Kroger Co. KR released its fourth-quarter and full-year 2018 financial results before the opening bell on March 7. Earnings and revenue failed to meet Wall Street's forecasts.
By the numbers
The supermarket chain reported fourth-quarter net income of $259 million, or 32 cents per share, down from $854 million, or 96 cents per share, in the year-ago quarter. The Cincinnati-based company posted adjusted earnings of 48 cents per share. Revenue of $28.1 billion declined 9.5% from the prior-year quarter.
The operating profit for the quarter was $391 million, down 29%. The gross margin, as a percentage of sales, was 22%.
For the year, online sales grew 58%.
In a statement, CEO Rodney McMullen commented on Kroger's performance.
“We reached our FIFO operating profit goal and finished the year with sales and business momentum," he said. "We have a clear path to achieve $400 million in incremental FIFO operating profit growth and $6.5 billion in cumulative Restock cash flow by the end of 2020.”
Efforts
The company is facing stiff competition in the retail industry, particularly from Walmart WMT and Amazon AMZN. As a result, it is investing in restructuring and modernizing its stores and improving its delivery services.
The company’s warehouses are now supported by robots, something that can act as a stimulus to its grocery business. In addition, Kroger is testing driverless vehicles to improve delivery services.
Kroger also continues to invest in new technology. Last year, the company installed tiny screens under shelves in 200 stores, which displayed video ads, prices, coupons and nutritional information.
In addition to rolling out Kroger Pay and the Kroger Rewards debit card, the company also introduced Home Chef meal kits during the fourth quarter. It has also collaborated with Microsoft MSFT to set up a connected store experience pilot and retail-as-a-service commercial product.
Financial forecast
The company projects full-years earnings per share to be in the range of $2.15 to $2.25. Profits are expected to take a hit this year as Kroger plans to invest $3.2 billion to power its online business and revamp its stores as part of its “Kroger Restock” initiative.
Discosure: I do not hold any positions in the stocks mentioned.
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