Kroger’s Second Quarter Results Exceeded Expectations, Cash Flow is Strong, and the Future is Expected

Kroger, a well-known American grocery retailer, recently released its second quarter financial report, both revenue and sales were better than expected, the novel coronavirus pneumonia caused the outbreak of the new age to cause consumers to stay at home more frequently, the company also improved its forecast for this year’s performance.

Net income in the second quarter totaled $819 million, or $1.03 per share, up from $297 million, or $0.37 per share, in the same period last year. Adjusted earnings per share were 0.73 cents, easily exceeding analysts’ expectations of $0.54.


Sales in the second quarter rose to $30.49 billion from $28.17 billion last year, better than Wall Street’s forecast of $29.97 billion. Rodney McMullen, Kroger’s chief executive, said in a speech to analysts, Kroger’s private brand category is driving overall sales and giving it a competitive advantage.

Sales of private selection, the company’s high-end store brand, grew 17% in the quarter. Simple truth’s sales grew 20 percent, and store brand packaging products grew by 50 percent. 

Digital sales more than tripled to 127%. Same sales without fuel increased by 14.6%, also exceeding expectations. Today, Kroger has more than 2400 grocery delivery locations and 2100 pick-up locations in its branches, attracting 98% of shoppers in its market area through physical stores and digital channels.


“Novel coronavirus pneumonia is the first priority for our employees and consumers. We will continue to work hard to meet the challenges as the new crown pneumonia continues,” Mike Mullen said.


“Consumers are at the heart of what we do, so we are expanding our market share. Kroger’s strong digital business is a key factor in this growth, as investments to expand our digital ecosystem resonate with consumers. Our results continue to show that Kroger is a trustworthy brand and that our consumers choose to shop with us because they value the quality, freshness, convenience and digital products we offer. “


Speaking to analysts, novel coronavirus pneumonia incidence rate of the company was “significantly lower than the incidence of the community in which we operate,” McMullen said. He added: “novel coronavirus pneumonia has been opened to us during the new era of pneumonia and we have learned a lot and will continue to learn.”

It is understood that Kroger has approved a new $1 billion stock repurchase plan to replace the previous authorization. For the full year, Kroger expects the same sales excluding fuel to grow by more than 13%, with earnings per share expected to be between $3.20 and $3.30. Wall Street’s estimate is the same, with sales up 9.7% and earnings per share of $2.92.


In the future, Kroger’s financial model is driven not only by retail supermarkets, fuel and health and health businesses, but also by profit growth in its alternative businesses.

Kroger’s financial strategy is to continue to leverage the strong free cash flow generated by the business and deploy it in a disciplined manner to drive long-term sustainable growth by identifying high return projects that support its strategy.


At the same time, Kroger will continue to allocate funds to drive sales growth in stores and digital products, improve productivity, and build a seamless digital ecosystem and supply chain.

In addition, Kroger is committed to maintaining net debt in the adjusted EBITDA range of 2.30 to 2.50 to maintain its current investment grade debt rating.

The company hopes to continue to increase dividends over time to reflect its confidence in free cash flow and to continue to return excess cash to investors through share buybacks.

Kroger expects its model to deliver better operating results over time, continue to maintain strong free cash flow, and translate into consistently strong and attractive total shareholder returns over the long-term range of 8% to 11%.

Kroger’s main competitors include Costco, target and Wal Mart. Here is a comparison of their store:



Post time: Sep-29-2020