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The Kroger Co. (KR - Free Report) came up with fourth-quarter fiscal 2021 results, wherein both the top and the bottom line not only surpassed the Zacks Consensus Estimate but also improved year over year. KR also registered growth in identical sales without fuel. We note that KR’s digital business remains a key driver. Management provided an upbeat outlook for fiscal 2022.
This Cincinnati, OH-based player has been making significant investments to enhance product freshness and quality, and expand digital capabilities. Impressively, Kroger has been introducing items under its “Our Brands” portfolio for a while and launched 72 items during the quarter under review. It completed the conversion of specialty cheese shops under the Murray's Cheese brand in 260 stores and launched Kroger Floral pilot in partnership with DoorDash in the Houston and Dallas divisions.
Let’s Introspect
Kroger posted adjusted earnings of 91 cents a share that surpassed the Zacks Consensus Estimate of 73 cents and increased from 81 cents reported in the prior-year quarter.
Total sales of $33,048 million came ahead of the Zacks Consensus Estimate of $32,635 million. The metric rose from $30,737 million reported in the year-ago period. Excluding fuel, total sales rose 3.7% from the year-ago period's readfing. We note that identical sales without fuel jumped 4%.
On a two-year stack basis, digital sales surged 105%, while identical sales without fuel increased 14.6%.
The gross margin contracted approximately 70 basis points to 22.2%. FIFO gross margin rate, excluding fuel, expanded 3 basis points from the year-ago period's tally. This reflects sourcing benefits, offset by strategic price investments and higher supply-chain expenses. Adjusted FIFO operating profit came in at $1,014 million, up from $837 million reported in the year-ago period.
Kroger ended the quarter with cash of $311 million, total debt of $13,364 million and shareowners’ equity of $9,429 million. Net total debt decreased $243 million over the last four quarters. During 2021, KR bought back $1.6 billion of shares. In total, KR returned $2.2 billion to its shareholders in 2021.
Management estimates capital expenditures in the band of $3.8-$4 billion and the free cash flow generation between $2 billion and $2.2 billion in fiscal 2022.
2022 View
Management now envisions identical sales without fuel to be up 2-3% in fiscal 2022 compared with 0.2% growth registered in fiscal 2021. Kroger anticipates FIFO operating profit in the band $4.2-$4.3 billion compared with $4.3 billion reported in fiscal 2021.
Management anticipates fiscal 2022 earnings between $3.75 and $3.85 per share, suggesting an increase from adjusted earnings of $3.68 reported in fiscal 2021. The Zacks Consensus Estimate for fiscal 2022 earnings currently stands at $3.43, which could witness an upward revision in the coming days.
Wrapping Up
Kroger, which operates in the thin-margin grocery industry, has been making every effort for a while to strengthen its position not only with respect to products but also in terms of the way consumers prefer shopping. Realizing the need of the hour, KR continues offering a no-contact delivery option, low-contact pickup service and ship-to-home orders. During the quarter, KR opened a customer fulfillment center powered by Ocado in Forest Park, GA and a cross-dock spoke facility in the Indianapolis area.
Shares of this currently Zacks Rank #3 (Hold) player have gained 9.4% in the past three months against the industry’s decline of 1.2%.
Stocks to Consider
We highlighted three better-ranked stocks, namely Boot Barn Holdings (BOOT - Free Report) , Tractor Supply Company (TSCO - Free Report) and Sprouts Farmers Market (SFM - Free Report) .
Boot Barn Holdings, the lifestyle retailer of western and work-related footwear, apparel and accessories, sports a Zacks Rank #1 (Strong Buy) at present. BOOt has an expected EPS growth rate of 20% for three-five years. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn Holdings’ current financial year sales and EPS suggests growth of 62.6% and 220.8%, respectively, from the corresponding year-ago period's reported figures.
Tractor Supply Company, a rural lifestyle retailer in the United States, currently carries a Zacks Rank #2 (Buy). TSCO has an expected EPS growth rate of 9.8% for three-five years.
The Zacks Consensus Estimate for Tractor Supply Company’s current financial year sales and EPS suggests growth of 8.2% and 8%, respectively, from the corresponding year-ago period's reported numbers. TSCO has a trailing four-quarter earnings surprise of 22%, on average.
Sprouts Farmers, which offers fresh, natural and organic food products, currently carries a Zacks Rank #2. SFM has an expected EPS growth rate of 7.3% for three-five years.
The Zacks Consensus Estimate for Sprouts Farmers’ current financial year sales and EPS suggests growth of 4.7% and 4.8%, respectively, from the corresponding year-ago period's reported figures. SFM has a trailing four-quarter earnings surprise of 17.9%, on average.
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Kroger (KR) Q4 Earnings Beat Estimates, Sales Increase Y/Y
The Kroger Co. (KR - Free Report) came up with fourth-quarter fiscal 2021 results, wherein both the top and the bottom line not only surpassed the Zacks Consensus Estimate but also improved year over year. KR also registered growth in identical sales without fuel. We note that KR’s digital business remains a key driver. Management provided an upbeat outlook for fiscal 2022.
This Cincinnati, OH-based player has been making significant investments to enhance product freshness and quality, and expand digital capabilities. Impressively, Kroger has been introducing items under its “Our Brands” portfolio for a while and launched 72 items during the quarter under review. It completed the conversion of specialty cheese shops under the Murray's Cheese brand in 260 stores and launched Kroger Floral pilot in partnership with DoorDash in the Houston and Dallas divisions.
Let’s Introspect
Kroger posted adjusted earnings of 91 cents a share that surpassed the Zacks Consensus Estimate of 73 cents and increased from 81 cents reported in the prior-year quarter.
Total sales of $33,048 million came ahead of the Zacks Consensus Estimate of $32,635 million. The metric rose from $30,737 million reported in the year-ago period. Excluding fuel, total sales rose 3.7% from the year-ago period's readfing. We note that identical sales without fuel jumped 4%.
On a two-year stack basis, digital sales surged 105%, while identical sales without fuel increased 14.6%.
The gross margin contracted approximately 70 basis points to 22.2%. FIFO gross margin rate, excluding fuel, expanded 3 basis points from the year-ago period's tally. This reflects sourcing benefits, offset by strategic price investments and higher supply-chain expenses. Adjusted FIFO operating profit came in at $1,014 million, up from $837 million reported in the year-ago period.
The Kroger Co. Price, Consensus and EPS Surprise
The Kroger Co. price-consensus-eps-surprise-chart | The Kroger Co. Quote
Other Financial Aspects
Kroger ended the quarter with cash of $311 million, total debt of $13,364 million and shareowners’ equity of $9,429 million. Net total debt decreased $243 million over the last four quarters. During 2021, KR bought back $1.6 billion of shares. In total, KR returned $2.2 billion to its shareholders in 2021.
Management estimates capital expenditures in the band of $3.8-$4 billion and the free cash flow generation between $2 billion and $2.2 billion in fiscal 2022.
2022 View
Management now envisions identical sales without fuel to be up 2-3% in fiscal 2022 compared with 0.2% growth registered in fiscal 2021. Kroger anticipates FIFO operating profit in the band $4.2-$4.3 billion compared with $4.3 billion reported in fiscal 2021.
Management anticipates fiscal 2022 earnings between $3.75 and $3.85 per share, suggesting an increase from adjusted earnings of $3.68 reported in fiscal 2021. The Zacks Consensus Estimate for fiscal 2022 earnings currently stands at $3.43, which could witness an upward revision in the coming days.
Wrapping Up
Kroger, which operates in the thin-margin grocery industry, has been making every effort for a while to strengthen its position not only with respect to products but also in terms of the way consumers prefer shopping. Realizing the need of the hour, KR continues offering a no-contact delivery option, low-contact pickup service and ship-to-home orders. During the quarter, KR opened a customer fulfillment center powered by Ocado in Forest Park, GA and a cross-dock spoke facility in the Indianapolis area.
Shares of this currently Zacks Rank #3 (Hold) player have gained 9.4% in the past three months against the industry’s decline of 1.2%.
Stocks to Consider
We highlighted three better-ranked stocks, namely Boot Barn Holdings (BOOT - Free Report) , Tractor Supply Company (TSCO - Free Report) and Sprouts Farmers Market (SFM - Free Report) .
Boot Barn Holdings, the lifestyle retailer of western and work-related footwear, apparel and accessories, sports a Zacks Rank #1 (Strong Buy) at present. BOOt has an expected EPS growth rate of 20% for three-five years. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn Holdings’ current financial year sales and EPS suggests growth of 62.6% and 220.8%, respectively, from the corresponding year-ago period's reported figures.
Tractor Supply Company, a rural lifestyle retailer in the United States, currently carries a Zacks Rank #2 (Buy). TSCO has an expected EPS growth rate of 9.8% for three-five years.
The Zacks Consensus Estimate for Tractor Supply Company’s current financial year sales and EPS suggests growth of 8.2% and 8%, respectively, from the corresponding year-ago period's reported numbers. TSCO has a trailing four-quarter earnings surprise of 22%, on average.
Sprouts Farmers, which offers fresh, natural and organic food products, currently carries a Zacks Rank #2. SFM has an expected EPS growth rate of 7.3% for three-five years.
The Zacks Consensus Estimate for Sprouts Farmers’ current financial year sales and EPS suggests growth of 4.7% and 4.8%, respectively, from the corresponding year-ago period's reported figures. SFM has a trailing four-quarter earnings surprise of 17.9%, on average.