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Kroger (KR) Bolsters Its Industry Presence: Find Out How
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The Kroger Co. (KR - Free Report) , which operates in the thin-margin grocery industry, has embarked on a comprehensive transformation with respect to product offerings and changing consumer preferences. Recognizing the need to cater to a diverse range of consumer choices, the company has been adding new and innovative products to its portfolio. Moreover, Kroger has been embracing technological expansion to enhance its omnichannel reach and create a seamless shopping experience for customers.
Kroger has been making significant investments to enhance product freshness and quality and expand digital capabilities. The company has been introducing new items under its “Our Brands” portfolio. Kroger ensures that customers have access to high-quality products at competitive prices. We note that Our Brands sales grew 4.9% in the first quarter of fiscal 2023. Our Brands helps drive margins that are 600-800 basis points higher compared to national brands.
Kroger is embracing digital innovation and leveraging technology to drive its long-term growth strategy. Initiatives, such as Kroger Delivery Now, have been a game-changer. The service promises the delivery of food and household staples within 30 minutes. The company’s Boost membership program has played a pivotal role in driving customer loyalty and engagement. The company’s expansion of customer fulfillment centers plays a crucial role in ensuring efficient and timely deliveries.
We note that identical sales, without fuel, jumped 3.5% in the first quarter. Kroger’s digital sales grew 15% during the quarter.
Image Source: Zacks Investment Research
Improving Competitiveness
In October 2022, Kroger entered into a deal to acquire Albertsons Companies (ACI - Free Report) to strengthen its position in the competitive grocery space. The combined entity is likely to benefit from a loyal customer base and a broader portfolio. The transaction is expected to close in early 2024.
We believe that Kroger’s focus on fresh offerings, technology and process improvements to lower costs, a seamless digital ecosystem and the margin-rich alternative profit business should continue contributing to growth. Management believes that Kroger’s Leading with Fresh and Accelerating with Digital initiatives should help generate sustainable total shareholder returns of 8-11% over time.
Management envisions identical sales, without fuel, to be up 1% to 2% in fiscal 2023, with underlying growth of 2.5% to 3.5% after adjusting for the effect of Express Scripts. The company anticipates an adjusted FIFO operating profit in the band of $5-$5.2 billion compared with $5.1 billion reported in fiscal 2022. Kroger anticipates fiscal 2023 adjusted earnings between $4.45 and $4.60 per share, suggesting an increase from adjusted earnings of $4.23 reported in fiscal 2022.
Wrapping Up
Shares of this Cincinnati, Ohio-based company have advanced 2.5% year to date compared with the industry’s rise of 8%. This Zacks Rank #3 (Hold) company has been redefining strategies and upgrading capabilities to stay ahead of the curve. Quality, price, customer shopping experience and reward programs have been its key areas of focus.
Bet Your Bucks on These Hot Stocks
Here we have highlighted two better-ranked stocks, namely The TJX Companies (TJX - Free Report) and Walmart (WMT - Free Report) .
The Zacks Consensus Estimate for TJX Companies’ current financial-year sales and earnings suggests growth of 6.4% and 14.5% from the year-ago period. TJX has a trailing four-quarter earnings surprise of 4.4%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.5%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period. WMT has a trailing four-quarter earnings surprise of 12%, on average.
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Kroger (KR) Bolsters Its Industry Presence: Find Out How
The Kroger Co. (KR - Free Report) , which operates in the thin-margin grocery industry, has embarked on a comprehensive transformation with respect to product offerings and changing consumer preferences. Recognizing the need to cater to a diverse range of consumer choices, the company has been adding new and innovative products to its portfolio. Moreover, Kroger has been embracing technological expansion to enhance its omnichannel reach and create a seamless shopping experience for customers.
Kroger has been making significant investments to enhance product freshness and quality and expand digital capabilities. The company has been introducing new items under its “Our Brands” portfolio. Kroger ensures that customers have access to high-quality products at competitive prices. We note that Our Brands sales grew 4.9% in the first quarter of fiscal 2023. Our Brands helps drive margins that are 600-800 basis points higher compared to national brands.
Kroger is embracing digital innovation and leveraging technology to drive its long-term growth strategy. Initiatives, such as Kroger Delivery Now, have been a game-changer. The service promises the delivery of food and household staples within 30 minutes. The company’s Boost membership program has played a pivotal role in driving customer loyalty and engagement. The company’s expansion of customer fulfillment centers plays a crucial role in ensuring efficient and timely deliveries.
We note that identical sales, without fuel, jumped 3.5% in the first quarter. Kroger’s digital sales grew 15% during the quarter.
Image Source: Zacks Investment Research
Improving Competitiveness
In October 2022, Kroger entered into a deal to acquire Albertsons Companies (ACI - Free Report) to strengthen its position in the competitive grocery space. The combined entity is likely to benefit from a loyal customer base and a broader portfolio. The transaction is expected to close in early 2024.
We believe that Kroger’s focus on fresh offerings, technology and process improvements to lower costs, a seamless digital ecosystem and the margin-rich alternative profit business should continue contributing to growth. Management believes that Kroger’s Leading with Fresh and Accelerating with Digital initiatives should help generate sustainable total shareholder returns of 8-11% over time.
Management envisions identical sales, without fuel, to be up 1% to 2% in fiscal 2023, with underlying growth of 2.5% to 3.5% after adjusting for the effect of Express Scripts. The company anticipates an adjusted FIFO operating profit in the band of $5-$5.2 billion compared with $5.1 billion reported in fiscal 2022. Kroger anticipates fiscal 2023 adjusted earnings between $4.45 and $4.60 per share, suggesting an increase from adjusted earnings of $4.23 reported in fiscal 2022.
Wrapping Up
Shares of this Cincinnati, Ohio-based company have advanced 2.5% year to date compared with the industry’s rise of 8%. This Zacks Rank #3 (Hold) company has been redefining strategies and upgrading capabilities to stay ahead of the curve. Quality, price, customer shopping experience and reward programs have been its key areas of focus.
Bet Your Bucks on These Hot Stocks
Here we have highlighted two better-ranked stocks, namely The TJX Companies (TJX - Free Report) and Walmart (WMT - Free Report) .
TJX Companies, which operates as an off-price apparel and home fashion retailer, carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 10.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for TJX Companies’ current financial-year sales and earnings suggests growth of 6.4% and 14.5% from the year-ago period. TJX has a trailing four-quarter earnings surprise of 4.4%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.5%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period. WMT has a trailing four-quarter earnings surprise of 12%, on average.