The Kroger Co. (KR Quick QuoteKR - Free Report) , a prominent player in the grocery industry, has been proactively transforming its operations to align with evolving consumer preferences. To cater to diverse customer choices, the company has been continuously introducing innovative products while investing in technology to bolster its omnichannel capabilities. This technology-driven approach aims to create a seamless shopping experience for customers.

To meet the evolving demands, Kroger has been making significant investments to improve product freshness and quality while expanding its digital offerings. Under its "Our Brands" portfolio, the company introduces new items, ensuring 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.

Digital innovation plays a pivotal role in Kroger's long-term growth strategy. Initiatives such as Kroger Delivery Now, which promises the delivery of food and household staples within 30 minutes, have been game-changers. Additionally, the Boost membership program has significantly increased customer loyalty and engagement. The expansion of customer fulfillment centers further supports efficient and timely deliveries.

We note that identical sales, without fuel, jumped 3.5%, while digital sales grew 15% in the first quarter.

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Kroger's commitment to staying competitive was evident in its decision to acquire Albertsons Companies (ACI Quick QuoteACI - Free Report) in October 2022. This strategic move aimed to strengthen Kroger's position in the grocery market by capitalizing on a loyal customer base and a broader portfolio. The transaction is expected to be finalized 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. 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

Despite the challenges in the grocery industry, Kroger continues to make strides in redefining strategies and upgrading capabilities, enabling the company to stay ahead of the curve. Key areas of focus include quality, price, customer shopping experience and rewarding loyalty programs. Shares of this Zacks Rank #3 (Hold) company have advanced 7.4% year to date compared with the industry’s rise of 10.5%.

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The Zacks Consensus Estimate for Ollie's Bargain’s current fiscal-year sales and earnings suggests growth of 12.6% and 61.1%, respectively, from the year-ago reported numbers.

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.