We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Kroger (KR) Q2 Earnings Beat, Identical Sales Up 1% Y/Y
Read MoreHide Full Article
The Kroger Co. (KR - Free Report) came up with second-quarter fiscal 2023 results, wherein the top line missed the Zacks Consensus Estimate and declined year over year. Nonetheless, the bottom line surpassed the consensus mark and improved from the year-ago period. The company also registered growth in identical sales without fuel. However, the growth rate decelerated on a sequential basis.
Kroger appears to be navigating a tough operating environment. Factors such as inflation, reduced SNAP benefits and the current economic backdrop, particularly a higher-interest-rate scenario, have posed challenges, predominantly for budget-conscious consumers.
Despite these headwinds, Kroger's well-defined customer segmentation strategy, emphasis on value and focus on its 'Our Brands' portfolio have provided some cushion. The company remains committed to its core strengths, including an array of fresh products, personalized shopping experiences and a seamless digital ecosystem, all aimed at sustaining its momentum.
In a separate release, Kroger revealed that it has entered into a definitive agreement alongside Albertsons with C&S Wholesale Grocers for the sale of 413 stores, eight distribution centers, two offices and five private-label brands in connection with their proposed merger announced in October last year.
Analyzing Q2 Outcome
Kroger posted adjusted earnings of 96 cents a share, which surpassed the Zacks Consensus Estimate of 92 cents and increased from the 90 cents reported in the prior-year quarter. Including a $1.4 billion charge related to a nationwide opioid settlement framework, the company reported a loss of 25 cents a share.
Total sales of $33,853 million fell short of the Zacks Consensus Estimate of $34,251 million. The metric also declined from the $34,638 million reported in the year-ago period. Excluding fuel, sales rose 1.1% from the year-ago period. We note that identical sales, without fuel, jumped 1%, following 3.5% growth registered in the preceding quarter. Digital sales grew 12% during the quarter under discussion.
We note that the gross margin was 21.8% of sales. The FIFO gross margin rate, excluding fuel, expanded 35 basis points compared to the same period last year. The adjusted FIFO operating profit came in at $989 million, down from the $1,110 million reported in the year-ago period.
Other Financial Aspects
Kroger ended the quarter with cash of $263 million, total debt of $12,791 million and shareowners’ equity of $10,604 million. Net total debt decreased by $1,792 million over the last four quarters. Management estimates capital expenditures in the band of $3.4-$3.6 billion and expects to generate adjusted free cash flow between $2.5 billion and $2.7 billion in fiscal 2023.
2023 View
Management reaffirmed its financial outlook for fiscal 2023. Kroger envisions identical sales, without fuel, to rise 1% to 2% in the current fiscal, with underlying growth of 2.5% to 3.5% after adjusting for the effect of Express Scripts. Management believes that the environment will remain challenging for consumers. Consequently, it anticipates identical sales, without fuel, to land at the lower end of the projected range, turning marginally negative in the second half of the year.
Kroger anticipates the adjusted FIFO operating profit in the band of $5-$5.2 billion compared with $5.1 billion reported in fiscal 2022. The company 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.
Shares of this Zacks Rank #3 (Hold) company have fallen 1.4% in the past three months against the industry’s rise of 5.9%.
Grocery Outlet, an extreme value retailer of quality, name-brand consumables and fresh products, currently has a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 12.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales and earnings suggests growth of 11.2% and 3.9%, respectively, from the year-ago reported numbers. GO has a trailing four-quarter earnings surprise of 14.3%, on average.
Ross Stores, which operates off-price retail apparel and home fashion stores, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 11.6%.
The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and earnings suggests growth of 7% and 19.4%, respectively, from the year-ago reported numbers. ROST has a trailing four-quarter earnings surprise of 11.4%, 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 6.6%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings suggests growth of 5% and 2.1%, respectively, from the year-ago reported numbers. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Kroger (KR) Q2 Earnings Beat, Identical Sales Up 1% Y/Y
The Kroger Co. (KR - Free Report) came up with second-quarter fiscal 2023 results, wherein the top line missed the Zacks Consensus Estimate and declined year over year. Nonetheless, the bottom line surpassed the consensus mark and improved from the year-ago period. The company also registered growth in identical sales without fuel. However, the growth rate decelerated on a sequential basis.
Kroger appears to be navigating a tough operating environment. Factors such as inflation, reduced SNAP benefits and the current economic backdrop, particularly a higher-interest-rate scenario, have posed challenges, predominantly for budget-conscious consumers.
Despite these headwinds, Kroger's well-defined customer segmentation strategy, emphasis on value and focus on its 'Our Brands' portfolio have provided some cushion. The company remains committed to its core strengths, including an array of fresh products, personalized shopping experiences and a seamless digital ecosystem, all aimed at sustaining its momentum.
In a separate release, Kroger revealed that it has entered into a definitive agreement alongside Albertsons with C&S Wholesale Grocers for the sale of 413 stores, eight distribution centers, two offices and five private-label brands in connection with their proposed merger announced in October last year.
Analyzing Q2 Outcome
Kroger posted adjusted earnings of 96 cents a share, which surpassed the Zacks Consensus Estimate of 92 cents and increased from the 90 cents reported in the prior-year quarter. Including a $1.4 billion charge related to a nationwide opioid settlement framework, the company reported a loss of 25 cents a share.
The Kroger Co. Price, Consensus and EPS Surprise
The Kroger Co. price-consensus-eps-surprise-chart | The Kroger Co. Quote
Total sales of $33,853 million fell short of the Zacks Consensus Estimate of $34,251 million. The metric also declined from the $34,638 million reported in the year-ago period. Excluding fuel, sales rose 1.1% from the year-ago period. We note that identical sales, without fuel, jumped 1%, following 3.5% growth registered in the preceding quarter. Digital sales grew 12% during the quarter under discussion.
We note that the gross margin was 21.8% of sales. The FIFO gross margin rate, excluding fuel, expanded 35 basis points compared to the same period last year. The adjusted FIFO operating profit came in at $989 million, down from the $1,110 million reported in the year-ago period.
Other Financial Aspects
Kroger ended the quarter with cash of $263 million, total debt of $12,791 million and shareowners’ equity of $10,604 million. Net total debt decreased by $1,792 million over the last four quarters. Management estimates capital expenditures in the band of $3.4-$3.6 billion and expects to generate adjusted free cash flow between $2.5 billion and $2.7 billion in fiscal 2023.
2023 View
Management reaffirmed its financial outlook for fiscal 2023. Kroger envisions identical sales, without fuel, to rise 1% to 2% in the current fiscal, with underlying growth of 2.5% to 3.5% after adjusting for the effect of Express Scripts. Management believes that the environment will remain challenging for consumers. Consequently, it anticipates identical sales, without fuel, to land at the lower end of the projected range, turning marginally negative in the second half of the year.
Kroger anticipates the adjusted FIFO operating profit in the band of $5-$5.2 billion compared with $5.1 billion reported in fiscal 2022. The company 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.
Shares of this Zacks Rank #3 (Hold) company have fallen 1.4% in the past three months against the industry’s rise of 5.9%.
Bet Your Bucks on These 3 Hot Stocks
Here we have highlighted three better-ranked stocks, namely Grocery Outlet (GO - Free Report) , Ross Stores (ROST - Free Report) and Walmart (WMT - Free Report) .
Grocery Outlet, an extreme value retailer of quality, name-brand consumables and fresh products, currently has a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 12.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales and earnings suggests growth of 11.2% and 3.9%, respectively, from the year-ago reported numbers. GO has a trailing four-quarter earnings surprise of 14.3%, on average.
Ross Stores, which operates off-price retail apparel and home fashion stores, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 11.6%.
The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and earnings suggests growth of 7% and 19.4%, respectively, from the year-ago reported numbers. ROST has a trailing four-quarter earnings surprise of 11.4%, 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 6.6%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings suggests growth of 5% and 2.1%, respectively, from the year-ago reported numbers. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.