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Kroger (KR) Q4 Earnings Top Estimates, Identical Sales Fall Y/Y
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The Kroger Co. (KR - Free Report) came up with fourth-quarter fiscal 2023 results, wherein the top line missed the Zacks Consensus Estimate, while the bottom line beat the same. Both the metrics improved from the year-ago period. Additionally, the company witnessed a decline in identical sales without fuel.
Kroger appears to be navigating a tough operating landscape, characterized by a tightening consumer spending environment. Also, the grocery industry is witnessing increased competition, with retailers actively working to reduce prices and expand their range of budget-friendly food options.
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.
Analyzing Q4 Outcome
Kroger reported adjusted earnings of $1.34 per share, exceeding the Zacks Consensus Estimate of $1.13 and marking an increase from 99 cents reported in the same quarter last year.
Total sales of $37,064 million fell short of the Zacks Consensus Estimate of $37,248 million. Nonetheless, the metric improved from $34,823 million reported in the year-ago period. Excluding fuel and the 53rd week, sales decreased 0.5% year over year. We note that identical sales without fuel fell 0.8%. Digital sales grew more than 10% during the quarter under discussion.
We note that the gross margin was 22.7% of sales. The FIFO gross margin rate, excluding fuel and the 53rd week, expanded 13 basis points compared to the same period last year. The adjusted FIFO operating profit came in at $1,307 million, up from $1,274 million reported in the year-ago period.
Kroger ended the quarter with cash of $235 million, total debt of $12,226 million and shareowners’ equity of $11,601 million. Net total debt decreased by $1,996 million over the last four quarters.
The company 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 2024.
Outlook
Kroger envisions identical sales without fuel to rise between 0.25% and 1.75% in fiscal 2024. Management anticipates the adjusted FIFO operating profit in the band of $4.6-$4.8 billion compared with $5 billion reported in fiscal 2023.
The company anticipates fiscal 2024 adjusted earnings between $4.30 and $4.50 per share compared with adjusted earnings of $4.76 reported in fiscal 2023.
Shares of this Zacks Rank #2 (Buy) company have increased 13.3% in the past three months compared with the industry’s rise of 19.8%.
Other Stocks Hogging in the Limelight
Here, we have highlighted three other top-ranked stocks, namely Chewy, Inc. (CHWY - Free Report) , Costco Wholesale Corporation (COST - Free Report) and Grocery Outlet Holding Corp. (GO - Free Report) .
Chewy, a trusted destination for pet parents and partners everywhere, sports a Zacks Rank #1 (Strong Buy). CHWY has a trailing four-quarter earnings surprise of 234.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Chewy’s current financial-year sales and earnings suggests growth of about 10.3% and 11.3%, respectively, from the year-ago reported numbers.
Costco Wholesale Corporation, which operates membership warehouses, currently carries a Zacks Rank #2. COST has a trailing four-quarter earnings surprise of 2.6%, on average.
The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings suggests growth of around 4.7% and 6.9%, respectively, from the year-ago reported numbers.
Grocery Outlet, a high-growth, extreme-value retailer of quality, name-brand consumables and fresh products, currently carries a Zacks Rank #2. GO has a trailing four-quarter earnings surprise of 17%, on average.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales and earnings suggests growth of around 9.4% each from the year-ago reported numbers.
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Kroger (KR) Q4 Earnings Top Estimates, Identical Sales Fall Y/Y
The Kroger Co. (KR - Free Report) came up with fourth-quarter fiscal 2023 results, wherein the top line missed the Zacks Consensus Estimate, while the bottom line beat the same. Both the metrics improved from the year-ago period. Additionally, the company witnessed a decline in identical sales without fuel.
Kroger appears to be navigating a tough operating landscape, characterized by a tightening consumer spending environment. Also, the grocery industry is witnessing increased competition, with retailers actively working to reduce prices and expand their range of budget-friendly food options.
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.
Analyzing Q4 Outcome
Kroger reported adjusted earnings of $1.34 per share, exceeding the Zacks Consensus Estimate of $1.13 and marking an increase from 99 cents reported in the same quarter last year.
Total sales of $37,064 million fell short of the Zacks Consensus Estimate of $37,248 million. Nonetheless, the metric improved from $34,823 million reported in the year-ago period. Excluding fuel and the 53rd week, sales decreased 0.5% year over year. We note that identical sales without fuel fell 0.8%. Digital sales grew more than 10% during the quarter under discussion.
We note that the gross margin was 22.7% of sales. The FIFO gross margin rate, excluding fuel and the 53rd week, expanded 13 basis points compared to the same period last year. The adjusted FIFO operating profit came in at $1,307 million, up from $1,274 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 $235 million, total debt of $12,226 million and shareowners’ equity of $11,601 million. Net total debt decreased by $1,996 million over the last four quarters.
The company 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 2024.
Outlook
Kroger envisions identical sales without fuel to rise between 0.25% and 1.75% in fiscal 2024. Management anticipates the adjusted FIFO operating profit in the band of $4.6-$4.8 billion compared with $5 billion reported in fiscal 2023.
The company anticipates fiscal 2024 adjusted earnings between $4.30 and $4.50 per share compared with adjusted earnings of $4.76 reported in fiscal 2023.
Shares of this Zacks Rank #2 (Buy) company have increased 13.3% in the past three months compared with the industry’s rise of 19.8%.
Other Stocks Hogging in the Limelight
Here, we have highlighted three other top-ranked stocks, namely Chewy, Inc. (CHWY - Free Report) , Costco Wholesale Corporation (COST - Free Report) and Grocery Outlet Holding Corp. (GO - Free Report) .
Chewy, a trusted destination for pet parents and partners everywhere, sports a Zacks Rank #1 (Strong Buy). CHWY has a trailing four-quarter earnings surprise of 234.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Chewy’s current financial-year sales and earnings suggests growth of about 10.3% and 11.3%, respectively, from the year-ago reported numbers.
Costco Wholesale Corporation, which operates membership warehouses, currently carries a Zacks Rank #2. COST has a trailing four-quarter earnings surprise of 2.6%, on average.
The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings suggests growth of around 4.7% and 6.9%, respectively, from the year-ago reported numbers.
Grocery Outlet, a high-growth, extreme-value retailer of quality, name-brand consumables and fresh products, currently carries a Zacks Rank #2. GO has a trailing four-quarter earnings surprise of 17%, on average.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales and earnings suggests growth of around 9.4% each from the year-ago reported numbers.