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What to Expect from Kroger (KR) Earnings as Amazon Expands Grocery Business

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Shares of Kroger (KR - Free Report) have climbed roughly 4% to start the year, but the grocery giant’s positive movement falls well behind the S&P 500’s 11.8% jump. Now, with Amazon (AMZN - Free Report) set to roll out its own branded grocery store-style offerings, let’s see what to expect from Kroger’s fourth-quarter financial results that are due out Thursday.

Recent News & Overview

Reports began to surface late last week that said Amazon plans to launch smaller-scale grocery stores in urban areas. The e-commerce giant’s offerings look poised to be a larger version of their current Amazon Go stores and are set to feature everything from food to beauty products. Amazon’s move should help the firm compete directly against the likes of Target (TGT - Free Report) and CVS (CVS - Free Report) in cities, and will likely put even more pressure on Walmart (WMT - Free Report) and Kroger.

With that said, Amazon’s growth and purchase of Whole Foods already forced Kroger and others to step up their modern retail game. Kroger currently offers online ordering and curbside pickup and has expanded its partnership with grocery delivery startup Instacart.

Plus, the Cincinnati-based company has started to roll out meal kit offerings after it purchased private meal kit firm Home Chef in an effort to compete against the likes of Blue Apron (APRN - Free Report) and others. Kroger is also currently working with Nuro on an autonomous grocery delivery pilot and has partnered with e-commerce behemoth Alibaba (BABA - Free Report) to sell some of its brands in China.

Despite Kroger’s growth initiatives, investors can see that KR stock is down over 20% in the past three years. Kroger stock closed regular trading Monday up 2.21% at $28.64 a share, which represented a roughly 13% downturn from its 52-week high of $32.74 per share.

 

 

Q4 Outlook

Moving on, our current Zacks Consensus Estimate calls for Kroger’s fourth-quarter revenues to fall 9.51% from the prior-year quarter to hit $28.08 billion. This would come after KR’s third-quarter revenues slipped marginally. Meanwhile, the company’s identical-store sales, without fuel, are projected to pop 1.84%, based on our current NFM estimate. Investors might be pleased to note that this would mark the retailer’s best year over year growth in this vital category all year. Last quarter, Kroger’s comps popped 1.6%.

At the bottom end of the income statement, Kroger’s adjusted Q4 earnings are projected to plummet roughly 19% to reach $0.51 a share. Kroger has experienced some mixed earnings estimate revision activity for Q4 and fiscal 2018 over the last 60 days that helps it earn a Zacks Rank #3 (Hold) at the moment.

Bottom Line

Kroger is scheduled to release its fourth quarter and full-year 2018 financial results before the market opens on Thursday, March 7. So make sure to head back to Zacks for a full breakdown of the company’s actual Q4 results.

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