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Kroger's (KR) March Comps Rise Amid Coronavirus-led Demand
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The coronavirus outbreak has highlighted a paradigm shift in consumer buying behavior. People are shopping essential items rather than making discretionary purchases. There has been a huge demand for toilet paper, disinfectants, masks, gloves, packaged water, medicines and related food staples. As Americans are stocking up, companies are leaving no stone unturned to fill the shelves faster. Impressively, The Kroger Co. (KR - Free Report) has prioritized its actions to resonate well with the prevailing crisis and burgeoning demand for essential commodities.
Driven largely by coronavirus-led demand, Kroger registered a sharp rise in sales across both brick-&-mortar stores and digital channels during the month of March. Notably, identical retail supermarket sales without fuel surged approximately 30% during the month. The company informed that as consumers started stockpiling, demand shot up in the middle of the month but somewhat tapered in the final week as people get accustomed to changes in their daily lifestyle.
As people are working from home, dining at home and maintaining social distancing, they are resorting to various apps and e-commerce platforms to fulfill their requisites. Kroger fully understands the need of the hour and is well-positioned to assist with pick-up, delivery and ship to home solutions and contactless payment solutions like Kroger Pay. It has been making prudent investments to bolster omni-channel operations, improve supply chain and increase manpower to ensure swift customer service amid such challenging times.
In the last two weeks, Kroger has hired more than 32,700 new associates to meet the demand for fresh food and other essential supplies effectively. Companies such as Dollar General (DG - Free Report) , Walmart (WMT - Free Report) and Amazon (AMZN - Free Report) — which are also witnessing rising demand for their products during this crucial time — are hiring to guarantee prompt services.
Kroger is committed and sensitive toward its employees as much as it is toward customers during the time of this pandemic. The company has announced a “Hero Bonus”, a $2 premium above standard base rate, for all hourly frontline grocery, supply chain, manufacturing, pharmacy, and call center associates worked from Mar 29 through Apr 18. This follows a one-time bonus to frontline associates to be paid on Apr 3.
Considering the recent sales trends, management now expects first-quarter fiscal 2020 identical sales excluding fuel and adjusted earnings per share to fare better than the annual growth rate. However, it cautioned that sales are likely to be volatile throughout the year. As a result, Kroger has retained fiscal 2020 projection. Management still anticipates identical sales, excluding fuel, to be above 2.25% and earnings between $2.30 and $2.40 per share. Kroger also reaffirmed adjusted operating profit in the band $3-$3.1 billion.
Moreover, in order to maintain strong liquidity in response to the pandemic Kroger borrowed $1 billion under its revolving credit facility on Mar 18, 2020 and also decided to halt additional share repurchases for the time being. The company notified that it had already bought back $355 million shares during the first quarter under its $1 billion share repurchase plan announced last November. The company still had $245 million remaining under the program.
We believe that Kroger’s customer-centric business model provides a strong value proposition. The stock, which carries a Zacks Rank #3 (Hold), has gained 6.3% against the industry’s decline of 3.7% in the past three months.
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Kroger's (KR) March Comps Rise Amid Coronavirus-led Demand
The coronavirus outbreak has highlighted a paradigm shift in consumer buying behavior. People are shopping essential items rather than making discretionary purchases. There has been a huge demand for toilet paper, disinfectants, masks, gloves, packaged water, medicines and related food staples. As Americans are stocking up, companies are leaving no stone unturned to fill the shelves faster. Impressively, The Kroger Co. (KR - Free Report) has prioritized its actions to resonate well with the prevailing crisis and burgeoning demand for essential commodities.
Driven largely by coronavirus-led demand, Kroger registered a sharp rise in sales across both brick-&-mortar stores and digital channels during the month of March. Notably, identical retail supermarket sales without fuel surged approximately 30% during the month. The company informed that as consumers started stockpiling, demand shot up in the middle of the month but somewhat tapered in the final week as people get accustomed to changes in their daily lifestyle.
As people are working from home, dining at home and maintaining social distancing, they are resorting to various apps and e-commerce platforms to fulfill their requisites. Kroger fully understands the need of the hour and is well-positioned to assist with pick-up, delivery and ship to home solutions and contactless payment solutions like Kroger Pay. It has been making prudent investments to bolster omni-channel operations, improve supply chain and increase manpower to ensure swift customer service amid such challenging times.
In the last two weeks, Kroger has hired more than 32,700 new associates to meet the demand for fresh food and other essential supplies effectively. Companies such as Dollar General (DG - Free Report) , Walmart (WMT - Free Report) and Amazon (AMZN - Free Report) — which are also witnessing rising demand for their products during this crucial time — are hiring to guarantee prompt services.
Kroger is committed and sensitive toward its employees as much as it is toward customers during the time of this pandemic. The company has announced a “Hero Bonus”, a $2 premium above standard base rate, for all hourly frontline grocery, supply chain, manufacturing, pharmacy, and call center associates worked from Mar 29 through Apr 18. This follows a one-time bonus to frontline associates to be paid on Apr 3.
Considering the recent sales trends, management now expects first-quarter fiscal 2020 identical sales excluding fuel and adjusted earnings per share to fare better than the annual growth rate. However, it cautioned that sales are likely to be volatile throughout the year. As a result, Kroger has retained fiscal 2020 projection. Management still anticipates identical sales, excluding fuel, to be above 2.25% and earnings between $2.30 and $2.40 per share. Kroger also reaffirmed adjusted operating profit in the band $3-$3.1 billion.
Moreover, in order to maintain strong liquidity in response to the pandemic Kroger borrowed $1 billion under its revolving credit facility on Mar 18, 2020 and also decided to halt additional share repurchases for the time being. The company notified that it had already bought back $355 million shares during the first quarter under its $1 billion share repurchase plan announced last November. The company still had $245 million remaining under the program.
We believe that Kroger’s customer-centric business model provides a strong value proposition. The stock, which carries a Zacks Rank #3 (Hold), has gained 6.3% against the industry’s decline of 3.7% in the past three months.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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