Kroger has forecast annual sales and profit largely above Wall Street estimates on higher demand for groceries at its stores as more Americans prepare meals at home amid persistent inflation.
Shares of Kroger, whose $24.6-billion (€22.6 billion) deal to buy smaller rival Albertsons is facing an antitrust roadblock, rose more than 5% in premarket trading.
Consumers are cooking more at home, instead of eating out, as grocery prices ease at a faster pace than menu prices at restaurants, propping up sales at retailers such as Kroger and Walmart.
Data from the US Department of Agriculture showed food-at-home prices were only 1.2% higher in January, compared with a year earlier, whereas food-away-from-home prices were 5.1% higher than January 2023.
Kroger said it saw higher customer visits in the quarter, helping the company post a smaller-than-expected drop of 0.8% in quarterly same-store sales. Analysts expected a 1.47% decrease, according to LSEG data.
Strong 2023 Results
Chairman and CEO Rodney McMullen added, "Kroger achieved strong 2023 results, in line with our long-term growth model and built upon three consecutive years of historic growth.
"As customers manage macroeconomic pressures, we are lowering prices and offering even more ways to save with personalised promotions and rewards."
Earnings reports from other retailers also showed grocery demand held strong. Grocery Outlet saw increased store traffic, Albertsons posted strong pharmacy sales growth and Walmart reported robust sales of grocery and consumables.
Growth Drivers
Kroger has also benefited from its online business, as investments to expand delivery services and roll out same-day delivery in multiple markets have boosted sales, while perks like extra savings and fuel points on its loyalty programme also drove more purchases.
The supermarket chain said it expected fiscal 2024 identical sales, excluding fuel, to increase 0.25% to 1.75%, compared with analysts' average estimate for a 0.7% increase, according to LSEG data.
It projected adjusted earnings of $4.30 to $4.50 per share for fiscal 2024, compared with analysts' estimate of $4.34 per share.
The company said it planned to lower prices and increase worker wages this year.
News by Reuters, additional reporting by ESM.
