Kroger maintained full-year guidance early Thursday after beating earnings estimates for its fiscal first quarter. Kroger stock tumbled further below a key level. Shares of rival grocery kingpin Walmart set a fresh record. Costco fell near all-time highs.
Though Kroger earnings topped views, the supermarket operator saw EPS drop for the first time in 12 quarters.
Kroger Earnings
Estimates: For the quarter ended May 25, analysts expected Kroger earnings to decline 10%, year over year, to $1.36 per share. Sales were seen falling 0.7% to $44.855 billion, FactSet shows. Same-store sales were seen flat during the quarter vs. a 3.5% gain in the year-ago quarter.
Results: Kroger earnings declined 5% to $1.43, less than expected. Sales rose 0.2% to $45.269 billion, also beating. Excluding fuel, identical sales rose 0.5%. That marked the first Kroger earnings decline since Q1 2022.
Kroger grew digital sales more than 8% during the quarter, with delivery and pickup growing double digits combined, the earnings release showed. "Kroger is delivering exceptional value at a time when many customers need it more than ever, by providing affordable prices with personalized promotions," CEO Rodney McMullen said in a statement.
Outlook: The company reiterated full-year EPS guidance of $4.30-$4.50 after the Q1 beat. Analysts now expect Kroger earnings of $4.44 a share for the full year, down 6.8% but above the $4.40 midpoint of the company's guidance. Kroger's fiscal year ends in January.
Kroger Stock, Grocery Retail Stocks
Shares of Kroger lost 3.3% in big volume on the stock market today, extending its slide below the 50-day moving average. The Kroger stock chart shows a 58.34 buy point from an 11-week flat base, according to MarketSurge pattern recognition. Shares have largely been consolidating since April 2022, except for a sizable rally following the company's previous Q4 report in early March.
The grocer's major peers include Walmart, Costco, Amazon Fresh and Whole Foods parent Amazon.com and Target. Among them, Walmart, Kroger and Costco are the nation's three largest supermarket retail chains.
Costco stock fell nearly 1% on Thursday and Walmart stock edged higher, with the latter pegging a fresh all-time high intraday. Costco set a record high on Tuesday. Amazon and Target shares gained a fraction each.
Walmart Stock, Costco Stock: Groceries Boost Earnings
On May 16, Walmart delivered robust earnings. Walmart CFO John David Rainey said shoppers are turning to its grocery aisles because of the high prices for fast food.
On May 30, Costco also posted strong earnings. Consumers, stretched thin by inflation, flocked to its warehouses for value deals and groceries, the membership-based warehouse retailer said.
According to a June 10 Placer.ai report, Kroger's brands are luring customers at a steady clip.
Between January and May, the grocery chain operator's largest banners — including Kroger, Fred Meyer, Ralphs, Harris Teeter, Smith's, Fry's, King Soopers and Food 4 Less — all enjoyed "nearly uniform" year-over-year growth in foot traffic to stores, the report said.
But Kroger's Q1 same-store sales are likely to be tepid because "some of the impact of increased traffic growth will be cancelled out by lower prices — a trend we've seen across the grocery category this year," R.J. Hottovy, head of analytical research at Placer.ai, told IBD in an email.
Ahead of Kroger earnings on Thursday, Evercore ISI analysts said on Tuesday Kroger is not getting credit for its ability to execute in a promotional — price cutting — backdrop. The firm kept its outperform rating and $60 price target on Kroger stock.
Meanwhile, BMO Capital upgraded Kroger stock on Tuesday to outperform with a price target of $60, up from $58. The firm says that it believes Kroger can manage competition with stable margins. Further, it sees the pending Albertsons deal as "a win-win under either a deal or no-deal scenario."
The $25 billion combination, announced in October, has faced stiff opposition from the Federal Trade Commission as well as a number of state and industry groups. The combined companies have agreed to sell 579 stores for $2.9 billion in cash to C&S Wholesale Grocers as part of the deal.
