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Kroger’s Stock Explodes After Defying Notion Amazon Is Crushing Grocer

Looks like Kroger Co.’s (KR) investment in food is working out.

The grocery chain beat Wall Street expectations Thursday, Nov. 30, in its third-quarter results, reporting earnings of 44 cents per share. That’s compared with the analysts’ forecast of 40 cents. Net earnings totaled $ 397 million while sales reached $ 27.7 billion, an increase of 4.5% year over year and again exceeding the Street’s estimate of $ 24.5 billion in total sales.

Identical supermarket sales, or same-store sales, grew by 1% in the third quarter — slightly above projections of a 0.9% uptick.

“This quarter shows that by investing for the future, our business continues to improve and gain momentum,” CEO Rodney McMullen said in a statement.

Kroger’s strategic plan to refine its food products, dubbed Restock Kroger and unveiled in October, is “off to a great start,” he added. “We continue to accelerate our digital and ecommerce offerings, to grow Our Brands, to lower prices for customers, and to invest in our associates.”

The Cincinnati-based grocer also reported a gross margin of 22.4% of sales. The $ 27.7 billion in total sales reflects a 4.5% increase compared to the same period last year. In the third quarter, Kroger announced two new private label brands in food products and a floral line, Bloom Haus. Earlier this month, it raised eyebrows with its plans to launch an apparel line next year.  Kroger also boasted in its earnings release that it’s investing $ 500 million in employee training over the next three years and hiring some 14,0000 part-time workers for the holiday season.

McMullen suggested that the company is confident about the fourth quarter after posting a stellar Black Friday.

“The holidays are always Kroger’s time to shine. In fact, we had our best ever Black Friday results for general merchandise, led by record sales at [regional store brand] Fred Meyer” he said in the statement.

Kroger shares are up 10% pre-trading Thursday following the release. After losing nearly 30% of its value this year, the Kroger stock has been on the rebound since its successful Investor Day in October, during which the company detailed a turnaround effort. To focus on food, Kroger will expand self-checkout, continue to personalize coupons and develop tools for customer traffic in stores.

The chain is also in the process of selling its 800-some convenience stores across the country, operating under the brand names Turkey Hill, Loaf ‘N Jug, KwikShop, Tom Thumb and QuickStop.

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