Kroger Raises Outlook on Healthy Grocery Demand
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Kroger Co. raised its full-year sales forecast, illustrating that the grocer is attracting value-seeking consumers who are opting to eat at home.
The company said it now expects comparable sales, excluding fuel, to gain as much as 3.4%, versus its previous guidance calling for a high of 3.25% increase.
Kroger’s shares rose as much as 4.4% in premarket trading.
Kroger ranks No. 31 on the Transport Topics Top 100 list of the largest private carriers in North America, and No. 3 on the TT grocery list.
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Food retailers have posted steady sales in recent years, benefiting from shoppers prioritizing necessities even as they cut spending elsewhere. People are staying cautious overall, buying things on sale or purchasing cheaper items.
The grocery chain’s comparable sales and adjusted earnings beat expectations during the latest quarter, driven by higher sales of fresh food, e-commerce and pharmacy.
Kroger is seeking to establish a new chapter of growth after calling off a $24.6 billion deal with rival Albertsons Cos., a fight that’s now unfolding in court. Kroger’s former chief executive abruptly resigned earlier this year, replaced by industry veteran Ron Sargent until a permanent CEO is named.
Albertsons ranks No. 5 on the grocery carriers list.
Under Sargent, the Cincinnati company has been sharpening focus on the core retail business. It’s accelerating new store openings while closing underperforming ones. Improving e-commerce profitability is another priority, as Kroger works to reduce wait times and move online orders faster. Kroger said in August that it would lay off nearly 1,000 corporate employees to cut costs.
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While Kroger has less exposure to tariffs than competitors selling clothes and other general merchandise, the retailer is diversifying sourcing and discontinuing some items in response. The grocer is also emphasizing value, offering promotions, lowering prices and expanding store brands that continue to grow faster than national names. Still, competition has been growing as Walmart Inc. offers more food discounts and Amazon.com Inc. plans to expand grocery delivery offerings.
Walmart ranks No. 1 and Amazon ranks No. 15 on the TT100 private carriers list.
Food inflation has stayed in the low single digits, with prices at restaurants rising at a faster pace than those at grocery stores. Overall inflation is also expected to rise further later this year as retailers replenish inventory and levies start trickling down to consumers.
