Kroger raises sales forecast as grocery demand stays inflation resistant

1 min read
A screen displays the company logo for Kroger Co on the floor of the NYSE in New York

By Uday Sampath Kumar

(Reuters) – Kroger Co raised its annual same-store sales and profit forecasts on Thursday, boosted by steady demand for groceries and household essentials, and as it kept prices relatively cheaper than rivals.

Kroger, like Walmart Inc, has been successful in using its scale and large store network to negotiate lower prices with suppliers, helping it pull in more inflation-weary customers to its stores.

“The larger food retailers out there like Walmart, Target and Kroger are gaining market share at the expense of smaller independent and specialty grocers” CFRA Research analyst Arun Sundaram said.

Kroger forecast fiscal 2022 adjusted same-store sales growth of 5.1% to 5.3%, compared with a 4% to 4.5% rise previously. It lifted its annual earnings per share forecast to between $4.05 and $4.15 from $3.95 to $4.05.

In comparison, discount store chain Dollar General Corp , which stocks more imported discretionary merchandise, cut its profit forecast on Thursday due to high transportation costs.

Related News:   Hasbro to cut 15% of workforce in 2023, estimates dour holiday quarter

Shares of Kroger, which is in the process of buying smaller rival Albertsons Cos Inc in a $25 billion deal, rose 3.6% premarket after the company also beat same-store sales estimates in the third quarter.

Kroger’s blowout quarterly results and forecast are not expected to add to anti-competition concerns regulators have regarding the company’s Albertsons acquisition, according to Sundaram.

“Politicians will use the quarterly results as more ammo to push back on the merger, but the topics the FTC (U.S. Federal Trade Commission) is looking at are more to do with grocery market share and store divestment, rather than Kroger’s top and bottom line this quarter,” Sundaram said.

Kroger’s same-store sales, excluding fuel, climbed 6.9% in the third quarter ended Nov. 5, beating estimates of 4.5%, according to Refinitiv IBES data.

(Reporting by Uday Sampath in Bengaluru; Editing by Shinjini Ganguli)

tagreuters.com2022binary_LYNXMPEIB01VC-BASEIMAGE