Kroger beats earnings estimates, raises outlook

Jun. 16, 2022 8:38 AM ETThe Kroger Co. (KR)By: Kevin P. Curran, SA News Editor1 Comment

Kroger Supermarket Signage

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Kroger (NYSE:KR) could not court confidence in its optimistic outlook after reporting strong earnings on Thursday morning.

The Cincinnati-based grocery chain reported non-GAAP EPS of $1.45 for the first quarter, alongside revenue of $44.6B. Those figures beat expectations by $0.17 and $1.5B, respectively. Management highlighted strong trends in digital and fresh produce that drove top line trends, while pricing power and supply chain improvements bolstered the bottom line amid inflation impacts.

“Our team is doing an outstanding job managing costs in an inflationary environment, which is allowing us to continue to invest in our associates while providing our customers the freshest food at affordable prices when and where they need it,” CEO Rodney McMullen said. "Looking ahead, we are well positioned to continue delivering for our customers, investing in our associates, and driving sustainable returns for shareholders."

As such, adjusted EPS estimates were raised to a range of $3.85 to $3.95 from $3.75 to $3.85 for the full year, rising above analyst consensus which stood at $3.82. Same store sales growth expectations ex-fuel were also raised to a range of 2.5% to 3.5% from 2.0% to 3.0% against analyst expectations set at 3.2%.

Nonetheless, Kroger (KR) shares fell more than 5% in Thursday’s pre-market trading as macroeconomic concerns stoke a broad-based downturn for stocks.

Continued increases in inflation, especially in fuel, foment fears on consumer strength which flowed through to much of the consumer sector as of late. For Kroger (KR) gross margin contracted in the first quarter excluding fuel impacts as “continued strategic price investments” could not entirely offset higher supply chain costs. These impacts are anticipated to persist through the balance of the year.

Read more on the key details of the release.

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