The grocery store operator reported identical sales (ex-fuel) were up 6.2% for the quarter to top the consensus expectation of +5.2%.
Gross margin came in at 21.8% of sales for the quarter. The FIFO gross margin rate (ex-fuel) decreased 1 basis point compared to the same period last year. The Cincinnati-based company said the result reflected Kroger's (KR) ability to effectively manage higher product cost inflation through strong sourcing practices and lower supply chain costs, while maintaining competitive pricing and helping customers manage their budgets.
On the capital allocation front, Kroger (KR) expects to continue to pay its quarterly dividend and expects the payout to increase over time, subject to board approval. Of note, Kroger (KR) has paused its share repurchase program to prioritize de-leveraging following the proposed merger with Albertsons Companies (ACI).
Looking ahead, Kroger (KR) sees full-year identical-store sales growth of +1% to +2% vs. +2.6% consensus and adjusted EPS of $4.45 to $4.60 vs. $4.17 consensus. Full-year capex spending of $3.4B to $3.6B is anticipated vs. $3.6B consensus.
Read more details from the Kroger Q4 earnings report.