Kroger Results Disappoint, Especially Compared to Walmart and Target
(Bloomberg) -- Kroger Co. tumbled the most in six months after the supermarket chain missed analysts’ sales estimates and margins continued to narrow in the company’s fiscal second quarter.
- Kroger’s lackluster results contrast with rivals Walmart Inc. and Target Corp., who raised their 2018 expectations.
- Comparable-store sales rose 1.6 percent when excluding gasoline sales. That’s below the estimate of 1.8 percent from Consensus Metrix.
- A strong consumer environment has put wind at retailers’ backs, with Target and Dollar General CEOs both saying conditions are the best they’ve seen in more than a decade. As a result, investors have punished companies that haven’t been able to take advantage of the favorable climate.
- Kroger’s online sales rose more than 50 percent. The company has expanded home-delivery and curbside pickup options, while also inking deals with meal-kit maker Home Chef and U.K. online grocer Ocado. The idea is to bolster its defenses against Amazon.com Inc. and other rivals.
- Kroger’s investments have weighed on profitability, and its gross margins continued to contract.
- Grocery chains have been pressured by relentless competition -- especially as German discounters Aldi and Lidl expand in the U.S.
- Kroger shares fell as much as 10 percent, the biggest intraday drop since March 8, and were down 9.5 percent to $28.71 at 9:41 a.m. in New York. The stock gained 16 percent this year through Wednesday’s close.
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