Kroger upbeat for 2022 as grocery demand, online deliveries power sales

Kroger’s delivery vans double as a billboard. The company is using them to get out the word that it’s now offering grocery deliveries in Florida.

Melissa Repko

Kroger forecast annual same-store sales and profit above market expectations on Thursday, encouraged by strong demand for its pick-up and delivery services and sustained home-cooking trends.

Shares in the Ohio-based grocer, which also topped estimates for quarterly results, rose nearly 6% in premarket trading.

Despite the reopening of restaurants and bars, Americans have stuck to cooking more at home as they did during lockdowns, due in part to hybrid-work trends, boosting sales at grocers.

Shoppers are also increasingly leaning on delivery and pick-up services rather than venturing out to stores, helping Kroger more than double its digital sales in the quarter from pre-pandemic levels.

Kroger has ramped up its online business, from loyalty programs to memberships for unlimited home deliveries, to draw in more customers and retain existing ones.

The retailer has been opening more fulfillment centers across U.S. states to support online orders, aided by its partnership with British supermarket and technology firm Ocado Group.

The company’s reliance on automation and robotics has also helped shave costs when margins across the retail industry are being hammered by inflation, helping Kroger increase adjusted gross margin rate by 3 basis points from last year.

The company said it expects adjusted same-store sales to rise 2% to 3% in fiscal year 2022, compared with analysts’ average estimate of a 2.1% increase, according to IBES data from Refinitiv.

Kroger, which operates nearly 2,800 stores across the United States, said it expects adjusted earnings per share between $3.75 and $3.85 for the year, well above estimates of $3.45.

Same-store sales, excluding fuel, climbed 4% in the fourth quarter ended Jan. 29, topping expectations for a 2.84% rise, while adjusted profit of 91 cents also surpassed expectations.

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