Kroger Holds Serve With Solid Sales Fueled by Its Own Brands

Written by
Matthew Boyle
Written by

Matthew Boyle

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(Bloomberg) -- Kroger Co. posted solid results with profit that slightly beat estimates while maintaining its guidance for the current year, displaying resilience in the face of fierce competition from Walmart Inc. and Amazon.com Inc.

Fourth-quarter comparable sales excluding fuel, a key metric, rose 2%, in line with analysts' expectations. The supermarket chain also maintained its profit and sales outlook for the current fiscal year.

Key Insights

Kroger, the nation's biggest traditional supermarket chain, bucked the trend of big retailers who have posted lackluster sales over the critical holiday period. Sales were fueled by Kroger's private-label foods and by expanded online pickup and delivery options. Walmart, Target Corp. and Dollar Tree Inc. have all disappointed investors in recent weeks, for reasons ranging from a compressed holiday-sales season to a lack of must-have items.
The company plans to close 35 of its almost 2,800 stores in 2020, and recognized an impairment charge in the fourth quarter related to that plan. More details should come on its analyst call at 10 a.m.
The grocer said its 2020 guidance, given late last year, does not include any potential impact from the coronavirus.
Kroger's digital sales rose 22%, a slight acceleration from the third quarter's pace. It also boosted gross margins in the quarter thanks to improvements in sourcing goods, which offset headwinds from its pharmacy business.