Retail Giant Kroger Trims Identical Sales Outlook As Consumer Spending Tightens: Details

Kroger Company KR reported a third-quarter FY23 sales decline of 0.7% year-on-year to $33.96 billion, marginally beating the analyst consensus estimate of $33.92 billion.

Identical Sales without fuel decreased by 0.6%. Adjusted EPS of $0.95 beat the consensus estimate of $0.91.

Gross margin was 22%, and the FIFO gross margin rate, excluding fuel, increased by 3 basis points Y/Y.

Operating, general and administrative expenses rose 1.1% Y/Y to $5.65 billion. Operating margin expanded from 2.5% to 2.7%, and operating income for the quarter rose 8.4% to $912 million.

Kroger held $1.725 billion in cash and temporary cash investments as of November 4, 2023. Operating cash flow year-to-date totaled $4.86 billion. The company had a net total debt of $11.3 billion as of November 4, 2023.

"Kroger's third quarter results highlight the strength and diversity of our business model in a challenged operating environment, as strong fuel performance and growth in our alternative profit businesses supported continued adjusted net earnings per diluted share growth," said Chairman and CEO Rodney McMullen.

Outlook: Kroger raised the lower end of its full-year adjusted EPS guidance, revising the range from $4.45-$4.60 to $4.50-$4.60 versus an estimate of $4.53.

Reflecting the impact of near-term economic pressures and food-at-home disinflation, KR now expects full-year identical sales without fuel to be 0.6%- 1.0% (prior view 1.0% – 2.0%).

Price Action: KR shares are trading higher by 1.99% at $44.51 on the last check Thursday.

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