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The Kroger Co. (KR - Free Report) reported second-quarter fiscal 2024 results, with sales falling short of the Zacks Consensus Estimate and earnings beating the same. Although revenues grew year over year, earnings declined compared to the same period last year. Decent sales performance in the first two quarters gave management confidence to lift the lower end of the full-year identical sales without fuel view by 50 basis points.
Kroger's well-defined customer segmentation strategy, emphasis on value and focus on its 'Our Brands' portfolio have enabled it to maintain a competitive position. The company remains committed to its core strengths, which include offering an array of fresh products, providing personalized shopping experiences and fostering a seamless digital ecosystem. These initiatives are all aimed at sustaining Kroger's positive momentum and continued growth.
Analyzing Kroger’s Q2 Outcome
Kroger reported adjusted earnings of 93 cents a share, which came a penny ahead of the Zacks Consensus Estimate but declined from 96 cents reported in the same quarter last year.
Total sales of $33,912 million came below the Zacks Consensus Estimate of $34,069 million but improved from $33,853 million reported in the year-ago period. We note that identical sales without fuel rose 1.2%. Digital sales grew 11% during the quarter under discussion.
We note that the gross margin was 22.6% of sales. The FIFO gross margin rate, excluding fuel, expanded 42 basis points compared to the same period last year. The adjusted FIFO operating profit came in at $984 million, down from $989 million reported in the year-ago period.
Kroger ended the quarter with cash of $233 million, total debt of $12,230 million and shareowners’ equity of $12,512 million. Net total debt decreased by $957 million over the last four quarters.
The company guided capital expenditures in the band of $3.6-$3.8 billion and expects to generate adjusted free cash flow between $2.5 billion and $2.7 billion in fiscal 2024.
Kroger Maintains FY2024 Earnings View
Kroger maintained its fiscal 2024 adjusted earnings guidance of $4.30 to $4.50 per share compared with adjusted earnings of $4.76 reported in fiscal 2023. Management continues to anticipate the adjusted FIFO operating profit in the band of $4.6-$4.8 billion compared with $5 billion reported in fiscal 2023.
However, Kroger now foresees identical sales without fuel to increase between 0.75% and 1.75% in fiscal 2024 compared with its earlier guidance of 0.25% to 1.75% growth.
Shares of this Zacks Rank #3 (Hold) company have risen 1.9% in the past three months compared with the industry’s growth of 17.1%.
Stocks Hogging in the Limelight
The Chefs' Warehouse (CHEF - Free Report) is a premier distributor of specialty food products in the United States, the Middle East and Canada. It currently sports a Zacks Rank #1 (Strong Buy). CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Chefs' current financial-year sales and earnings suggests growth of around 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Sprouts Farmers (SFM - Free Report) , which is engaged in the retailing of fresh, natural and organic food products, currently sports a Zacks Rank #1. SFM has a trailing four-quarter earnings surprise of 12%, on average.
The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings implies growth of around 9.6% and 18.7%, respectively, from the year-ago reported numbers.
Flowers Foods (FLO - Free Report) , one of the largest producers of packaged bakery foods in the United States, currently carries a Zacks Rank #2 (Buy). FLO has a trailing four-quarter earnings surprise of 1.9%, on average.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and earnings calls for growth of around 1% and 4.2%, respectively, from the year-ago reported numbers.
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Kroger Beats Q2 Earnings Estimates, Updates FY24 Identical Sales View
The Kroger Co. (KR - Free Report) reported second-quarter fiscal 2024 results, with sales falling short of the Zacks Consensus Estimate and earnings beating the same. Although revenues grew year over year, earnings declined compared to the same period last year. Decent sales performance in the first two quarters gave management confidence to lift the lower end of the full-year identical sales without fuel view by 50 basis points.
Kroger's well-defined customer segmentation strategy, emphasis on value and focus on its 'Our Brands' portfolio have enabled it to maintain a competitive position. The company remains committed to its core strengths, which include offering an array of fresh products, providing personalized shopping experiences and fostering a seamless digital ecosystem. These initiatives are all aimed at sustaining Kroger's positive momentum and continued growth.
Analyzing Kroger’s Q2 Outcome
Kroger reported adjusted earnings of 93 cents a share, which came a penny ahead of the Zacks Consensus Estimate but declined from 96 cents reported in the same quarter last year.
Total sales of $33,912 million came below the Zacks Consensus Estimate of $34,069 million but improved from $33,853 million reported in the year-ago period. We note that identical sales without fuel rose 1.2%. Digital sales grew 11% during the quarter under discussion.
We note that the gross margin was 22.6% of sales. The FIFO gross margin rate, excluding fuel, expanded 42 basis points compared to the same period last year. The adjusted FIFO operating profit came in at $984 million, down from $989 million reported in the year-ago period.
The Kroger Co. Price, Consensus and EPS Surprise
The Kroger Co. price-consensus-eps-surprise-chart | The Kroger Co. Quote
KR’s Financial Snapshot
Kroger ended the quarter with cash of $233 million, total debt of $12,230 million and shareowners’ equity of $12,512 million. Net total debt decreased by $957 million over the last four quarters.
The company guided capital expenditures in the band of $3.6-$3.8 billion and expects to generate adjusted free cash flow between $2.5 billion and $2.7 billion in fiscal 2024.
Kroger Maintains FY2024 Earnings View
Kroger maintained its fiscal 2024 adjusted earnings guidance of $4.30 to $4.50 per share compared with adjusted earnings of $4.76 reported in fiscal 2023. Management continues to anticipate the adjusted FIFO operating profit in the band of $4.6-$4.8 billion compared with $5 billion reported in fiscal 2023.
However, Kroger now foresees identical sales without fuel to increase between 0.75% and 1.75% in fiscal 2024 compared with its earlier guidance of 0.25% to 1.75% growth.
Shares of this Zacks Rank #3 (Hold) company have risen 1.9% in the past three months compared with the industry’s growth of 17.1%.
Stocks Hogging in the Limelight
The Chefs' Warehouse (CHEF - Free Report) is a premier distributor of specialty food products in the United States, the Middle East and Canada. It currently sports a Zacks Rank #1 (Strong Buy). CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Chefs' current financial-year sales and earnings suggests growth of around 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Sprouts Farmers (SFM - Free Report) , which is engaged in the retailing of fresh, natural and organic food products, currently sports a Zacks Rank #1. SFM has a trailing four-quarter earnings surprise of 12%, on average.
The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings implies growth of around 9.6% and 18.7%, respectively, from the year-ago reported numbers.
Flowers Foods (FLO - Free Report) , one of the largest producers of packaged bakery foods in the United States, currently carries a Zacks Rank #2 (Buy). FLO has a trailing four-quarter earnings surprise of 1.9%, on average.
The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and earnings calls for growth of around 1% and 4.2%, respectively, from the year-ago reported numbers.