Kroger raises profit estimates after strong third quarter performance
Kroger announced in October it plans to purchase one of its biggest competitors, Albertsons
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Kroger raised annual sales and profit forecasts on Thursday after the company showed a strong third-quarter rally despite record-high inflation for grocery items.
Similar to Walmart, Kroger has provided lower prices on its products through direct negotiations with suppliers that have helped attract a steady base of customers throughout the inflation highs of the third quarter.
The company now projects that same-store sales growth of 5.1% to 5.3%, while prior forecasts indicated a 4%-5% increase. Moreover, annual earnings per share estimates were adjusted to fall between $4.05 to $4.15.
Premarket shares of Kroger rose by 3.6% on Thursday morning as other competitors, such as Dollar General Corp, cut their profit forecast the same day.
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Kroger was able to raise its annual sales and profit forecasts after showing a strong performance in the third quarter of 2022. (iStock / iStock)
"Kroger achieved strong results in the third quarter as we continue to execute our Leading with Fresh and Accelerating with Digital strategy," said the company's CEO Rodney McMullen in a statement. "Our associates are doing an outstanding job delivering a full, fresh and friendly experience across our seamless store and digital ecosystem."
"Kroger's value proposition, which includes providing great quality, fresh products at affordable prices, data-driven promotions, trusted Our Brands products and an industry-leading fuel rewards program, is resonating with shoppers and driving increased customer loyalty," McMullen added.
RETAIL SALES RISE FASTER THAN EXPECTED IN OCTOBER
Total sales made by the company so far this year were $34.2 billion in the third quarter, an increase from $31.9 billion for the same period last year. The gross margin of sales stood at 21.4%, a decline of 5 points compared to last year's report.
In October, Kroger announced it plans to purchase one of its biggest competitors, Albertsons, in a $24.6 billion deal. If the deal ends up being confirmed, one of the two biggest grocers in the country will combine their revenues.