Kroger Forecasts Drop In Sales As Pandemic-Led Demand Tempers
Kroger Co signalled a bigger-than-expected slowdown in sales of groceries this year as a pandemic-fuelled demand that helped it top expectations for fourth-quarter results tempers.
The company, however, forecast full-year earnings above estimates, as it undertakes cost-saving initiatives in its sourcing, equipment purchases and supply chain, sending shares up about 1% in premarket trade.
Kroger's sales surged last year as stuck-at-home consumers rushed in droves to the websites and apps of big national grocery chains to stock up on food and household essentials.
Analysts expect that sales growth would be difficult to replicate this year as the rollout of COVID-19 vaccines promises a return to relative normalcy, removing the need to hoard supplies.
Kroger expects adjusted full-year same-store sales to fall 3% to 5%, more than analysts' estimates of a 2.5% decline.
The supermarket chain forecast full-year profit per share between $2.75 and $2.95, above analysts' estimates of $2.69.
Same-store sales, excluding fuel, rose 10.6% in the fourth quarter, beating the Refinitiv IBES estimate of a 9.4% rise.
Kroger reported a net attributable loss of $77 million in the fourth quarter compared to a profit of $327 million a year earlier, as it recorded a previously announced near $1 billion charge related to its withdrawal from a union pension fund.
Excluding one-time items, Kroger earned 81 cents per share, beating estimates of 69 cents per share.
Commenting on the company's performance, CEO and chairman, Rodney McMullen, said, "Kroger continued to grow market share during the quarter. Our ability to meet our customers' evolving needs is a testament to our deep competitive moats, disciplined investments in our increasingly robust digital capabilities, as well as our associates' relentless focus on our customers.
"We finished fiscal year 2020 with strong sales and earnings, as heightened demand for fresh, convenient food and meal solutions across modalities, including in store, pick up and home delivery, continued throughout the fourth quarter."