The Kroger Co. said it gained market share and profits in its fiscal second quarter behind a sales lift of 8.2% and non-fuel comps of 14.6%, powered by a continuation of pandemic-fueled home food consumption and digital sales growth of 127%.
For the period, which ended Aug. 15, the Cincinnati-based retailer reported sales of $30.5 billion and adjusted earnings per share (EPS) of 73 cents, both figures exceeding consensus estimates. The company subsequently provided updated guidance for its fiscal year, calling for same-store sales growth of no less than 13% and achieving adjusted EPS growth of approximately 45% to 50%. Kroger also said the events would likely lead to exceeding shareholder return targets in 2021 that were outlined as part of a strategic plan last year.
“Customers are at the center of everything we do and, as a result, we are growing market share,” CEO Rodney McMullen said in a statement. “Kroger’s strong digital business is a key contributor to this growth, as the investments made to expand our digital ecosystem are resonating with customers. Our results continue to show that Kroger is a trusted brand, and our customers choose to shop with us because they value the product quality and freshness, convenience and digital offerings that we provide.
“We delivered extremely strong results in the second quarter and expect to deliver consistently attractive total shareholder returns,” he continued. “We are more certain than ever that the strategic choices and investments made through Restock Kroger to execute against our competitive moats—Fresh, Our Brands, Personalization and Seamless—have positioned Kroger to meet the moment, especially as customers are rediscovering their passion for food at home.”
Kroger posted adjusted FIFO operating profit of $894 million, up 43% compared to prior year. Gross margins as a percent of sales were up 5 basis points to 22.8% of sales, driven by efficiencies, sales leverage and growth in alternative profit streams, partially offset by price investment and mix changes.