The Kroger Co. posted another year of record performance in 2021, chairman and CEO Rodney McMullen said March 3, as the Cincinnati-based grocer announced it had ended fiscal 2021 with total company sales (including fuel) up more than 4% to $137.9 billion for the year.
In the fiscal fourth quarter ending Jan. 29, Kroger saw comparable sales, excluding fuel, rise 4% vs. the year-ago period—an acceleration from the 3.1% year-over-year comp growth the company recorded in the third quarter of fiscal 2021. On a two-year stack, comp sales were up 14.6%. Digital sales in the fourth quarter were up 105% on a two-year stack.
Gross margin was 22.2% of sales in the fourth quarter, and the company's gross margin rate excluding fuel increased 3 basis points. That stability, amid higher supply-chain costs felt throughout the retail industry, was driven by sourcing strength, according to Kroger.
McMullen attributed fourth-quarter and full-year strong results to Kroger’s strategy of leading with fresh and accelerating digital.
In fourth-quarter 2021, Kroger completed the initial phase of its in-store End-to-End Fresh initiative and finished the conversion of specialty cheese shops under the Murray's Cheese brand in 260 stores. The company also launched a Kroger Floral pilot in partnership with DoorDash in the Houston and Dallas divisions, enabling fresh floral delivery in as little as one-hour; opened its first Kitchen United MIX locations, providing customers the opportunity to enjoy made-to-order restaurant meals from a variety of participating restaurants; and launched 72 new Our Brands items, many in support of providing easy food-at-home meal solutions, including Kroger’s Simple Truth skillet meals for two and Kroger brand multiserve tray meals.
In the digital arena, Kroger in the fourth quarter opened a customer fulfillment center (CFC) powered by Ocado in Forest Park, Ga., and a cross-dock spoke facility in the Indianapolis area, as well as announced development of CFCs in the Cleveland area, a new geography and North Carolina.
The grocer also announced a cross-dock spoke facility in Oklahoma City, a new geography for the company, and expanded its collaboration with Nuro as it works to redefine the customer experience through the introduction of Nuro's third-generation autonomous delivery vehicle.
“As we look to 2022, we expect the momentum in our business to continue and have confidence in our ability to navigate a rapidly changing operating environment,” McMullen said. “We are leveraging technology, innovation and our competitive moats to build lasting competitive advantages. Our balanced model is allowing us to deliver for shareholders, invest in our associates, continue to provide fresh affordable food to our customers and uplift our communities.”
The company posted earnings per share (EPS) for fiscal 2021 of $2.17, with adjusted EPS at $3.68. In the fourth quarter, EPS was 75 cents and adjusted EPS was 91 cents.
For 2022, Kroger expects identical sales without fuel will increase 2% to 3% and adjusted net earnings per share to grow between $3.75 to $3.85, CFO Gary Millerchip said in the company's news release. “This guidance contemplates continued investments in our associates and customers, balanced with cost savings and growth in alternative profits,” he said.