Kroger Reports New Growth Strategy in Third Quarter 2019 Results



Kroger Reports New Growth Strategy in Third Quarter 2019 Results



CINCINNATI, OH - Earlier last month, we reported Kroger had undergone a major brand facelift. The grocer claims it was putting a more focused effort on its grocery business, and that the new look was to break through the grocery retail industry’s “sea of sameness.” Well, it looked like it worked. In its Q3 financial results, the grocer reported positive results alongside intriguing news that it plans to part ways with Lucky's Market.

Kroger invested in the upstart natural foods chain Lucky’s Market in 2017, but has since decided to divest its interest in the chain. The retailer said the decision to divest followed a portfolio review. Of the impairment charge, $131 million will go into Kroger's pocket.

Rodney McMullen, Chairman and CEO, Kroger“Kroger's customer obsession and focus on operational excellence continued to generate positive results in the third quarter. Identical sales were the strongest since we started Restock Kroger, and gross margin rate, excluding fuel and pharmacy, improved slightly in the quarter. At the same time, we continued to reduce costs as a percentage of sales,” commented Chairman and CEO Rodney McMullen.

Highlights from the quarterly included:

  • Total company sales were $28.0 billion
  • Alternative profit streams are on track to contribute an incremental $100 million in operating profit in 2019 versus 2018
  • Adjusted EPS of $0.47 which includes a $0.03 out of period charge
  • Achieved Operating Profit of $254 million
  • Adjusted FIFO Operating Profit of $653 million EPS and Operating Profit results affected by several adjustment items, primarily by a non-cash impairment charge related to an investment in Lucky's Market
  • Alternative profit streams on track to contribute an incremental $100 million in operating profit in 2019 versus 2018 confirms identical sales
  • Adjusted FIFO Operating Profit and Adjusted EPS guidance for 2019 and 2020

In its Q3 2019 financial results, Kroger reported positive results alongside intriquing news that it plans to part ways with Lucky's Market

“We are using the power of Kroger's stable and growing supermarket business to create meaningful, incremental operating profit through the alternative profit stream businesses, which adds up to a business built for long-term growth that generates consistently attractive total shareholder returns,” continued McMullen. “Kroger continues to generate strong and durable free cash flow as reflected by the fact that the company has reduced debt by $1.5 billion over the prior four quarters and continues to increase its dividend to create shareholder value.”

One thing is for sure, it looks like Kroger will be starting 2020 on a strong foot.

Restock Kroger is the right framework to reposition our business to create value for all of our stakeholders, both today and in the future,” concluded McMullen.

To see the full results of the financial, click here. Keep following us here at AndNowUKnow as we bring you more updates on retailers.

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