Kroger sees sales skyrocket as pandemic drives at-home food consumption

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Kroger’s sales in 2020 were $ 132.5 billion, compared to sales of $ 122.3 billion the previous year, which grew more than 8% due to changes in food consumption during the pandemic.

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Kroger sees sales skyrocket as pandemic drives at-home food consumption 1

“In addition to changing the way we work, COVID-19 has also changed the way Kroger customers enjoy food,” Kroger CEO Rodney McMullen said in a conference call Thursday. “We still see people eating and working more at home, putting health and hygiene first. We think these trends will continue, even with restrictions on relaxation and vaccine distribution.”

Total sales of non-fuel supermarkets in Cincinnati increased 14.2% in 2020. Kroger also reported annual earnings of $ 2.8 billion, which was boosted by results related to the rising popularity due to sidewalk pickups and door-to-door deliveries.

Kroger sees sales skyrocket as pandemic drives at-home food consumption 2

McMullen said more and more customers are participating in McMullen’s so-called “seamless ecosystem”, which has led to a 118% increase in digital sales, including a 249% increase in revenue in the quarter.

“When customers use our method in-store and online at the same time, our retention rate in the ecosystem has reached 98%, underscoring our strict commitment to customers,” he said.

Despite the launch of the COVID vaccine, there are doubts about the direction of the household food market, but the company remains optimistic.

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“Our knowledge shows that many changes have occurred in consumers during the pandemic. These changes will prove to be more structured and sustainable. Combined with robust execution and our flexible financial model, we are confident that we will be Kellogg’s senior vice president and chief financial officer, ”said officer Gary Millership (Gary) Melchip during the conference call.

Miller Kibb said Kroger expects sales to decline 3-5% this year.

Last year’s increase in sales and profits also prompted the company to update its average hourly wages for its employees to $ 15.50, compared to $ 15 last year. Millerchip said that given the overall benefits, their average hourly wages are more than $ 20.

Kroger said it invested $ 300 million last year to increase regular wages for its employees. Miller Chip said he expects to add $ 350 million to the average continuous hourly wage growth for his employees this year.

Also this week, Kroger announced a loss of $ 77 million for the fourth fiscal quarter ending January 30, after reporting profits for the same period last year.

The company said it was losing 10 cents a share. Earnings per share adjusted for one-off costs were 81 cents.

The result exceeded Wall Street’s expectations. The average estimate of eight analysts polled by Zacks Investment Research is 69 cents per share.

The supermarket chain’s revenue was $ 30.74 billion, lower than Wall Street’s forecast. The five analysts polled by Zacks expect it to be $ 31.01 billion.

For the full year, the company reported earnings of $ 2.59 billion, or earnings per share of $ 3.27. Sales were reported at $ 132.5 billion.

Kroger predicts earnings per share for the full year will be between $ 2.75 and $ 2.95.

Since the beginning of the year, the price of the Kroger stock is up about 5%, while the S&P 500 is up about 2%. In the past 12 months, the stock has risen 13%.

McMullan said in a statement that Kroger continued to increase its market share during the quarter.

“Our ability to meet the evolving needs of our customers is testament to our strong competitive advantage, rigorous investment in our increasingly powerful digital capabilities and our employees’ constant focus on customers,” he said. Demand for ready meals and complete meal solutions (including in-store and door-to-door deliveries) continued to grow and our sales and revenues were strong and lasted into the fourth quarter. ”

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