The Kroger Co. enjoyed a healthy fourth quarter and fiscal 2017, matching the expectations of the Cincinnati-based grocery giant.
During Q4, which ended Feb. 3, sales rose 12.4 percent to $31 billion, compared with $27.6 billion during the same period prior, with identical-store sales rising 1.5 percent during the period, which Kroger CFO Mike Schlotman said the company is “very pleased with.”
“Several departments outperformed the company in the fourth quarter, including produce, deli/fresh prepared, meat and seafood,” he noted. “Our natural foods department continued to generate strong double-digit growth in both the fourth quarter and the full year. Eighteen of our 22 supermarket operating divisions have positive IDs for the year as well, demonstrating the consistency of our results across the enterprise.”
Q4 earnings were $854 million, compared with $506 million during the same period a year prior.
In fiscal 2017, Kroger’s total sales grew $6.4 percent to $122.7 billion in 2017, compared with $115.3 billion in 2016. Earnings were $1.9 billion, or $2.09 per diluted share, compared with $2 billion, or $2.05 per diluted share, the year prior.
During Q4, Kroger continued work on its Restock Kroger program, achieving several new milestones in its commitment to the four pillars: Redefine the Grocery Customer Experience, Partner for Customer Value, Develop Talent and Live Kroger’s Purpose.
- For the first pillar, the company achieved $16.7 billion in annual natural and organic sales, including $2 billion in sales of Simple Truth private label items. It also opened the Kroger Culinary Innovation Center in downtown Cincinnati, brought the ClickList click-and-collect service to its 1,000th store, and hosted its second Natural Foods Innovation Summit.
- For the second, it announced an agreement to sell its convenience store business to EG Group for $2.15 billion. It also revealed its intention to expand the Scan, Bag, Go cashierless service to 400 stores and establish a digital-wallet partnership with Chase Pay.
- For the third, it created 10,000 new supermarket jobs, and also ratified a labor agreement with the International Brotherhood of Teamsters to protect pensions.
- For the fourth, it added a new waste-to-energy system at its Greensburg, Ind., manufacturing plant. Moreover, it partnered with ReFED for the Zero Hunger | Zero Waste $10 million innovation fund and joined the Sustainable Packaging Coalition.
"We launched Restock Kroger in the fall of 2017 and finished the year with positive momentum in our sales and overall business,” said Kroger Chairman and CEO Rodney McMullen. “Customers are letting us know that they see, feel and appreciate our efforts to redefine the customer experience – and they are rewarding us with growing loyalty. This is the cycle that creates long-term value for shareholders."
Continued McMullen: "The Tax Cuts and Jobs Act is a catalyst that is enabling us to accelerate investments in Restock Kroger. We are taking a balanced approach to ensure tax reform benefits our associates, customers and shareholders. What we've previously said is that sharing the benefits with our associates and customers will create a more sustainable and stronger business model for the future. This balanced approach is also consistent with our values and Kroger's purpose: to feed the human spirit.”
For 2018, Kroger is targeting identical comps growth of 1.5 percent to 2 percent, excluding fuel. Additionally, it anticipates net earnings to range from $1.95 to $2.15 per diluted share, as well as capital investments – excluding mergers, acquisitions and purchases of leased facilities – to be approximately $3 billion.