Kroger's Transformation Moves Lead to Dip in Q3 Sales
Big moves to transform its business and deliver on its Restock Kroger strategy left the Kroger Co. with a sales decline in the third quarter of its fiscal 2018.
During the period, which ended Nov. 10, total sales declined 0.3 percent compared with the same period last year, hitting $27.7 billion. This was affected by fuel sales, the divestiture of Kroger's convenience store business, and its purchase of Home Chef – without those, total sales actually grew 1.7 percent in Q3.
One significant highlight of the grocery giant's performance in Q3 lies in its ecommerce sector. The company reported more than 60 percent growth in digital sales; it reported a digital sales rise of more than 50 percent during Q2.
"Kroger is transforming our business model," said Rodney McMullen, Kroger chairman and CEO. "We're moving from a traditional grocer to a growth company with both a strong customer ecosystem that offers anything, anytime, anywhere, and asset-light, high-margin alternative partnerships and services. Restock Kroger is the blueprint for this transformation."
McMullen added that Kroger is strengthening its ecosystem by reducing costs and investing in savings in its associates, technology and price to grow units, traffic and share.
"Leveraging our store, logistics and data assets in turn creates incremental new profit streams, which then further redefines the customer experience," he noted. "In this way, our new growth model will be a virtuous cycle. We are doing all of this and remain committed to delivering on our 2020 Restock Kroger financial targets."
Kroger announced continued progress in meeting its Restock Kroger goals during the quarter. Highlights include:
- Double-digit growth in digital households
- Record private label unit and sales growth
- The introduction of Dip apparel in 300 stores nationwide
- Hosting the fourth Natural Foods Innovation Summit
- Launch of an exploratory partnership with Walgreens
- The introduction of Geoffrey's Toy Box to 600 stores for the holiday season
- Hiring 10,000 for the holiday season
- Ratification of a new labor contract that raises wages in the Columbus division
- A No. 6 ranking on Fortune's Change the World 2018 list for the Zero Hunger | Zero Waste social impact plan
- Ranking on the Dow Jones Sustainability Index for the sixth consecutive year
- Hosting drug take-back events at 200 stores across 27 states
The Kroger Co. operates a seamless digital shopping experience and 2,800 retail food stores under a variety of banner names nationwide. The Cincinnati-based company is No. 2 on Progressive Grocer's 2018 Super 50 list of the top grocers in the United States. It was also named Progressive Grocer's 2018 Retailer of the Year.