Kroger Reports Sales Dip in Q4, FY18

Kroger took a hit for both quarter four and its overall fiscal 2018, reporting sales declines due to big investments made by the Cincinnati-based grocer.

Kroger's 9.5 percent decline in sales during the quarter – $28.1 billion compared to $31 billion for the same period a year prior – was the result of fuel sales, the 53rd week of fiscal 2017, the divestiture of the grocer's convenience-store business unit, and the merger with Home Chef. Not counting those, total sales grew 1.6 percent during the quarter compared to Q4 2017.

Gross margin was 22 percent of sales for Q4. Excluding fuel, the 53rd week and the LIFO credit, gross margin dropped 93 basis points from the same period a year prior due to changes in mix and investments in supply chain, as well as investments in price.

The fiscal year altogether, however, was referred to as one for investing by McMullen in his statement on performance for the quarter and the year.

"Kroger solidly delivered on what we set out to do in 2018, which was … [to lay] the groundwork for us to achieve our 2020 Restock Kroger targets including financials," he stated. "We reached our FIFO operating profit goal and finished the year with sales and business momentum. We have a clear path to achieve $400 million in incremental FIFO operating profit growth and $6.5 billion in cumulative Restock cash flow by the end of 2020."

Continued McMullen: "As America's grocer, Kroger has the winning combination of local presence plus a digital ecosystem enhanced by strategic partnerships enabling us to offer our customers anything, anytime, anywhere. We are transforming from grocer to growth company by deploying our assets to serve even more customers and create margin-rich alternative profit streams. We are well positioned to deliver on our Restock Kroger vision to serve America through food inspiration and uplift."

For the full year, total sales decreased 1.2 percent to $121.2 billion in 2018 compared to $122.7 billion in 2017. Excluding fuel, the 53rd week, the c-store business divestiture and the Home Chef merger, total sales grew 2 percent in 2018 compared to 2017.

Ecommerce sales grew 58 percent during the period. The grocer also expanded its reach for both click-and-collect and delivery, officially able to serve 91 percent of Kroger household by the year's end.

Moreover, private label achieved its best year ever, reaching 30.5 percent unit share in Q4.

For fiscal 2019, Kroger is expecting comparable sales growth, excluding fuel, to range from 2 percent to 2.25 percent.

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.