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Kroger Failed to Impress, Fell 8% on Sales Miss

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Snapshot

Cincinnati-based Kroger (KR) reported its results for 4Q16 and fiscal 2016 on March 3, 2016. The quarter ended on December 31, 2015. Kroger’s stock price fell 8% after the results. It reported weaker-than-expected fiscal 4Q16 sales due to lower fuel prices. It also reported weaker same-store guidance for fiscal 2017. However, the current quarter was the ninth straight quarter with a positive earnings surprise for the company. For fiscal 2017, the core business is expected to grow the earnings per share by 8%–11% as expected earlier—excluding the impact of Roundy’s integration costs.

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Kroger’s 4Q16 result highlights

  • It achieved the 49th consecutive quarter of positive identical supermarket sales growth—excluding fuel
  • Total sales rose 3.8% YoY (year-over-year) to $26.1 billion
  • Sales, excluding fuel, rose 6.5% YoY
  • Net adjusted earnings stood at $559 million or $0.57 per diluted share

About Kroger

Kroger is the largest supermarket chain in the US. It’s one of the world’s largest grocery retailers. It’s only surpassed by Walmart (WMT). The company operates more than 2,700 supermarket stores, 786 convenience stores, and 326 fine jewelry stores across 35 states. It’s part of the S&P 500 Index and the S&P 500 Food & Staples Retail Index. It has a weight of 1.2% in the SPDR S&P Retail ETF (XRT), 0.2% in the SPDR S&P 500 ETF (SPY), and 2.3% in the SPDR Consumer Staples Select Sector ETF (XLP).

Kroger’s peers include Whole Foods Market (WFM), Sprouts Farmers Market (SFM), The Fresh Market (TFM), and SUPERVALU (SVU) as we discuss throughout this series.

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