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Are Kroger’s Sales Slowing in Fiscal 2016?

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Dec. 4 2020, Updated 10:53 a.m. ET

Fiscal 2016 results

For fiscal 2016, Kroger (KR) reported total sales of $109.8 billion. It registered a 1.3% increase from the previous year. This is the slowest sales growth that the company has seen since fiscal 2010. Sales, excluding fuel, increased 6% YoY (year-over-year) during the year. Excluding Roundy’s, the total sales increase was around 5.5%. The company reported same-store sales of 5%, excluding fuel, during the year—compared to 5.4% in the last fiscal year.

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What continued to boost sales?

The contribution of corporate brands to the company’s total sales improved during the year. While corporate brands represented 27% of the total units sold and 26% of the dollar sales—excluding fuel and pharmacy—in 2015, the contribution increased to ~29% of the total units sold and 26.2% of the dollar sales in fiscal 2016. Natural and organic food products continued to drive the company’s sales during the year. The company’s Simple Truth line, in particular, had an impressive performance. It reached $1.5 billion in revenue for the year. The company will get another push for its organic product line if the rumored deal between Kroger and The Fresh Market (TFM) materializes. Investors looking for exposure to Kroger through ETFs can invest in the Vanguard Consumer Staples ETF (VDC). The company accounts for 1.9 % of VDC.

Kroger beat analysts’ consensus EPS estimate

Kroger was ahead of Wall Street analysts’ consensus estimate on earnings for the seventh straight year—it might not be true for all of the quarters though. It reported EPS (earnings per share) of $2.06. It beat analysts’ consensus estimate by $0.01 per share. During the earnings release, Kroger’s chairman and CEO, Rodney McMullen, commented that “2015 was an outstanding year for Kroger. We delivered on our performance targets, grew market share, created 9,000 new jobs, supported our communities, and continued to expand our use of technology to drive growth. And we’re not done. In 2016, we will continue making a difference for our customers and associates, growing our business, and delivering value for shareholders.”

Recent earnings update for peers

Whole Foods (WFM) and Sprouts Farmers Market (SFM) reported their results in February. Sprouts Farmers Market registered a 7.8% increase in its same-store sales for 4Q16 and a 5.8% increase for the fiscal year. It registered a sales increase of 21% YoY for the fiscal year. It reported an adjusted EPS of $0.86.

Whole Foods reported a 1.8% decline in same-store sales in its last reported quarter. The company’s performance was better than analysts’ estimates. The company reported an EPS of $0.46. It beat analysts’ earnings estimates by $0.06.

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