Kroger Beats Earnings Estimates for the 10th Straight Quarter



Earnings overview

Cincinnati-based grocer Kroger (KR) reported its financial results for fiscal 1Q17 on June 16, 2016. The company beat its earnings estimates for the tenth straight quarter, reporting earnings of 70 cents per share, as compared to consensus estimates of 69 cents. This represents a 12.9% YoY (year-over-year) earnings growth for the company.

At the top line, however, the company did not meet its fiscal 1Q17 expectations and missed the consensus by $102 million, mainly on account of weakness in fuel prices. Total revenues stood at $34.6 billion, which means a growth of 4.7% YoY. Fuel sales aside, total sales were up by 7.8% YoY.

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About Kroger

Founded in 1883, The Kroger Company (KR), is the largest US supermarket operator and one of the world’s largest grocery retailers, surpassed only by Wal-Mart Stores (WMT), or Walmart, in grocery sales. The company operated more than 2,700 supermarket stores, 784 convenience stores, and 323 fine jewelry stores in 34 states in the US as of January 31, 2016.

Supermarkets are the largest revenue contributor for the company and accounted for 93% of the company’s total revenue in fiscal 2016. Walmart is Kroger’s biggest competitor and operates more than 4,400 stores in the US alone. Kroger’s other competitors are relatively smaller in size and operate fewer stores. Whole Foods Market (WFM) operates around 430 stores, while Sprouts Farmers Market (SFM) operates 217.

Kroger is a component of the S&P 500 Index and the S&P 500 Food & Staples Retail Index. It constitutes 2.5% of the Guggenheim S&P 500 Equal Weight Consumer Staples ETF (RHS) and 2.1% of the SPDR Consumer Staples Select Sector ETF (XLP).

In this series

In this series, you’ll get an earnings overview of Kroger’s fiscal 1Q17 results. We’ll evaluate the company’s financial performance as compared to the previous quarters, look at key revenue drivers, and explore the company’s initiatives and profit boosting strategies for fiscal 2017.

At the end of this series, we’ll examine Kroger’s stock market performance and compare its valuations with supermarket peers like Whole Foods, Sprouts Farmers Market, and SUPERVALU (SVU).

Let’s start with revenue and same-store sales comparisons.


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