Evaluating Kroger’s top line performance
Despite ongoing deflationary headwinds and competitive challenges in the food retail sector (XRT), Kroger (KR) posted three strong quarters in fiscal 2017. Its top line rose ~5% in the first nine months of fiscal 2017.
Though its comps growth has slowed, the company has posted 52 consecutive quarters of positive identical supermarket sales growth, excluding fuel. Read more about the reasons behind Kroger’s falling comps in the next article.
How did Kroger perform in 3Q17?
Kroger’s fiscal 3Q17 sales stood at $26.6 billion, a rise of 5.9% over the same quarter last year. The company outperformed Wall Street’s expectations of a 5.4% YoY (year-over-year) rise in its top line.
As in the last several quarters, Kroger’s fiscal 3Q17 sales were negatively impacted by falling fuel prices. If it weren’t for the weakness in gasoline prices, Kroger’s top line likely would have expanded 7.1% YoY.
The company’s organic and natural food sales continued to outperform its other categories. Its Simple Truth product line recorded double-digit growth once again.
Expected performances in fiscals 4Q17 and 2017
Wall Street analysts are predicting a 4.3% YoY rise in Kroger’s fiscal 4Q17 top line to $27.3 billion. For fiscal 2017, its total sales are expected to rise 4.8% to $115 billion.
How have Kroger’s competitors fared recently?
Kroger’s closest competitor, Walmart (WMT), reported its fiscal 4Q17 and fiscal 2017 results on February 21, 2017. The company reported 1% and 0.8% rises in its quarterly and annual top lines, but it missed analysts’ consensus estimates for the fourth quarter.
Whole Foods (WFM), which reported its quarterly results on February 8, 2017, reported a 1.9% YoY rise in its total sales. The company also missed analysts’ consensus estimate for sales.