Here’s What Drove Kroger Stock in the 2nd Half of 2017



Kroger stock in the 2nd half of the year

As we saw in the previous part of this series, Kroger (KR) has faced challenges since the beginning of 2017. The stock closely reflected those challenges. Now let’s see what the key drivers of Kroger stock were in the second half of the year.

August 2017 was another bad month for Kroger. The stock fell 11% after Amazon (AMZN) started cutting prices at Whole Foods Market.

In September 2017, Kroger once again posted in-line earnings and a better-than-expected top line. Sales comps (comparables) returned to positive territory after two weak quarters.

However, investors looked beyond the beat. Management’s decision to withdraw its long-term guidance forced investors to wonder about Kroger’s long-term prospects. The stock fell 7.5% after its 2Q17 results on September 8, 2017. The company’s YTD (year-to-date) losses were 42% at the end of September.

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Kroger closed 2017 on a positive note

November and December, however, changed the fortunes of many retail stocks. The pessimism for retail seemed to disappear, and most retail stocks bounced back. It came on the back of a strong holiday season, better-than-expected results, and expected benefits from the proposed tax reform bill.

Kroger also made a comeback with strong 3Q17 results on November 30, 2017. It surpassed its top and bottom line expectations, which were driven by better-than-expected sales comps and gross margin improvements.

In fact, Kroger’s 3Q17 results were followed by one of its best days in the stock market. KR stock rose 13.6% on November 30, 2017, before finally settling at a 6% gain.

Kroger stock rose 33% during the last two months of 2017. The company closed 2017 with a year-to-date loss of 20.5%. Even so, the performance of Kroger stock is far inferior to its peers. Retail giant Walmart (WMT) rose 43% in 2017. Smaller, natural organic chain Sprouts Farmers Market (SFM) rose 29%.

In the next part, we’ll see how Kroger’s ratings changed in 2017.


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