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Kroger Tops Earnings Estimates but Misses on Same-Store Sales

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

Third-quarter performance

Today, Kroger reported its fiscal 2018 third-quarter earnings results for the quarter that ended on November 10. The company posted adjusted EPS of $0.48 on revenue of $27.67 billion, outperforming analysts’ EPS estimate of $0.43 and their revenue estimate of $27.66 billion.

However, the company’s SSSG (same-store sales growth) of 1.6% was slightly lower than analysts’ expectation of 1.7%. The company’s lower-than-expected SSSG and the weakness in the broader equity market appear to have led to the fall in its stock price. Kroger was trading at a fall of ~1.5% in premarket trading hours on December 6.

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Year-over-year growth

Compared to its revenue of $27.75 billion in the third quarter of fiscal 2017, Kroger’s revenue fell 0.3% in the most recent quarter. However, excluding fuel, its convenience store sale, and its merger with Home Chef, the company’s revenue rose 1.7%.

For the quarter, Kroger has posted generally accepted accounting principles EPS of $0.39. However, removing one-time items, the company’s adjusted EPS stood at $0.48, representing a rise of 9.1% from $0.44 in the third quarter of 2017. This EPS growth was driven by a lower effective tax rate and share repurchases partially offset by a contraction in its adjusted its EBITDA margin. During the quarter, the company’s gross margin contracted 0.9% due to higher transportation expenses, price investments, and growth in its specialty pharmacy business.

Outlook

Since posting its third-quarter earnings results, Kroger’s management has reiterated its fiscal 2018 SSSG guidance in the range of 2.0%–2.5% excluding fuel. It’s also reconfirmed its adjusted EPS guidance for the year in the range of $2.00–$2.15.

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