Thursday, November 30th, 2017
Kroger’s recent Restock Kroger campaign has proven to be the success story it hoped it would be. The company’s third quarter’s 2017 fiscal results were announced, and life is looking good for the chain. Kroger’s tireless efforts to innovate and evolve with the constantly evolving and competitive market have paid off, as can be seen in its $6 million net earnings gain since last year.
Restock Kroger is off to a great start. Customers are recognizing our efforts to redefine the customer experience and rewarding us with their loyalty. We continue to accelerate our digital and ecommerce offerings, to grow Our Brands, to lower prices for customers, and to invest in our associates,” said Rodney McMullen, Chairman and CEO, in a recent press release. “The holidays are always Kroger's time to shine. In fact, we had our best ever Black Friday results for general merchandise, led by record sales at Fred Meyer. Everything we are doing revolves around our associates providing friendly service and fresh products to our customers. This quarter shows that by investing for the future, our business continues to improve and gain momentum. We remain confident in our ability to continue to grow identical supermarket store sales and market share for the balance of the year and in 2018."
Strong core business results, strong fuel results, and incremental $111 million contribution to the UFCW Consolidated Pension Plan in the third quarter are three ways that the company established itself with determination for success this third quarter. The supermarket’s net earnings this year came in at $397 million, while last year at this time, they showed up at $391 million. Further, its shares have fluctuated in a like-way; last year’s $0.41 per diluted share has gone up to $0.44 per diluted share.
What caused the upward turn for the company? While Reuters reports that many analysts doubted Kroger’s ability to keep up with competing industry powerhouses like Amazon and Walmart, news of the company’s big net earnings increase over last year prompted shares to jump up to 13.6 percent. The supermarket’s accomplishment seems to be its reward for relentless hard work on many different business fronts, so as to always keep up-to-date when competition is tight.
According to the press release, the following stats detail its third quarter success:
- Total sales increased 4.5% to $27.7 billion in the third quarter compared to $26.6 billion for the same period last year. Total sales, excluding fuel, increased 3.0% in the third quarter compared to the same period last year
- Gross margin was 22.4% of sales for the third quarter. Excluding fuel, ModernHEALTH and the LIFO charge, gross margin increased 30 basis points from the same period last year. Lower cost of goods and sales mix more than offset continued price investments
- Kroger recorded a $3 million LIFO charge in the third quarter of 2017, compared to an $8 million LIFO credit in the same period last year
- FIFO operating margin dollars for the third quarter of 2017 increased $38 million, or 5.5%
- Operating, General & Administrative costs as a rate of sales – excluding fuel, ModernHEALTH, and a $111 million contribution to the UFCW Consolidated Pension Plan – increased 18 basis points. Rent and depreciation with the same exclusions remained consistent
The press release also highlights the justification for Kroger's Restock Kroger campaign efforts, too. It showed the campaign's affect of its third quarter 2017 results:
- Redefine the Grocery Customer Experience—launched the We are Local campaign, hosted the first natural foods innovation summit to expand its natural foods offering, launched the new restaurant concept Kitchen 1883, announced two newOur Brands product lines (a clothing line due out in 2018 and Bloom Haus™)
- Partner for Customer Value—used cost savings to reduce prices for customers, launched home delivery service using Instacart in Southern California, announced its media solution that offers CPGs a service that offers personalized communication to Kroger’s customers through a multitude of digital and media channels called Kroger Precision Marketing, announced cloud computing portfolio to expand its Google Cloud platform
- Develop Talent—announced $500 million incremental investment in associates over the next three years, hired about 14,000 part-time and seasonal employees this holiday season, named one of the “Healthiest 100 Workplaces in America” by Healthiest Employers, Loweres prices for healthcare services at The Little Clinic® for company associates and their immediate families
- Live Kroger's Purpose—launched Zero Hunger | Zero Waste as an initiative to end hunger in the communities in which Krogers reside and eliminate waste throughout the company by 2025, named to the Dow Jones Sustainability Index-North America for the fifth consecutive year, generated $7 million to support recovery efforts in Texas, Florida, and Puerto Rico, donated $3.2 million to the USO with its Honoring Our Heroes campaign to show its long-standing commitment to all service men – both veterans and current – and their families. Named to the Dow Jones Sustainability Index-North America for fifth consecutive year
- Financial Strategy—the use of cash to contribute an incremental $1.1 billion to company-sponsored pension plans, repurchase 59 million common shares for $1.7 billion, pay $446 million in dividends, and invest $2.9 billion in capital
Want more details on how Kroger managed to do so well this holiday season? Check out their full press release here, where you can also locate its plans moving forward.
For more of the industry's insider details, keep checking back with us at Deli Market News for the latest!