Dive Brief:
- Kroger reported 5.5% sales growth in itsfourth quarter earnings report, reaching$27.6 billion in sales and $506 million in net profit for the quarter.
- Excluding fuel sales, same-store sales fell 0.7% during the quarter — breaking Kroger's streak of 52 quarters of same-store sales growth. Same-store sales for 2016 were up 1% over the previous year. The grocery giant expects same-store sales to grow 0-1% in 2017.
- "In 2016, Kroger grew market share, increased tonnage, and hired more than 12,000 new store associates," Chairman and CEO Rodney McMullen said in the report. "For 2017 and beyond, we will continue delivering for our customers while also setting the company up for our next phase of growth and customer-first innovation."
Dive Insight:
Kroger completed its12thconsecutive year of market share gains, but it also ended an impressive 52-quarter streak of same-store sales growth. The decline in same-store sales is particularly disappointing, and profits are also down from the same period last year. The company still beat Wall Street expectations by a penny per share.
Like many other grocers, Cincinnati-based retailer's earnings were dampened by the deflation of food prices, which hasdepressed grocery profits over the last year. Publicly traded grocery retailers likeWhole Foodsand competitors like Ahold Delhaizealso reported sales slumpsdue to deflation.
Kroger's earnings set the stage for the retailer's future plans, including an expansion of its click-and-collect service and a possible move into grocery delivery. Expanding online ordering options is becoming a growing priority for grocery retailers. In 2016, Kroger added more than 420 locations— which now total 640 —for ClickList, the retailer's online ordering platform that enables curbside pickup and payment.
Kroger announced in January its intent tohire 10,000 more full-time employees. Kroger didn't specify where these employees would go, but the company told a Memphis newspaper thatClickList adds 25 to 35 more jobsat each store where the service is being used. Kroger has also been experimenting with home delivery of groceries, and rumors suggest the programwill expand in the near future.
In pre-market trading Thursday, Kroger's stock tumbled nearly 5%.
