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Kroger's sales increase for digital investments



Kroger
Co.

reported slightly higher sales in the last quarter thanks to investments to attract new customers who are also weighing profits.

The increase to $ 28.2 billion in sales from $ 28 billion a year earlier reversed three quarters following a decline in that measure. The food lecturer's metric for sale, in stores that are open for at least 15 months, excluding fuel, rose 2.2%.

Managing Director

Rodney McMullen

said in a conversation with analysts that the higher sales showed that Kroger's investments in its digital operations and new product lines were paying off.

"We got our work cut out for us," he said. "We are driven by that challenge."

Kroger's shares increased by less than 1

% at midday Thursday to $ 25.77.

The nation's largest supermarket chain is trying to keep its foot in the rapidly changing food industry. Like other food retailers, Kroger faces pressure to keep prices low as they invest in delivery to compete better against

Amazon.com
Inc.

and

Walmart
Inc.,

the country's leading food retailer.

Walmart as well

Goal
Corp

posted higher sales in recent quarters as a result of investments that have increased digital sales. discount

Grocery Holding
Corp

, which went public in June, revealed ambitious plans to increase the number of stores by 10% annually. Organic Grocery Store

Spira Farmers Market
Inc.

recently lowered its guidance for the entire year as growth continues to slow.

Kroger is in the middle of a three-year plan to revive its operations with investments in technology and new hires. The 136-year-old company has added clothing and financial services to its sales strategy, as well as new groceries and store-branded meat-free burger cookies.

Cincinnati-based Kroger has expanded pickup and home delivery to more stores and has opened automated warehouses for delivery as part of its partnership with the UK retailer

Ocado Group

PLC.

Digital sales growth in the last quarter slowed to 31% from more than 50% a year ago as delivery and pickup services matured.

The owner of Fred Meyer, Ralphs and Harris Teeter stores has said that investments should generate $ 4 billion in free cash flow through cost savings and better sales.

While sales improved, gross margins decreased during the quarter against profitable profitability from Kroger's pharmacies. Kroger said it still expects profit growth in 2019, but drew its previous guidance on operating profit of $ 400 million until 2020.

Kroger maintained its guidance for sales growth in the same store of 2% to 2.25% and adjusted earnings at $ 2.15 to $ 2.25 per share for 2019.

Write to Jaewon Kang at jaewon.kang@wsj.com

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