Traders work as screens display the trading information for Kroger Co. and Albertsons Companies Inc. on the floor of the New York Stock Exchange, Oct. 14, 2022.Albertsons on Wednesday formally terminated its proposed $25 billion merger with Kroger and filed a lawsuit against its supermarket competitor, saying Kroger violated its contract and didn't follow through on commitments to help get the deal approved.It comes a day after a judge blocked the planned tie-up.In a news release, Albertsons said Kroger bro ...

Financial Data and Key Metrics Changes - Kroger achieved identical sales without fuel growth of 2.3% in Q3 2024, driven by strong pharmacy and digital sales [35][36] - Gross margin was reported at 22.9% of sales, with FIFO gross margin rate, excluding fuel, increasing by 51 basis points compared to last year [41][44] - Adjusted FIFO operating profit was $1.02 billion, and adjusted EPS was $0.98 per diluted share, reflecting a 3% increase compared to the previous year [44] Business Line Data and Key Metrics Changes - Pharmacy and digital sales were the primary contributors to growth, with digital sales growing by 11% and delivery sales increasing by 18% [23][38] - Our Brands outperformed national brands, with mid-single-digit growth in the premium Private Selection brand [36][37] - The sale of Kroger Specialty Pharmacy for $464 million reduced total company sales by approximately $340 million in Q3, but improved gross margin and operating costs [33][34] Market Data and Key Metrics Changes - Customer engagement remained strong, with increases in total and loyal households, particularly among mainstream households [10][36] - Budget-conscious households continued to face pressure from inflation and higher interest rates, affecting their spending habits [11][12] - Digital offers and loyalty programs contributed to customer savings, with a 5% increase in digital offer clips leading to 14% more savings for customers [12] Company Strategy and Development Direction - The company is focused on enhancing its go-to-market strategy, emphasizing Fresh, Our Brands, Personalization, and Seamless shopping experiences [13][26] - Investments in technology, such as RFID-embedded labels, are aimed at improving inventory management and freshness [16][20] - The company is committed to growing its digital capabilities and narrowing the profitability gap between online and in-store shopping [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties and deliver sustainable growth [55][61] - Inflation is expected to remain stable at around 1% in the fourth quarter, with no significant changes anticipated for the following year [46][91] - The company plans to continue investing in price and customer experience to maintain competitiveness in the market [104] Other Important Information - The company ratified new labor agreements covering nearly 13,000 associates during the third quarter [47] - Kroger's net total debt-to-adjusted EBITDA ratio was 1.21%, indicating a strong balance sheet and flexibility for growth [49][50] - The company is in the process of finalizing its 2025 business plan, with expectations for FIFO operating profit growth on a standalone basis [54] Q&A Session Summary Question: Core business growth characterization - Management agreed with the characterization of core business growth being strong, particularly in pharmacy, despite lower fuel profitability [64][66] Question: Guidance narrowing rationale - The guidance was narrowed to reflect less variability in expectations, with Q3 results being strong due to pharmacy and digital growth [74][76] Question: Boost membership performance - Management expressed satisfaction with Boost membership signups and retention, highlighting its value and customer connection potential [85][86] Question: Inflation outlook for next year - Management indicated it is still early to predict next year's inflation but expects it to remain stable and consistent with current trends [90][91] Question: Fresh initiatives and RFID tags - Initial results from RFID tags in bakery items are promising, with plans for further testing and potential rollout [93][95] Question: Gross margin outlook - Management expects gross margin to remain relatively flat year-over-year in Q4, with positive contributions from Our Brands and improved operational efficiencies [116][120] Question: Position if Albertsons merger is rejected - Management stated that while the merger with Albertsons is exciting, Kroger will continue to grow its business independently if the merger does not proceed [122][124] Question: Retail media growth expectations - Management confirmed expectations for retail media growth to remain strong, with continued investment in demonstrating value to CPGs [130][132] Question: Sales growth drivers for 2025 - Management emphasized that improving customer experience and investing in growth areas will be key to achieving sales targets in 2025 [135]

Financial Performance - Kroger reported quarterly earnings of $0.98 per share, matching the Zacks Consensus Estimate, and an increase from $0.95 per share a year ago [1] - The company posted revenues of $33.63 billion for the quarter ended October 2024, missing the Zacks Consensus Estimate by 1.81%, and a decrease from $33.96 billion year-over-year [2] - Over the last four quarters, Kroger has surpassed consensus EPS estimates three times and topped revenue estimates only once [2] Stock Performance - Kroger shares have increased approximately 31.1% since the beginning of the year, outperforming the S&P 500's gain of 27.6% [4] - The current Zacks Rank for Kroger is 2 (Buy), indicating expectations for the stock to outperform the market in the near future [7] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.12 on revenues of $35.23 billion, and for the current fiscal year, it is $4.46 on revenues of $148.7 billion [8] - The estimate revisions trend for Kroger is currently favorable, which may influence future stock movements [6][7] Industry Context - The Retail - Supermarkets industry, to which Kroger belongs, is currently ranked in the bottom 19% of over 250 Zacks industries, indicating potential challenges ahead [9]

Kroger (KR) shares slipped Thursday after the grocery giant reported third-quarter results mostly below analysts' estimates. The company reported $33.63 billion in revenue, below the $34.22 billion expected by analysts polled by Visible Alpha. Net income came in at $618 million, beneath the $659.3 million projection. After stripping out one-time charges like costs related to the chain's proposed merger with Albertsons (ACI), Kroger's adjusted earnings per share (EPS) of $0.98 came in a penny above estimate ...

Sales Performance - Identical sales without fuel increased by 2.3% in Q3 2024[2] - Digital sales grew by 11% in Q3 2024[2] - Total company sales for Q3 2024 were $33.6 billion, a decrease from $34.0 billion in Q3 2023, primarily due to the sale of Kroger Specialty Pharmacy and lower fuel sales[8] - Sales for Q3 2024 were $33.634 billion, a slight decrease from $33.957 billion in Q3 2023, representing a 100% sales ratio for both periods[31] - Year-to-date sales for 2024 were $112.815 billion, compared to $112.975 billion in 2023, maintaining a 100% sales ratio[31] - Identical sales excluding fuel for Q3 2024 increased by 2.3% to $29.47 billion, compared to $28.818 billion in Q3 2023[44] - Year-to-date identical sales excluding fuel for 2024 increased by 1.2% to $97.595 billion, compared to $96.397 billion in 2023[44] Profitability Metrics - Operating profit for Q3 2024 was $828 million, with an EPS of $0.84[2] - Adjusted FIFO operating profit reached $1,017 million, and adjusted EPS was $0.98[2] - Operating profit for Q3 2024 was $828 million (2.5% of sales), down from $912 million (2.7% of sales) in Q3 2023[31] - Year-to-date operating profit for 2024 was $2.937 billion (2.6% of sales), up from $1.902 billion (1.7% of sales) in 2023[31] - Net earnings attributable to The Kroger Co. for Q3 2024 were $618 million (1.8% of sales), compared to $646 million (1.9% of sales) in Q3 2023[31] - Year-to-date net earnings for 2024 were $2.031 billion (1.8% of sales), up from $1.428 billion (1.3% of sales) in 2023[31] - Net earnings including noncontrolling interests for 2024 is $2.038 billion, a 42.5% increase from $1.430 billion in 2023[39] - Net earnings attributable to The Kroger Co. for Q3 2024 were $618 million, compared to $646 million in Q3 2023[54] - Year-to-date net earnings for 2024 were $2,031 million, up from $1,428 million in 2023[54] - Adjusted net earnings excluding adjustment items for Q3 2024 were $719 million, compared to $698 million in Q3 2023[54] - Year-to-date adjusted net earnings excluding adjustment items for 2024 were $2,447 million, down from $2,500 million in 2023[54] - Net earnings per diluted share for Q3 2024 were $0.84, compared to $0.88 in Q3 2023[54] - Adjusted net earnings per diluted share excluding adjustment items for Q3 2024 were $0.98, compared to $0.95 in Q3 2023[54] - Year-to-date adjusted net earnings per diluted share excluding adjustment items for 2024 were $3.34, down from $3.42 in 2023[54] - Operating profit for Q3 2024 was $828 million, compared to $912 million in Q3 2023[63] - Year-to-date operating profit for 2024 was $2,937 million, up from $1,902 million in 2023[63] - Adjusted FIFO operating profit excluding adjustment items for Q3 2024 was $1,017 million, compared to $1,022 million in Q3 2023[63] Gross Margin and LIFO Charges - Gross margin for Q3 2024 was 22.9%, with FIFO gross margin rate excluding fuel increasing by 51 basis points[9] - LIFO charges for Q3 2024 were $4 million, compared to $29 million in Q3 2023[35] - Year-to-date LIFO charges for 2024 were $66 million, down from $131 million in 2023[35] Debt and Financial Ratios - Kroger's net total debt to adjusted EBITDA ratio improved to 1.21 from 1.40 a year ago[14] - Total debt increased by $9.838 billion to $22.601 billion in 2024, compared to $12.763 billion in 2023[48] - Net total debt decreased by $1.814 billion to $9.478 billion in 2024, compared to $11.292 billion in 2023[48] - Adjusted EBITDA for the rolling four quarters ended November 9, 2024, is $7.845 billion, compared to $8.078 billion for the same period in 2023[49] - Net total debt to adjusted EBITDA ratio improved to 1.21 in 2024 from 1.40 in 2023[49] Cash Flow and Capital Expenditures - Adjusted free cash flow guidance for 2024 remains at $2.5 – $2.7 billion[16] - Net cash provided by operating activities for 2024 is $4.39 billion, compared to $4.868 billion in 2023[39] - Payments for property and equipment, including lease buyouts, increased to $3.133 billion in 2024 from $2.907 billion in 2023[39] - Proceeds from issuance of long-term debt in 2024 is $10.499 billion, compared to none in 2023[39] Assets and Liabilities - Total assets as of November 9, 2024, were $62.418 billion, up from $51.021 billion as of November 4, 2023[37] - Total liabilities as of November 9, 2024, were $49.524 billion, compared to $39.830 billion as of November 4, 2023[37] Guidance and Forecasts - Full-year 2024 guidance for identical sales without fuel was narrowed to 1.20% – 1.50%[16] - Adjusted FIFO operating profit guidance for 2024 was narrowed to $4.6 – $4.7 billion[16]

Third Quarter Highlights Identical Sales without fuel increased 2.3% Operating Profit of $828 million; EPS of $0.84 Adjusted FIFO Operating Profit of $1,017 million and Adjusted EPS of $0.98 Achieved strong Adjusted Free Cash Flow Executed its go-to-market strategy to deliver value for customers Grew digital sales 11% Our Brands sales growth outpaced total grocery sales growth Increased total households and loyal households CINCINNATI, Dec. 5, 2024 /PRNewswire/ -- The Kroger Co. (NYSE: KR) today reporte ...

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Core Insights - Kroger is set to report its third-quarter results, while its proposed merger with Albertsons is facing legal challenges from the FTC [1][2] - Analysts anticipate an increase in sales and profits compared to the previous year, but the average price target indicates a potential decline in Kroger's stock from recent highs [1][3] - The FTC has presented arguments against the merger, claiming it would negatively impact competition, while Kroger and Albertsons argue it would enhance their ability to compete with larger retailers [6][7] Financial Expectations - Kroger is expected to report revenue of $34.23 billion, reflecting a 0.8% year-over-year increase, and a profit of $662.6 million, which is a 2.6% rise [4] - The average target price for Kroger's stock is $58.80, suggesting a potential decrease from its recent closing price of $61.08, which is the highest in over two years [3] Legal Context - The trial regarding the FTC's lawsuit to block the merger concluded with closing arguments in September, with a decision pending [5][6] - Kroger maintains confidence in the merger's potential benefits and expects it to close in the fourth quarter of this year [5][8]

Core Insights - Kroger is expected to report quarterly earnings of $0.98 per share, a 3.2% increase year-over-year, with revenues forecasted at $34.29 billion, reflecting a 1% year-over-year increase [1] - The consensus EPS estimate has remained unchanged over the last 30 days, indicating analysts' reassessment of their initial estimates [1][2] Earnings Estimates - Changes in earnings estimates are crucial for predicting investor reactions to the stock, with empirical studies showing a strong relationship between earnings estimate revisions and short-term stock price performance [2] - Analysts' forecasts for key metrics can provide valuable insights beyond consensus earnings and revenue estimates [3] Sales Metrics - The consensus estimate for total sales to retail customers without fuel is $30.08 billion, indicating a 1.7% increase from the prior-year quarter [4] - Supermarket fuel sales are expected to be $3.76 billion, reflecting an 8.4% year-over-year decline [4] - Other sales are projected to reach $284.24 million, representing a 4.5% increase from the prior-year quarter [4] Stock Performance - Kroger shares have increased by 8% in the past month, outperforming the Zacks S&P 500 composite, which rose by 3.5% [5] - With a Zacks Rank of 3 (Hold), Kroger is expected to closely follow overall market performance in the near term [5]