Kroger Co. (NYSE: KR) is expected to report its financial results for the first quarter next week. Last year, customer engagement was steady last year, driven by high quality products and tailored promotion offers. Recently, the company led the sales of the store in fiscal year 2025. This is encouraged by the growth of the digital footprint and the strength of private label brands. As a domestically focused retailer, we believe that the impact will be less than the new import duties.
After experiencing weakness in recent weeks, Cincinnati Headquarters grocery chain stocks are regaining momentum ahead of revenue. KR has grown an impressive 30% over the past year. The stock has consistently exceeded its 12-month average value of $60.30 after withdrawing from its peak in April. The company regularly hikes dividends and currently offers a yield of around 2% above average. In a recent statement, management said it is well underway to achieve its goal of providing a total shareholder profit of 8-11% over the long term.
Q1 Tap Report
The company is preparing to publish its first quarter results on Friday, June 20th at 8am ET. The quarterly analyst consensus revenue estimate is $1.45 per share on an adjusted basis, with total revenues looking for $452.9 billion. During the AGO quarter, the company acquired $1.43 per share against revenue of $45.27 billion. Retailers have a strong track record of delivering better results than expected, with quarterly revenue consistently surpassing estimates for over five years.
From Kroger’s revenue calls from the fourth quarter:
“The company focuses on investing in projects that maximize return on investment while maintaining current investment grade ratings, increasing dividends within the scope of board approval and returning excess capital to shareholders.
Mixed Q4
In the fourth quarter of 2024, Kroger’s revenue fell from $37.06 billion in the previous year’s quarter to $343.1 billion. Same sales without fuel increased by 2.4%. Adjusted earnings fell from $1.34 per share in the fourth quarter of the previous year to $1.14 per share in the fourth quarter, but won the estimate. On an unadjusted basis, net income was $634 million or $0.90 per share in the fourth quarter, compared to $736 million or $1.01 per share in the fourth quarter.
Management said it expects a 2-3% increase in identical sales that do not contain fuel in fiscal 2025. Adjusted revenue is expected to be between $4.60 per share and $4.80 per share. We are looking for adjusted free cash flows of between $2.8 billion and $3 billion in fiscal 2023. Capital expenditure targets range from $3.6 to $3.8 billion.
Outlook
Recently, Kroger has expanded its digital capabilities, offering facilities such as faster order delivery and curb pickup for shoppers. The company’s thriving pharmacy business and steady growth in its private brand sales should continue to be a key strength. Meanwhile, sales may be under pressure from cautious consumer spending amid rising inflation and growing competition.
On Friday, stocks opened higher, up 1% earlier in the session. Stocks are trading mostly sideways this week.
