Earnings

Kroger Beats The Street On Strong Discounting

Kroger is forecasting some good news for the final quarter of the year — on top of announcing a better-than-expected earnings report for Q3 2017. Wall Street noticed and rewarded Kroger for the turnaround in performance with a 12.5 percent spike in their stock price.

Kroger is the brand behind about 2,800 supermarket chains nationwide, including Ralphs, Harris Teeter, Food 4 Less and its namesake Kroger stores. This year has been marked by an avid push to lower prices and find new ways to make grocery shopping easier customers, as it has found itself beset from all side by retail competitors with some pretty impressive pedigrees.

Walmart, Lidl, ALDI and Amazon/Whole Foods Market have all been increasingly present and avid competitors on the U.S. grocery stage. Programs like Restock Kroger saw the brand cutting costs, investing more fully in their employee base (to the tune of $500 million), reducing the price of goods and even launching an apparel brand.

The third quarter of 2017 saw some of those retail initiatives start to gain traction, boosting same-store sales by 1.1 percent, higher than the 0.9 percent analysts had expected.

“All in, we think this was a better-than-expected print, and though we still have our reservations about this story, the quarter seems healthy versus expectations,” JPMorgan Analyst Ken Goldman said in a client note. Kroger also registered its best-ever Black Friday results for general merchandise.

The market was happy enough to boost Kroger’s stock in response. The year has been a tough on the Kroger brand, which has lost about a third of its value.

But Kroger is hoping that the momentum it is building will carry the supermarket chain forward. The estimate for 2017 adjusted earnings per share is $2.00 to $2.05. Analysts on average were expecting $1.97 per share. Total revenue rose 4.5 percent to $27.75 billion. Net earnings attributable rose to $397 million, or $0.44 per share, in the third quarter which ended Nov. 4, from $391 million, or $0.41 per share, a year earlier.

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