Kroger reported second-quarter revenue of $34.62 billion, up 2% year on year and in line with analyst estimates of $34.64 billion, while GAAP earnings per share of $1.05 also came in line with the $1.06 consensus. Full-year GAAP EPS guidance of $5.20 at the midpoint beat analyst estimates by 2.8%, and operating margin held at 2.8%, matching the same quarter last year, though same-store sales were flat after a 3.4% gain a year earlier. On the earnings call, CEO Gregory S. Foran told analysts that price investments are geographically targeted and funded through disciplined cost control, and said cost pressures from fuel and supplier costs are mounting while the company's value proposition improved versus competitors in the quarter. Foran described a multi-year plan to gradually improve shelf price value funded by operational efficiencies, cited untapped opportunities in shrink, out-of-stocks and sourcing, and pointed to natural, organic and prepared foods plus private label offerings such as sushi and premium frozen meals as drivers of market share gains. Kroger also faced headwinds from a cyclospora outbreak that weighed on produce sales and from continued pressure from lower drug prices in the pharmacy segment, and the stock trades at $58.72, up from $56.95 just before the earnings.
Kroger CompanyFull-year GAAP EPS guidance of $5.20 at the midpoint beat analyst estimates by 2.8%, with revenue in line and operating margin steady.
