Kroger shares have fallen 16.1% over the past year while the S&P 500 gained 19.3%, but the supermarket chain’s new CEO Greg Foran plans broad price cuts to stay competitive, drawing on his experience as former Walmart U.S. CEO. First-quarter same-store sales excluding gasoline rose 1%, and management expects 1% to 2% growth for the year, though gross margin contracted 30 basis points to 22.7%. The stock’s price-to-sales ratio has dropped from 0.35 to 0.25, a fraction of the S&P 500’s 3.7 multiple, making it an attractive opportunity for long-term investors. Berkshire Hathaway has held Kroger shares for nearly seven years, a position originally made under Warren Buffett’s capital allocation decisions.
Kroger CompanyNew CEO plans broad price cuts to stay competitive, which is a pricing strategy.
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