The Kroger Co. announced March 7 that it grew digital sales in its fiscal fourth quarter ended Feb. 3, as equivalent sales excluding fuel decreased barely.
In a March 7 earnings call with investors, CEO Rodney McMullen said a “strong and growing store network is essential.”
“Most of the ways we go to market in digital still comes through the shop channel,” McMullen said. “We all know that our most profitable customers shop each in-store and online. So it’s essential to be there for our customers in a way they decide to shop with us.”
Kroger is No. 8 within the Top 1000, Digital Commerce 360’s database rating the biggest online retailers in North America. Moreover, Kroger is first within the Top 1000’s Food/Beverage category.
Kroger digital sales in Q4 2023
In its fiscal Q4, Kroger digital sales grew greater than 10%. Meanwhile, Kroger’s total sales grew to $37.1 billion in Q4 2023, up from $34.8 billion in Q4 2022.
Customers who shop each in-store and online spend three to 4 times greater than in-store-only shoppers, McMullen said.
“Moving promotions online allowed Kroger to take personalization to a brand new level, targeting customers more efficiently and increasing the breadth and depth of promotions,” McMullen said.
That led to an 18% increase in digitally engaged households in Q4, he added.
In fiscal 2023, Kroger digital sales grew 12% to succeed in $12 billion. The retailer also increased delivery sales 24% yr over yr. Total Kroger sales in fiscal 2023 were $150.0 billion, up from $148.3 billion in 2022.
Kroger customers clipped 4 billion digital coupons in 2023, which is 1 billion greater than in 2022, McMullen said.
“Digital is a crucial growth accelerator in our business,” McMullen said. “And in 2024, we expect to deliver one other yr of double-digit sales growth.”
Neil Saunders, managing director at retail evaluation firm GlobalData, said trends for a lot of Kroger’s metrics point to wider problems for the corporate and the grocery sector overall.
“While Kroger’s operating profit and net income numbers were each elevated and robust through the final quarter, the sales line is looking quite a bit shabbier,” Saunders said. “Total growth of 6.4% looks robust, however it is flattered by the addition of $2.7 billion from an additional week of trade. When that is removed, total sales declined by 1.3%.”
Possible merger with Albertsons
The Federal Trade Commission (FTC) is suing to dam Kroger’s proposed $24.6 billion acquisition of Albertsons. The FTC called the deal “anticompetitive” in an announcement released Feb. 26.
The 2 grocery retailers first proposed the deal in 2022. Kroger was slated to purchase Albertsons on the time, pending regulatory approval. The merger would allow the chains to create a “premier omnichannel food retailer,” Kroger said in an announcement on the time. Together, the retailers would operate greater than 5,000 stores across 48 states, with nearly 700,000 employees.
Albertsons is No. 26 within the Top 1000, and second within the Top 1000’s Food/Beverage category.
Data from Placer.ai shows that Kroger was the nation’s most-visited food market chain in 2023. It captured 18.8% of annual foot traffic to the ten most-frequented grocery chains. Safeway, under the Albertsons umbrella, took 10.5% of foot traffic. Aldi had the fourth-most foot traffic (9.4%) among the many top 10.
Foot traffic at Kroger grew in three of the last 4 months. Kroger foot traffic grew 4.9% yr over yr in February 2024, based on Placer. In January, it decreased 1.2% yr over yr. It grew 2.7% in December 2023 and 0.4% in November, Placer data shows.
Aldi US expansion
The identical day that Kroger announced its earnings, competitor Aldi announced plans so as to add 800 stores throughout the U.S. by 2028. Aldi also announced that it accomplished its acquisition of Southeastern Grocers Inc. and its Winn-Dixie and Harveys Supermarket banners.
Southeastern Grocers is an omnichannel retailer with brick-and-mortar grocery stores and liquor stores. It has an internet presence, too, with grocery delivery and curbside pickup throughout Alabama, Florida, Georgia, Louisiana and Mississippi.
Aldi said it’ll invest greater than $9 billion over the following five years in its U.S. expansion. The grocery store said it’ll add latest locations throughout the country and said it’ll enter latest cities including Las Vegas.
Kroger earnings
For the fiscal fourth quarter ended Feb. 3, 2024, Kroger reported:
- Total sales excluding fuel dipped barely to $37.1 billion. That’s down 0.5% from $34.8 billion in Q4 2022.
- Comparable sales excluding fuel decreased 0.8%.
- Operating profit grew to $1.19 billion from $826 million within the prior-year period.
- Kroger digital sales grew greater than 10%.
For the 12 months ended Feb. 3, 2024, Kroger reported:
- Total sales excluding fuel grew to $150.0 billion. That’s up 1.1% from $148.3 billion in 2022.
- Comparable sales excluding fuel increased 0.9%.
- Operating profit decreased to about $3.09 billion from $4.12 billion the prior yr.
- Kroger digital sales grew to $12 billion.
Percentage changes may not align exactly with dollar figures resulting from rounding. Check back for more earnings reports.
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