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Kroger's 2nd-Quarter Earnings Edge Past Estimates, but Revenue Falls Short

Kroger Co. (NYSE:KR) released its second-quarter earnings before the market opened on Sept. 12. While the company's earnings met projections, its revenue fell short of expectations.

Earnings highlight

The supermarket posted earnings of 44 cents per share, topping estimates of 41 cents. Revenue of $28.2 billion was up from $28 billion reported in the prior-year quarter. Analysts had anticipated quarterly revenue of $28.38 billion.


Same-store sales, barring fuel, surged 2.2%, while digital sales grew 31% year over year, which was down from the 50% growth achieved in the year-ago quarter.

The company generated $559 million in operating profit.

In a statement, Chairman and CEO Rodney McMullen commented on the company's performance and said its Restock Kroger framework "is designed to reposition our core business by 2020 while continuing to deliver for shareholders."

"We are pleased with the improvement of trends in our supermarket business in the second quarter," he added. "Guided by our customer obsession, Kroger delivered our best identical sales, without fuel, result since the launch of our transformation plan. We continue to reduce costs and are on track to deliver $100 million in incremental operating profit through alternative profit stream growth."

Online developments

Following the first-quarter results, Kroger launched digital coupons and introduced an in-store pickup service for online orders and smart shopping lists.

The company's investments in the online platform finally paid off in the second quarter, driving revenue up. However, intensifying competition has impacted margins.

Financial forecast

For fiscal 2019, Kroger is guiding for earnings between $2.15 and $2.25 per share, while comps are expected to grow between 2% and 2.25%. Revenue is projected to climb 1.35% to $122.8 billion.

Disclosure: I do not hold any positions in the stocks mentioned.

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This article first appeared on GuruFocus.