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Why Kroger Stock Lost 16% in March

Demitrios Kalogeropoulos, The Motley Fool

What happened

Kroger (NYSE: KR) shareholders trailed the market last month as their stock dropped 16% compared to a 1.8% uptick in the S&P 500, according to data provided by S&P Global Market Intelligence.

The slump added to a tough period for investors in the grocery retailer, which has significantly underperformed over the past five years.

A grocery cart moving through the aisle.

Image source: Getty Images.

So what

Investors reacted harshly to Kroger's fiscal fourth-quarter report, which early in the month revealed disappointing operating trends. The chain's sales growth met management's initial forecast for the full year, but that performance translated into market share losses at a time when peers like Walmart and Target have been posting some of their best numbers in a decade. In contrast, Kroger's revenue inched higher by less than 2% in 2018 as profitability declined.

Now what

CEO Rodney McMullen and his team are making many of the same moves that have paid off for peers, including investing heavily in stores and in crafting a complete online-shopping offering. It's likely that these moves will eventually turn the tide for this business, given its large base of loyal shoppers. However, investors won't be eager to send shares higher until evidence of that rebound shows up in accelerating sales growth metrics.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.