Kroger, BJ's stock moves up on Q4 earnings

Shares of Kroger's (KR) are moving up on Thursday as the company posted its fourth-quarter earnings, beating Wall Street estimates with a revenue of $1.34 per share against an expected $1.13 per share. The company did, however, decide to hold on its previously scheduled earnings call, claiming they are committed to defending the merger with Albertsons (ACI) which saw push back from the FTC.

Shares of BJ's Wholesale Club (BJ) are also moving higher as the company posted its fourth-quarter earnings, beating Wall Street expectations on the bottom line with $1.11 adjusted earnings per share, but missed on the top line with $5.36 billion versus and expected $5.39 billion.

Yahoo Finance Reporter Brooke DiPalma joins Yahoo Finance to break down the latest developments for these companies and what this means for them moving forward.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

SEANA SMITH: We want to take a look at shares of Kroger moving to the upside here in early trading. Strong results out from the company. We are getting some headlines crossing right now. Kroger holding its earnings call saying, that they remain committed to defending their merger with Albertsons. We got to push back the lawsuit from the FTC last week.

Brooke DiPalma joining us here on set with the details on that. And Brooke, we're now looking at gains of just around 7%.

BROOKE DIPALMA: Yeah. Gains, certainly. Wall Street happy with what they're sharing in terms of how exactly this merger stands right now. The company did say that hearing dates have not been set yet. But they do expect to proceed in mid to late summer.

And the CEO really acknowledging here that they have to size up to the competition that's growing from retail businesses like Walmart, like wholesale clubs. BJ's out this morning, as well as Costco after market closed today.

They're also saying that regardless of what actions they have taken so far, they want to remain clear that Kroger keeps its commitments. And they know that this merger will result in secure jobs for the union.

They also said that they added more than 100,000 union jobs in a national retail environment, as these union jobs shrink elsewhere. They also mentioned that they're making historical-- historic investments in wages, including $2.4 billion in incremental investments since 2018. So Kroger really pushing for this acquisition.

And what we really see here is that this traditional grocery company is really looking to compete with these wholesale clubs. We did have BJ's report this morning. And we know that wholesale clubs tend to do better during the fourth quarter, that primary, that crucial holiday season, as compared to traditional grocery retailers.

And we really saw this play out this morning with these two names in the game, Kroger and BJ's. And if you take a closer look at BJ's, similar to what Kroger said, value really is the name of the game here. Both grocery, both wholesale and retailers really trying to take advantage of this opportunity here.

BJ's did say that inflation continued to moderate. But they did note that general merchandise really led the business this past quarter. The CEO calling it a great story this quarter. We saw positive growth in electronics, television, audio, and video games. Some of the things that we haven't heard in quite some time.

They also did say that their investment in peril did do well for them. But they have a far way to go. They have far less stores than a Costco, than a Sam's Club. And so really, we're seeing all these grocery, all these wholesale clubs really look to secure growth and opportunity. And that's really what Kroger is looking to do with that acquisition as well.

BRAD SMITH: And so what is true for BJ's expected to be true for Costco, when they report after the bell today. I just want an update on the Kirkland golf clubs. They've got a lawsuit right now taking place with that.

BROOKE DIPALMA: Yeah. Private label certainly--

SEANA SMITH: We'll be tracking that angle of the Costco story.

BRAD SMITH: That's all [INAUDIBLE]

BROOKE DIPALMA: That's what I'd say here because--

[INTERPOSING VOICES]

I'm taking a look at the Kirkland brand, seeing a private labels performing. But Costco, they are expecting traffic and ticket to go up. Of course, as we just mentioned with BJ's, apparel, groceries. Consumers are really looking for the best bang for their buck in this ongoing inflationary environment.

They do expect traffic and ticket to go up over 4% for Costco, as consumers, once again, look for value. In addition to that, we are expecting to hear similar to BJ's discretionary do well during this holiday season. We'll certainly also be taking a closer look to see if they mentioned anything about those membership price hikes.

We've been following that for what feels like quite some time now.