When Kroger released its latest quarterly earnings on Thursday, the retailer described its performance as evidence the grocery giant is thriving financially even as the economy continues to keep consumers off balance.

Wall Street, however, saw a gloomier picture.

While Kroger CFO Gary Millerchip was telling analysts during the earnings call that first-quarter results “clearly demonstrate the durability of our business in a more challenged operating environment,” investors were busy unloading shares in the company, which delivered underwhelming sales, slower comps and disappointing profits. Kroger’s stock price fell almost 3% by the time trading wrapped up for the day, to $45.94, even as key stock indexes notched gains.

That sour reaction from investors could be a sign that they think Kroger is headed for a bumpy ride during the coming months.

Walmart’s growing market share in the grocery sector could be one threat. As CFRA Research Vice President Arun Sundaram observed in a note to investors, Kroger was only able to come up with 3.5% identical-store sales growth in Q1 while Walmart’s U.S. grocery business recorded low-double-digit comps during the mass merchant’s most recent quarter.

In addition, Kroger seems to have been outdone by Walmart as both companies draw shoppers away from specialty retailers, Sundaram said, adding that CFRA believes Kroger’s comps will taper off as 2023 continues to unfold and the company’s growth could turn “flattish” by the end of the year, likely hurting Kroger’s margins.

Michael Lasser, equity research analyst at UBS, asked during the earnings call if Kroger is losing share in certain customer segments, pointing to Walmart’s improving grocery sales. Rodney McMullen, Kroger’s chairman and CEO, positioned Kroger as a prime competitor for retailers like Walmart. 

“Our total value equation is extremely close to what the EDLP [everyday low price] merchants would be. We just go to market in a different way,” McMullen said, noting the grocer saw “strong household growth and strong market share growth” among mainstream and upscale customers in Q1. While the grocer has seen a boost in higher-income shoppers at its stores, Kroger is doing more to make its stores more attractive to budget-conscious shoppers, he said. 

Millerchip said Kroger is dealing with the downside of the continued slowdown in inflation, which he said is a reason the company expects identical sales for the next three quarters to be at the low end of the range of 1% to 2% it included in its forecast for the full year. He noted. however, that the company’s same-store sales in Q1 didn’t decrease as fast as inflation — an indication that unit growth is supporting its business even as rising prices become less of a factor in driving revenue.

McMullen projected confidence about Kroger’s future, pointing to investments and productivity gains it has achieved during the past few years as reasons for investors to be optimistic.

“By delivering great value and driving strategic initiatives, we are sustaining momentum, which gives us the confidence that we will continue delivering on our commitments,” McMullen said

In case you missed it

Rewarded for going greener

Price Chopper/Market 32 is allowing its customers to earn points under its rewards program AdvantEdge when they support clean energy. Through a partnership with Green Mountain Energy, customers can earn 10,000 AdvantEdge points by switching their electricity provider or earn 6,000 points for supporting Green Mountain Energy’s Community Solar Program, per a press release posted on Multichannel Merchant. 

“[Green Mountain Energy’s] commitment to clean energy and sustainability projects like community solar align nicely with our pillar of local and community support,” Sean Weiss, vice president of marketing at Price Chopper/Market 32, said in the announcement. 

Customers can redeem their points for money off of their grocery or gas purchases, help pay their student loans, make donations to specific charities, enter sweepstakes or pay for magazine subscriptions. 

Ahold Delhaize’s chief information officer departs

Rom Kosla is leaving his role as chief information officer and executive vice president of information technology at the grocer’s Retail Business Services arm after roughly two years at the company. Kosla is joining Hewlett Packard Enterprise in July to become the global edge-to-cloud company’s CIO, per a press release earlier this week. 

While at Ahold Delhaize, Kosla led the company’s IT transformation across its U.S. banners, which included enabling enterprise-wide technologies to support workers and migrating key digital capabilities to the cloud to support e-commerce customer expansion, Hewlett Packard Enterprise noted. 

NRF’s continued support for ORC legislation

Ahead of the “Rise in Organized Retail Crime and the Threat to Public Safety” hearing on Tuesday held by the House Judiciary Committee's Subcommittee on Crime and Federal Government Surveillance, the National Retail Federation submitted a written statement outlining the growing dangers of organized retail crime (ORC). 

NRF’s statement, which was submitted a day ahead of the hearing, urges Congress to advance proposed bicameral legislation due to ORC's negative impact on businesses, workers and consumers.

The Combating Organized Retail Crime Act would establish an ORC unit within Homeland Security, strengthening resources across federal, state and local law enforcement to better handle ORC crimes. 

Number of the week: $15 billion

That is the estimated amount of money the Credit Card Competition Act would save merchants as well as their customers per year, the Merchants Payment Coalition reported Tuesday. The bill would address swipe fees that average more than 2% of the transaction that banks and card networks charge merchants to process credit card transactions. 

In 2022, credit and debit card swipe fees hit a record $160.7 billion, and most merchants’ highest operating cost, after labor, are these fees, per the coalition.

Impulse Find 

Being a new mom is hard, and it seems an expecting mama duck just wanted the support of shoppers at Plant Place at Kowalski's Markets in Woodbury, Minnesota, according to a report from a local CBS news station. 

Resting on her eggs in a homemade nest composed of more than 60 plastic plant tags, the soon-to-be mama mallard also chewed a majority of the market’s bee balm plants around her chosen nursery spot. The employees claimed they wouldn’t have even noticed the duck and her eggs if not for a young boy pointing it out.

Employees blocked off the section to ensure no customers disturb the mallard or her eggs.