Dive Brief:
- Kroger remains committed to merging with Albertsons, but the company is well-positioned for growth even if it doesn’t complete the transaction, Chairman and CEO Rodney McMullen said Thursday during the company’s third-quarter earnings call.
- Kroger generated $33.6 billion in sales during the third quarter, down about 1% compared with the same period a year ago, the supermarket operator reported Thursday. The company attributed the sales decline primarily to the sale in October of its specialty pharmacy business, which it said reduced its sales for the quarter by about $340 million.
- Identical sales excluding fuel rose 2.3% in Q3, a turnaround from the 0.6% decrease it recorded for that metric during the third quarter of 2023. Kroger said it now expects same-store sales growth for 2024 to fall in the range of 1.2% to 1.5%, a change from its previous guidance of 0.75% to 1.75%.
Dive Insight:
Kroger released its latest quarterly results against a backdrop of continuing uncertainty about its future course, as federal and state judges continue to mull whether to allow it to combine with Albertsons.
“We’ve always made sure that we don’t need to do mergers to make our business successful,” McMullen said during the earnings call.
He continued: “We’re super excited about Albertsons and the potential, and we believe we will be able to add a ton of value for giving customers better value. The people there will be able to provide security and grow our business and create additional career opportunities and support communities. But if it doesn’t happen, we’ll continue to go on.”
McMullen also suggested that Kroger is unlikely to look for another merger partner if it cannot complete the deal.
“There’s probably nothing else that would be transformational that would use the balance sheet capacity that we would have,” he said. “So I don't know that we would be out there trying to find what’s the next Albertsons.”
Digital sales during the quarter posted growth of 11%, led by an 18% increase in delivery sales. The company’s automated customer fulfillment centers, known as CFCs, helped drive the delivery growth, interim CFO Todd Foley said on the earnings call.
“The CFCs are offering customers a superior digital experience with excellent in-stocks, fresh items and a white glove on-time delivery,” Foley said. “CFC growth was driven by a significant increase in households and trips as well as an increase in basket size.”
Earlier this year, Kroger closed three e-commerce “spoke” facilities that were part of its online fulfillment network.
McMullen said that digital sales are providing an avenue for increased coupon clipping as Kroger looks to roll out more savings opportunities for customers. The company has seen consumers clip 5% more digital offers this year than a year ago, leading to 14% more savings for customers, he said.
