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Kroger
Co.
KR 0.47%
saw a slight increase in sales during its last quarter, thanks to investments made to attract new customers who also weighed on profits.
The increase in sales, which amounted to $ 28.2 billion compared to $ 28 billion a year earlier, canceled three consecutive months of decline. The preferred measure of grocer sales in stores that have been open for at least 15 months has increased by 2.5%.
General manager
Rodney McMullen
In a telephone conversation with analysts, he said the higher sales showed that Kroger's investments in digital business and new product lines were paying off.
"We had work to do," he said. "We are stimulated by this challenge."
Kroger shares rose less than 1% Thursday at noon, reaching $ 25.77.
The largest supermarket chain in the country is trying to keep up with the rapidly changing grocery industry. Like other grocery retailers, Kroger faces pressures to keep prices low as it invests in delivery to better compete.
Amazon.com
Inc.
and
Walmart
Inc.
the country's leading grocery seller.
Walmart and
Target
Corp.
have posted sales growth in recent quarters thanks to investments that boosted digital sales. discounter
Grocery store
Corp.
, which was made public in June, unveiled ambitious plans to increase the number of its stores by 10% per year. Organic grocery
Producers cabbage
Inc.
has recently lowered its guidance for the full year as growth continues to slow.
Kroger has begun a three-year plan to revive its business by investing in technology and hiring new employees. The company, 136, has added clothing and financial services to its sales strategy, as well as new grocery products, such as the store's brand-name, meat-free burger patties.
Kroger, based in Cincinnati, extended the number of pickups and home deliveries to more stores and opened automated warehouses for delivery as part of its partnership with the UK retailer
Ocado Group
PLC.
Digital sales growth in the last quarter slowed from over 50% a year ago to 31%, as delivery and pickup services mature.
Store owner Fred Meyer, Ralphs and Harris Teeter said the investments are expected to generate $ 4 billion in free cash flow through cost savings and better sales.
Although sales improved, gross margins decreased during the quarter due to the poor profitability of Kroger pharmacies. Kroger said he's still expecting earnings growth from 2019, but has withdrawn his previous forecast of a $ 400 million operating profit by 2020.
Kroger has maintained its target of 2% store business growth at 2.25% and adjusted earnings of $ 2.15 to $ 2.25 per share for 2019.
Write to Jaewon Kang at [email protected]
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