Kroger reports Q1 results
Kroger reported its first quarter 2024 results. Rodney McMullen, chairman and CEO of Kroger, said, "Kroger is off to a solid start in 2024 led by better-than-expected performance of our grocery business. Kroger is delivering exceptional value at a time when many customers need it more than ever, by providing affordable prices with personalized promotions. We appreciate our associates who are elevating the customer experience and improving store execution. Together, this is growing households and increasing customer visits."
McMullen continued, "The long-term investments we have made to strengthen and diversify our model enables us to manage economic cycles and gives us the confidence to deliver on our full year outlook. By delivering value for customers and investing in our associates, Kroger remains well-positioned to generate attractive and sustainable returns for our shareholders."
[Read more: Kroger to lower prices following merger with Albertsons]
Kroger's total company sales were $45.3 billion in the first quarter compared to $45.2 billion for the same period last year. Excluding fuel, sales increased 0.6% compared to the same period last year.
Gross margin was 22.4% of sales for the first quarter. The FIFO gross margin rate, excluding fuel, decreased 7 basis points compared to the same period last year. The decrease in rate was primarily attributable to lower pharmacy margins and increased price investments. The decrease was partially offset by favorable product mix reflecting Our Brands margin performance, Kroger said.
Kroger said it expects to continue to generate strong free cash flow and remains committed to investing in the business to drive long-term sustainable net earnings growth, as well as maintaining its current investment grade debt rating. The company expects to continue to pay its quarterly dividend and expects this to increase over time, subject to board approval. Kroger has paused its share repurchase program to prioritize de-leveraging following the proposed merger with Albertsons.
[Related: Kroger reports Q3 results]
Among the first quarter highlights:
- Identical sales without fuel increased 0.5%
- Operating profit of $1.294 billion; EPS of $1.29
- Adjusted FIFO Operating Profit of $1.499 billion and adjusted EPS of $1.43
- Executed its go-to-market strategy to deliver value for customers
- Grew digital sales more than 8%, with delivery and pickup combining for double-digit growth
- Increased total households, loyal households and customer visits
Kroger reaffirmed its full-year 2024 guidance:
- Identical sales without fuel of 0.25%—1.75%
- Adjusted FIFO operating profit of $4.6—$4.8 billion
- Adjusted net earnings per diluted share of $4.30—$4.50
- Adjusted free cash flow of $2.5—$2.7 billion
- Capital expenditures of $3.4—$3.6 billion
- Adjusted effective tax rate of 23%