Kroger shares membership program plans alongside Q1 results

Kroger is looking to give both inflation-weary shoppers and its bottom line a boost by expanding its loyalty program across the country.

During a strong first-quarter earnings report, the grocery chain announced that it would be rolling out its Boost membership program (first launched as a pilot in November) nationally over the next few weeks. Boost offers customers two different membership levels and includes benefits such as two times fuel points earned on every dollar spent, extra savings on Kroger's private brands and free two-hour or next-day delivery.

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The company says it is seeing positive feedback for the program from shoppers in its four pilot divisions of Cincinnati/Dayton, Columbus, Central (Indianapolis) and Atlanta.

As inflation continues to drive food and fuel prices up, and consumers keep stocking up on groceries, Kroger expects the program will make a big difference for price-conscious shoppers.

Meanwhile, Kroger raised its guidance on June 16 after reporting strong sales and earnings in the first quarter.

"Our relentless focus on executing our strategy and sustained food at home trends led to a strong first quarter," said CFO Gary Millerchip. "The Kroger team is effectively navigating a dynamic retail environment. Our diverse and resilient business model gives us confidence to raise our full-year guidance. We now expect identical sales without fuel to be in the range of 2.5% to 3.5%, adjusted FIFO operating profit of $4.3 billion to $4.4 billion, and adjusted net earnings per diluted share to be in the range of $3.85 to $3.95. We remain confident in our ability to deliver sustainable earnings growth and total shareholder returns of 8-11% over time." 

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During the first quarter, same-store sales without fuel increased 4.1% at Kroger. Fresh department comps increased by 5.2%. Our Brands comps increased 6.3%. And digitally engaged households grew by more than half a million and digital coupon downloads increased by 11%.

Total company sales during the first quarter were $44.6 billion, compared to $41.3 billion for the same period last year. Excluding fuel, sales increased 3.8% compared to the same period last year. Profit was $664 million, or 90 cents a share, up from $140 million, or 18 cents a share, last year.

The gross margin was 21.6% of sales for the first quarter. The FIFO gross margin rate, excluding fuel, decreased 26 basis points compared to the same period last year. This decrease was primarily attributable to continued strategic price investments and higher supply chain costs offset by sourcing benefits and the cycling of a write-down related to a donation of personal protective equipment inventory from prior year.

The LIFO charge for the quarter was $93 million, compared to a LIFO charge of $37 million for the same period last year driven by higher inflation.

The Operating, General & Administrative rate decreased 46 basis points, excluding fuel and adjustment items, which reflects sales leverage, continued execution of cost savings initiatives, and lower contributions to multi-employer pension plans offset by investments in associates.

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Kroger recently ranked third in Bond Brand Loyalty’s report, "Best U.S. Grocery Retail Programs of 2021," which is recognized as the industry’s longest-standing and largest global study on customer engagement, loyalty attitudes, behaviors, drivers and distribution. Bond’s annual report surveyed more than 25,000 North American consumers and examined 450-plus loyalty programs on more than 85 attributes.

"Our team is doing an outstanding job managing costs in an inflationary environment, which is allowing us to continue to invest in our associates while providing our customers the freshest food at affordable prices when and where they need it. We are delivering everyday value through personalized experiences, trusted Our Brands products, data-driven promotions, and seamless e-commerce solutions," said CEO Rodney McMullen. "Looking ahead, we are well positioned to continue delivering for our customers, investing in our associates, and driving sustainable returns for shareholders." 

This story originally appeared on Progressive Grocer.