Kroger’s Q3 sees Restock Kroger progress, Lucky's Market divestment

Kroger delivered solid results from its fiscal third quarter and offered an update on its Restock Kroger efforts. CEO Rodney McMullen said various Restock Kroger initiatives contributed in part to the company's performance.  

"Kroger's customer obsession and focus on operational excellence continued to generate positive results in the third quarter,” McMullin said. “Identical sales were the strongest since we started Restock Kroger and gross margin rate, excluding fuel and pharmacy, improved slightly in the quarter. At the same time, we continued to reduce costs as a percentage of sales.”

The company’s total sales were $28 billion for the quarter, compared with $27.8 billion in the prior-year third quarter. Kroger’s gross margin totaled 22.1% of total sales, but excluding fuel decreased 24 basis points, which the company attributed to lower margin rates for pharmacy and growth in specialty pharmacy. Overall, earnings per share totaled 32 cents, which was affected in part by certain adjustment items, including Kroger divesting its interest in Lucky's Market, which incurred a $238 million non-cash impairment charge, $131 million of which is attributable to Kroger. 

"Kroger's customer obsession and focus on operational excellence continued to generate positive results in the third quarter,” McMullen said. “Identical sales were the strongest since we started Restock Kroger and gross margin rate, excluding fuel and pharmacy, improved slightly in the quarter. At the same time, we continued to reduce costs as a percentage of sales.”

During the quarter, Kroger grew its pick-up offering to 1,915 locations and increased the number of delivery locations to 2,326, covering more than 96% of its consumer households. The company also launched 231 new Our Brands private-label products, including a plant-based Simple Truth collection. On the fulfillment side, it named the location of an additional fulfillment center to open in partnership with Ocado in Wisconsin. Other Restock Kroger pillars, which include “Develop Talent” and “Live Kroger’s” purpose saw progress in the quarter, the company reported. 

“Restock Kroger is the right framework to reposition our business to create value for all of our stakeholders, both today and in the future,” McMullen said.