Kroger's guidance update remains in line with analysts' forecasts

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Kroger's guidance update remains in line with analysts' forecasts

By Deena M. Amato-McCoy - 10/30/2018
Despite its store remodels slowing sales in the final months of the year, Kroger’s strong digital sales will enable the company’s second-half financial results to match those achieved in the first half of 2018.

The supermarket giant is standing by its earnings per share guidance of $2.00 to $2.15 per diluted share as it heads into the last months of 2018. This guidance is also still in line with analysts’ forecasts.

However, the company expects its financial results of the second half of 2018 to be similar to those achieved in the first half of the year. While Kroger’s same-store sales increased 1.8% in the first half of the year, the company issued guidance that same-store sales would rise anywhere from 2% to 2.5% for the year.

This impact is based on a series of ambitious projects through the company’s Restock Kroger initiative, including space optimization projects, store remodels, and technology enhancements. All projects affected more than 1,000 of its of the company’s 2,800 store locations.

While these stores continue to gain strength, remodeling initiatives did impact sales negatively, creating “a headwind to sales for the remainder of the year,” according to the company.

The company still remains bullish on the growth of its digital sales. Kroger expects an annual digital sales run rate of just over $5 billion at year end 2018, growing to an annual run rate of $9 billion at year end 2019.

“We are on a transformation journey and we are making strong progress on redefining the customer experience,” said Rodney McMullen, Kroger’s chairman and CEO.

“We are proactively investing in our stores, customers and associates for the future, and we are committed to delivering shareholder value through Restock Kroger,” said McMullen. “Everything we are doing today is creating a truly seamless shopping experience, so we can serve customers anything, anytime and anywhere.”