Kroger delivers fourth-quarter earnings beat, but expects 2021 sales to drop as the pandemic grocery boom tapers off

Kroger
Kroger’s digital sales boomed in 2020 as its total sales grew by more than $US10 ($13) billion. Stephen Zenner/SOPA Images/LightRocket via Getty Images
  • Kroger reported its fourth-quarter and full-year 2020 earnings Thursday morning. 
  • The supermarket chain beat fourth-quarter earnings estimates, but forecast slower sales in 2021. 
  • In 2020, Kroger’s digital sales more than doubled. 
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Kroger on Thursday signaled a bigger-than-expected slowdown in sales of groceries this year as a pandemic-fueled demand that helped it top expectations for fourth-quarter results tempers.

The company, however, forecast full-year earnings above estimates, as it undertakes cost-saving initiatives in its sourcing, equipment purchases and supply chain, sending shares up about 1% in premarket trade.

Kroger’s sales surged last year as stuck-at-home consumers rushed in droves to the websites and apps of big national grocery chains to stock up on food and household essentials.

Kroger’s full-year 2020 sales were $US132.5 ($170) billion, compared to $US122.3 ($157) billion in 2019. The supermarket chain reported a $US2.8 ($4) billion operating profit for 2020, up from $US2.3 ($3) billion the previous year. In 2020, Kroger’s digital sales more than doubled, growing by 116%.

Analysts expect that sales growth would be difficult to replicate this year as the rollout of COVID-19 vaccines promises a return to relative normalcy, removing the need to hoard supplies.

Kroger expects adjusted full-year same-store sales to fall 3% to 5%, more than analysts’ estimates of a 2.5% decline.

The supermarket chain forecast full-year profit per share between $US2.75 ($4) and $US2.95 ($4), above analysts’ estimates of $US2.69 ($3).

Same-store sales, excluding fuel, rose 10.6% in the fourth quarter, beating the Refinitiv IBES estimate of a 9.4% rise. 

Kroger reported a net attributable loss of $US77 ($99) million in the fourth quarter compared to a profit of $US327 ($420) million a year earlier, as it recorded a previously announced near $US1 ($1) billion charge related to its withdrawal from a union pension fund.

Excluding one-time items, Kroger earned 81 cents ($1.04) per share, beating estimates of 69 cents ($0.89) per share.