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

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.