On Thursday, grocery store chain Kroger reported fiscal first-quarter earnings in front of analysts’ forecast in the middle of improving sales for its in-house product brand. Unfortunately, this boost does not appear to be enough to impress shareholders, who made their lack of confidence known with a sincere downgrade to the stock.
Accordingly, the Cincinnati-based grocery store chain reported an adjusted net income of $586 million, which is notably lower than the $626 million reported in the same period last year. This is roughly the equivalent of 72 cents per share against 73 cents per share, respectively. Some analysts had expected earnings of 71 cents per share.
In addition, first quarter sales came in at $37.3 billion, which is also lower than the $37.7 billion registered in the same quarter last year.
Like so many other companies, Kroger has struggled to compete in a fast-moving market, mostly against giants like Walmart, with Amazon finding a way to make waves in the traditional retail world as well. Both Walmart an Amazon have picked up market share in both competitive store pricing and, perhaps more importantly, impressive digital delivery options.
In an effort to maintain their grip on the market, Kroger has been focused on introducing the “Restock Kroger” program. For the last three years, the company has aimed at “redefining the grocery customer experience, improved upon by exciting partnerships that will create value.”
Overall, then, Kroger shares recovered from losses made earlier in the session, down only 0.5 percent at $23.51. Still, Kroger share price is down approximately 14 percent on the year, so far.
Comparatively, Kroger’s closest brick-and-mortar peer, Walmart is also down. Walmart reports its first quarter adjusted EPS slipped almost one percent, to $1.13, mostly on continued investments in pricing—but only in specific markets—as well as weaker international margins. On the other hand, Target has had quite an impressive quarter, adding nearly 16 percent to its adjusted EPS, now at $1.53, mostly the result of higher sales numbers, a solid operating margin, and a lower average share count due to corporate share buybacks.
At the end of the day, Kroger expects guidance for fiscal 2019 EPS to rest within the $2.15 to $2.25 range.