Kroger reported earnings on June 18th with Q1 total sales +0.5% to $45.1B and identical sales (excluding fuel) growth of 1.0%, at the low end of expectations and continuing to decelerate for now the 3rd straight quarter. Profitability also faced several headwinds in Q1, including higher transportation costs, egg deflation, pharmacy mix, and planned investments in price and labor.
While management was pleased with Q1 performance and expressed confidence in its ability to offset these pressures through productivity initiatives and cost savings, investors were left waiting for more specifics on Kroger’s pricing strategy and path to accelerating growth. Shares fell approximately 8% following the release, as Kroger also struck a cautious tone on the consumer environment, consistent with commentary from other retailers this earnings season.
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