After delivering positive earnings surprise in the third quarter of fiscal 2017, The Kroger Co. (KR – Free Report) reported in line earnings in the fourth quarter. The grocery retailer posted adjusted earnings of 63 cents a share that came in line with the Zacks Consensus Estimate and increased 18.9% from the prior-year quarter.
Adjusted earnings for fiscal 2017 came in at $2.04 per share, down 3.8% from the year-ago period. Management now envisions fiscal 2018 earnings in the band of $1.95-$2.15 per share. The current Zacks Consensus Estimate for fiscal 2018 is pegged at $2.11.
Total sales grew 12.4% to $31,031 million from the prior-year quarter and also came ahead of the Zacks Consensus Estimate of $30,830 million, marking the sixth straight quarter of revenue beat. Excluding fuel center sales and the 53rd week, total sales rose 2.7%. Total sales rose 6.4% to $122.7 billion during the fiscal year, wherein digital sales surged more than 90%.
Kroger has been trying all means to overcome stiff competition from bellwethers such as Walmart (WMT – Free Report) and Amazon (AMZN – Free Report) . The company remains well on track to boost market share by expanding store base, introducing new items, digital coupons, and order online, pick up in store initiative. The company’s “Restock Kroger” program is gaining traction.
Kroger also entered into an agreement to sell its convenience stores to focus on its core operations. Per the deal valued $2.15 billion, Kroger will sell more than 700 stores —operating under the banners of Turkey Hill, Loaf ‘N Jug, Kwik Shop, Tom Thumb and Quik Stop — to EG Group, a Blackburn, England-based operator of convenience stores in Europe. No wonder, Kroger plans to utilize net sale proceeds to buy back shares and lower the debt load.
Kroger Company (The) Price, Consensus and EPS Surprise
These endeavors have helped the shares of Kroger to surge 22.9% in the past six months compared with the industry that gained 11.3%. We believe that the company’s operational strategies present enormous opportunities to augment identical supermarket sales and enhance return on invested capital.