Kroger bullish on 2022 as grocery demand and online deliveries fuel sales

A selection of Kroger-branded products are seen in a grocery cart at a Kroger-owned King Soopers store in Golden, Colorado September 15, 2009. REUTERS/Rick Wilking

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  • Grocery stocks rise about 6% pre-market
  • Annual Forecast Exceeds Market Estimates
  • Cooking sticks at home even when lockdowns pass

March 3 (Reuters) – Kroger Co (KR.N) on Thursday forecast same-store annual sales and profit to beat market expectations, encouraged by strong demand for its pickup and delivery services and sustained trends in the home cooking.

Shares of the Ohio-based grocer, which also beat quarterly earnings estimates, rose nearly 6% in premarket trading.

Despite the reopening of restaurants and bars, Americans have focused on cooking more at home as they have done during the shutdowns, in part due to hybrid work trends, which has boosted sales at grocers.

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Shoppers are also increasingly relying on delivery and pickup services rather than venturing into stores, helping Kroger more than double its digital sales in the quarter from pre-pandemic levels. .

Kroger has ramped up its online business, from loyalty programs to memberships for unlimited home deliveries, to attract more customers and retain existing customers.

The retailer has opened more fulfillment centers in US states to support online ordering, helped by its partnership with UK supermarket and technology company Ocado Group (OCDO.L).

The company’s reliance on automation and robotics has also helped reduce costs when retail sector margins are hammered by inflation, helping Kroger increase the adjusted gross margin rate by 3 basis points compared to last year.

The company said it expects adjusted same-store sales to grow 2% to 3% in fiscal 2022, compared to analysts’ average estimate of an increase of 2.0%. 1%, according to IBES data from Refinitiv.

Kroger, which operates nearly 2,800 stores across the United States, said it expects adjusted earnings per share between $3.75 and $3.85 for the year, well above $3.45 estimates.

Same-store sales excluding fuel climbed 4% in the fourth quarter ended Jan. 29, beating expectations for a 2.84% rise, while adjusted profit of 91 cents also beat expectations.

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Reporting by Deborah Sophia in Bengaluru; Editing by Vinay Dwivedi

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