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CINCINNATI, Ohio—The Kroger Co. reported mixed fourth-quarter results today. Revenue declined to $34.31 billion from $37.06 billion in the same period last year, slightly missing Wall Street estimates of $34.57 billion. It reported a profit of $634 million for the three months ending February 1, down from $736 million during the same period last year.
Fourth-quarter highlights:
- Identical Sales without fuel increased 2.4%
- Operating Profit of $912 million; EPS of $0.90
- Adjusted FIFO Operating Profit of $1,174 million and Adjusted EPS of $1.14
- Delivered 11% digital sales growth, excluding the 53rd week in 2023
Fiscal 2024 highlights
- Identical Sales without fuel increased 1.5%
- Operating Profit of $3.8 billion; EPS of $3.67
- Adjusted FIFO Operating Profit of $4.7 billion and Adjusted EPS of $4.47
- Delivered more than $13B in digital sales
- 17% increase in Media, excluding the 53rd week in 2023, contributed to $1.35B in Operating Profit from Alternative Profit Businesses
- Increased associate wages resulting in average hourly wage of more than $19 and rate of more than $25 with comprehensive benefits factored in, which is a 38% increase in rate in the last seven years
- Commenced a $5.0B Accelerated Share Repurchase Program to be completed under Kroger's $7.5B share repurchase authorization
The retailer issued a conservative outlook for the fiscal year 2025, projecting earnings of $4.60 to $4.80 per share, below estimates. Its profit was $4.47 a share in the recently completed fiscal year.
“Kroger is unable to provide a full reconciliation of its earnings projections without unreasonable effort because it is not possible to predict certain of our adjustment items with a reasonable degree of certainty,” the company stated. “This information is dependent upon future events and may be outside of our control, and its unavailability could have a significant impact on 2025 results.”
Full-Year 2025 Guidance*
- Identical Sales without fuel of 2.0% – 3.0%
- Adjusted FIFO Operating Profit of $4.7 – $4.9 billion
- Adjusted net earnings per diluted share of $4.60 – $4.80
- Adjusted Free Cash Flow of $2.8 – $3.0 billion**
- Capital expenditures of $3.6 – $3.8 billion
- Adjusted effective tax rate of 23%***
The earnings update comes just days after Kroger named board chairman Ronald Sargent as interim CEO following the resignation of longtime CEO Rodney McMullen, who stepped down after an investigation into his personal conduct. The company did not provide details about the investigation.
MMR
“I am excited to join this talented and experienced management team in my role as interim CEO. I am committed to ensuring that we execute with speed and that our teams continue to advance our go-to-market strategy to deliver for our customers, associates, communities, and shareholders,” said McMullen.
“Kroger is operating from a position of strength, delivering fourth quarter results that came in ahead of expectations due to the strength of our model and the disciplined execution of our teams. We enter 2025 with positive momentum, focused on delivering an incredible customer experience through great quality at low prices.”
Kroger attempted to acquire smaller rival Albertsons Cos. Inc. for $25 billion earlier this year, but the deal was blocked by the Federal Trade Commission and several state attorneys general in December. Regulators argued that the merger would stifle competition and increase consumer prices. In response, Kroger announced a $7.5 billion share-buyback program.
Albertsons retaliated by suing Kroger, alleging that Kroger did not put its full effort into completing the deal and seeking billions in damages. Kroger dismissed the lawsuit as “baseless and without merit.”
For more information, visit Kroger’s investor relations site at ir.kroger.com.
*Without adjusted items, if applicable. Kroger is unable to provide a full reconciliation of the GAAP and non-GAAP measures used in 2025 guidance without unreasonable effort because it is not possible to predict certain of our adjustment items with a reasonable degree of certainty. This information is dependent upon future events and may be outside of our control and its unavailability could have a significant impact on 2025 GAAP financial results.
**Adjusted free cash flow excludes planned payments related to the restructuring of multi-employer pension plans, payments related to opioid settlements and merger litigation costs.
***The adjusted tax rate reflects typical tax adjustments and does not reflect changes to the rate from the completion of income tax audit examinations and changes in tax laws and policies, which cannot be predicted.
