Second-quarter results for The Kroger Co. were roughly in line with estimates as the grocery and mass retailer reduced its identical sales guidance for the year.
Company net earnings were $641 million, or $1.05 per diluted share, versus $609 million, or 91 cents per diluted share, in the year-before quarter. Adjusted for one-time events, company net earnings were $667 million, or $1.09 per diluted share, versus $695 million, or $1.04 per diluted share, in the year-previous period, Kroger reported.
An analyst consensus estimate from Zacks Investment Research pegged Kroger second quarter earnings at $1.05 per diluted share and revenues at $34.69 billion.
Identical sales without fuel gained 0.2% in the quarter year over year, the company noted. Overall sales were $34.6 billion versus $33.9 billion in the year-earlier period. Operating profit was $971 million versus $863 million in the quarter a year prior while adjusted operating profit was $1.08 billion versus $1.09 billion.
The company reported its adjusted e-commerce sales increased by 20% year over year.
In announcing the financial results, Kroger CFO David Kennerley said the company was making an outlook adjustment because of the effects of the macroeconomic environment and the United States Inflation Reduction Act of 2022.
“Our second-quarter results demonstrate the resiliency of Kroger’s business model and the discipline with which our teams are executing,” Kennerley said. “Adjusted earnings per diluted share grew 5%, driven by cost savings, strong pharmacy and fuel performance, and improvement in the profitability of our e-commerce business. Given our first half results and the macro environment, we are updating our identical sales without fuel guidance to a new range of 0.2% to 0.8%, which includes an approximately 140 basis point headwind from the Inflation Reduction Act. We are reaffirming our adjusted FIFO net operating profit and adjusted earnings per diluted share guidance, reflecting our confidence and visibility into the same factors that drove our profitability in the second quarter. We will continue to invest in the business for growth, manage our margins with discipline and create long-term shareholder value.”
The previous identical guidance was for a 1% to 2% advance. The outlook for earnings per share remained at $5.10 to $5.30.
Kroger CEO Greg Foran said in a conference call that Kroger expects e-commerce to deliver a substantial proportion of company growth over the next several years. “Kroger delivered a solid second quarter, with adjusted EPS growth of 5%,” he said. “I am pleased with the progress we are making. Our teams kept driving value for customers, improving execution in our stores, growing e-commerce profitably and managing costs with discipline. Improving sales momentum remains a top priority.”
