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The Kroger Co. (KR) is one of the largest retailers in the world, with 2,742 supermarkets, 2,255 pharmacies, and 1,596 fuel centers. The company manages 51% of its supermarkets in company-owned facilities, including some company-owned buildings on leased land. These supermarkets stock over 15,000 private label items produced in their network of 35 food production plants.
The company generated 90% of its revenue from retail sales to customers without fuel and 10% from supermarket fuel sales during the quarter ended May 22, 2021.
Strong Earnings with Limited Inflation
Kroger reported first-quarter revenue that fell 0.6% to $41.3 billion, beating consensus estimates by $1.43 billion, with non-GAAP earnings of $1.19 per share, beating estimates by 20 cents. In addition, management raised its full-year guidance and expects adjusted net earnings per diluted share between $2.95 and $3.10 versus a $2.83 consensus.
CEO Rodney McMullen predicted that long-term inflation would be between 1% and 2%, which is well below recent government estimates. At the same time, McMullen believes that COVID-19 lockdowns altered eating habits across the nation and predicts that consumers will continue to value family meals even as restaurants continue to re-open.
The company raised its quarterly dividend by 16.7% to $0.21 per share, representing a 2.23% yield. The dividend is payable on September 1, 2021, to shareholders on record as of August 13, 2021. In addition, the company announced a new $1 billion share buyback program.
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