On September 9th The Kroger Company (KR) posted results for Q2 of FY2022 ending August 13th. Kroger is the second largest retailer of groceries in the U.S. and is a pure supermarket play subject to the pressures of an escalation in food costs, logistics and labor and the overhang of COVID in common with national and regional competitors.
For the quarter, the Company earned $731 million on revenue of $34,638 million with a diluted EPS of $1.01. For the corresponding Q2 of FY2021, Kroger earned $467 million on sales of $31,682 million with a diluted EPS of $0.62. Revenue was 9.3 percent higher but gross margin decreased by 2.3 percent to 20.9 percent compared to Q2 2021.
In commenting on quarterly results, Rodney McMullen CEO stated, "Kroger delivered strong second quarter results propelled by our Leading with Fresh and Accelerating with Digital strategy. We are incredibly thankful for our dedicated associates who continue to deliver a full, fresh and friendly customer experience.
Our consistent performance underscores the resiliency and flexibility of our business model, which enables Kroger to thrive in many different operating environments. We are applying technology and innovation to improve freshness, grow Our Brands, and create a seamless shopping experience so our customers can get what they want, when and how they want it, with zero compromise on quality, selection and affordability.
The Company release included FY 2022 Guidance:-
- Identical Sales growth without fuel of 4.0 to 4.5 percent
- Adjusted EPS of $3.95 to $4.05
- Adjusted Operating Profit of $4.6 billion to $4.7 billion
- Capital expenditure of $3,400 to $3,600 million
Comparable same-store sales for Q2 increased by 5.8 percent (excluding fuel) compared to Q2 FY 2021. “Our Brands” increased by 10.2 percent and digital sales were up by 8.0 percent.
On August 13th Kroger posted total assets of $48,741 of which $3,993 million comprised goodwill and intangibles, down 1.1 percent from the end of Q2 of 2021. Long-term debt and lease obligations attained $20,575 million, 4.7 percent lower than August 14th 2021.
At the end of FY2021, Target Corporation operated 2,750 stores with 2,255 pharmacies, under 25 banners in 35 states and D.C. Kroger incorporates 34 food plants and 45 distribution centers with three Ocado fully automated fulfillment centers with as many as twenty planned.
The Kroger Company had an intraday market capitalization of $34,600 million on September 12th. The Company has traded over the past fifty-two weeks in a range of $38.22 to $62.74 with a 50-day moving average of $47.81. KR trades with a forward P/E of 12.2. On September 8th the share closed at $48.35 but after the release opened at $49.66 on September 9th.
Twelve-month trailing operating margin was 3.0 percent and profit margin 1.7 percent. The Company generated a return on assets of 5.6 percent and 25.9 percent on equity.