On March 2^nd The Kroger Company (KR) posted results for Q4 and FY 2022 ending January 28^th 2023.  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 impact of inflation in common with national and regional competitors. Kroger has announced the intention of acquiring competitor Albertsons Cos. Creating an enterprise with 5,000 stores but this will be subject to FTC and DOJ approval.

 For the quarter, Kroger earned $450 million on revenue of $34,823 million with an EPS of $0.62.  For the corresponding Q4 of FY 2021, Kroger earned $566 million on sales of $33,048 million with an EPS of $0.64.  Revenue was 5.4 percent higher but gross margin decreased by 1.8 percent to 21.8 percent compared to Q4 2021. Operating margin declined 7.2 percent to $826 million from $965 million in Q4 of 2021.

For FY 2022 Kroger earned $2,244 million on revenue of $148,258 million with an EPS of $3.06.  For FY2021, Kroger earned $1,655 million on sales of $137,888 million with an EPS of $2.17.  Revenue was 7.5 percent higher than in 2021(mainly due to inflation) but gross margin decreased by 2.7 percent to 21.4 percent compared to 2021. Operating margin was 18.6 percent from 2021 to $4,126 million

In commenting on quarterly results, Rodney McMullen CEO stated, "Kroger achieved exceptional results in 2022 as we executed on our Leading with Fresh and Accelerating with Digital strategy, building on record years in 2020 and 2021”. He continued “We appreciate our associates for remaining customer-focused, delivering the products customers want, when and how they want them, with zero compromise on quality, convenience and selection. Our associates enable our success, and we are committed to investing in theirs by continuing to improve wages, comprehensive benefits and career development opportunities”.

He conclude “Our proven go-to-market strategy enables Kroger to successfully navigate many operating environments. We believe that by delivering value for our customers, investing in our associates and serving our communities, Kroger will continue to achieve attractive and sustainable total returns for our shareholders."  

The Company release included FY 2023 Guidance:- 

• Identical Sales growth of 1.0 to 2.0 percent 
• Adjusted EPS of $4.45 to $4.60 
• Adjusted Operating Profit of $5.0 billion to $5.2 billion
• Capital expenditure of $3,400 to $3,600 million
• Adjusted free cash flow of $2,300 million to $2,500 million

Comparable same-store sales for Q4 increased by 6.2 percent (excluding fuel) compared to Q4 FY 2021. “Our Brands” increased by 10.1 percent and digital sales were up by 12.0 percent.

On January 28^th Kroger posted total assets of $49,537 million of which $3,815 million comprised goodwill and intangibles. Long-term debt and lease obligations attained $20,766 million.  

At the end of FY2022 The Kroger Company operated 2,726 stores with 2,252 pharmacies and 1,613 fuel centers, under 25 banners in 35 states and D.C. Kroger operates 34 food plants and 45 distribution centers with five Ocado fully automated fulfillment centers with as many as twenty planned

The Kroger Company had an intraday market capitalization of $31,050 million on January 28^th 2023.  The Company has traded over the past fifty-two weeks in a range of $41.82 to $62.78 with a 50-day moving average of $44.71. KR trades with a forward P/E of 10.2. On March 1^st 2023 the share closed at $43.32 pre-release but opened on March 2^nd at $45.93

Twelve-month trailing operating margin was 3.1 percent and profit margin 1.6 percent.  The Company generated a return on assets of 5.7 percent and 24.4 percent on equity.