With consumers choosing to eat more at home because of closure of offices and schools classes online because of the novel coronavirus pandemic, United States based supermarket chain Kroger Co beat estimates of the market as the company forecast full-year same-store sales and profit on Friday.
Kroger reported a 127 per cent increase in its sales through the digital medium for its second quarter that ended August 15. This performance of the company’s online sale channel was driven by increased purchase from consumers amid the pandemic through online channel for everything from fresh vegetables and canned soups.
Even prior to the pandemic and the health crisis hitting the US and the world, heavy investments were being made by the company for the expansion of its digital offerings. The company has been investing in testing driverless delivery technology in three Texas stores as well as making a large investment in British online supermarket Ocado Group.
“As we talk to other companies across America, we believe return to work will look very different, with many employees working part of the week from home,” the company’s Chief Executive Officer Rodney McMullen told analysts on a call.
“2021 will be even stronger than we previously anticipated,” he added.
Kroger is among the first retail companies to give a forecast to the investors. The company said that it expects 2020 comparable sales to surpass 13 per cent growth while also forecasting its earnings of between $3.20 and $3.30 per share.
According to IBES data from Refinitiv, comparable sales of 10.15 per cent and earnings of $2.90 per share were being expected by analysts.
Despite the forecast some analysts believe that the company will not be able to sustain the unprecedented growth witnessed during the lockdowns induced by the novel coronavirus pandemic.
“Bears rightly point out that the 19% ID (same-store) sales and profit surge from 1Q was the top, with the reality that recent growth rates are unsustainable,” said Evercore ISI analyst Michael Montani.
On an adjusted basis, Kroger earned 73 cents per share, beating estimates of 55 cents. Comparable sales jumped 14.6%, topping expectation of 10.96%.
The news pushed the shares of the company a little to $34.86 in midday trading. So far this year, the shares of the company have gained by about 20 per cent.
(Adapted from USNews.com)