Kroger Reports Strong First Quarter 2024 Results and Reaffirms Guidance Kroger today reported its first quarter 2024 results, reaffirmed its guidance, and updated investors on the progress of its “Leading with Fresh and Accelerating with Digital” strategy, positioning the company for long-term sustainable growth.
Chairman and CEO Rodney McMullen’s Comments:
“Kroger is off to a solid start in 2024, driven by better-than-expected performance in our grocery business. We are providing exceptional value to our customers through affordable prices and personalized promotions at a time when many need it most. Our associates are enhancing the customer experience and improving store execution, resulting in growing households and increasing customer visits.
Our long-term investments to strengthen and diversify our business model enable us to manage economic cycles confidently. By delivering value to customers and investing in our associates, Kroger is well-positioned to generate attractive and sustainable returns for our shareholders.”
First Quarter Financial Results:
- Total company sales: $45.3 billion (1Q24) vs. $45.2 billion (1Q23)
- Excluding fuel: Sales increased by 0.6% compared to last year
- ID Sales: 0.5% (1Q24) vs. 3.5% (1Q23)
- Earnings Per Share: $1.29 (1Q24) vs. $1.32 (1Q23)
- Adjusted EPS: $1.43 (1Q24) vs. $1.51 (1Q23)
- Operating Profit: $1,294 million (1Q24) vs. $1,470 million (1Q23)
- Adjusted FIFO Operating Profit: $1,499 million (1Q24) vs. $1,669 million (1Q23)
- FIFO Gross Margin Rate: Decreased by 7 basis points
- OG&A Rate: Increased by 22 basis points
Key Financial Highlights:
- Gross margin: 22.4% of sales for the first quarter. The FIFO gross margin rate, excluding fuel, decreased by 7 basis points due to lower pharmacy margins and increased price investments, partially offset by a favorable product mix.
- LIFO charge: $41 million (1Q24) vs. $99 million (1Q23), due to lower inflation expectations.
- Operating, General & Administrative rate: Increased by 22 basis points, driven by planned investments in associate wages and increased incentive plan costs, partially offset by cost savings initiatives.
Capital Allocation Strategy:
Kroger expects to continue generating strong free cash flow, invest in long-term sustainable net earnings growth, maintain its investment-grade debt rating, and continue paying and potentially increasing its quarterly dividend. The company has paused its share repurchase program to prioritize de-leveraging following the proposed merger with Albertsons.
- Net total debt to adjusted EBITDA ratio: 1.25 (current) vs. 1.34 (previous year), with a target range of 2.30 to 2.50.
Full-Year 2024 Guidance (Reaffirmed):
- Identical Sales without fuel: 0.25% – 1.75%
- Adjusted FIFO Operating Profit: $4.6 – $4.8 billion
- Adjusted net earnings per diluted share: $4.30 – $4.50
- Adjusted Free Cash Flow: $2.5 – $2.7 billion
- Capital expenditures: $3.4 – $3.6 billion
- Adjusted effective tax rate: 23%
First Quarter 2024 Highlights:
Leading with Fresh:
- Introduced 346 new Our Brands items
- Achieved a new record for quarterly floral sales, led by Valentine’s Day and Mother’s Day
- Launched Field & Vine, a new brand offering high-quality, regionally grown berries
Accelerating with Digital:
- Increased delivery sales by 17%
- Increased digitally engaged households by 9%
- Expanded Kroger Precision Marketing capabilities on Meta’s platforms
- Achieved a new record for quarterly pickup fill rate
Associate Experience:
- Awarded the 2024 Platinum Bell Seal for Workplace Mental Health by Mental Health America
- Recognized as one of the All-Time Top Corporations for Women Business Enterprises by WBENC
- Named a Best Workplace for Diverse Professionals by Mogul
Live Our Purpose:
- Featured on the 2024 Axios Harris Poll 100, ranking among the most visible and trusted companies in America
- Sponsored the 2024 National STEM Festival through Kroger’s Zero Hunger | Zero Waste Foundation
- Celebrated Earth Month with contributions to the World Wildlife Fund and a new reusable bag campaign
