Kroger (NYSE:KR) will kick off its new fiscal year with first-quarter earnings results on June 21, but investors aren't expecting much good news. After all, the sales growth pace at the nation's largest grocery store chain has dropped into the low single digits despite aggressive price cuts aimed at expanding market share in its highly competitive space.

This latest report should show more progress on the Kroger's growth rebound. Yet the profit picture isn't likely to brighten until at least fiscal 2019. Let's take a closer look at the trends to watch on Thursday.

A grocery cart being pushed through the aisle.

Image source: Getty Images.

Market share performance

Kroger's 1.5% comparable-store sales gain in Q4 2017 marked its fourth straight quarter of accelerating growth in that key metric. It also was the retailer's best growth rate since early 2016, even though the figure was far below the 5% neighborhood that investors had come to expect before revenue gains hit a wall in late 2015 .

Chart showing sales growth by quarter.

Sales growth by quarter, excluding fuel.

Kroger did continue expanding market share through that sales growth slump. In fact, CEO Rodney McMullen said its share gains accelerated slightly in 2017 compared to 2016.

Yet its main rival, Walmart (NYSE:WMT), has made those improvements harder to achieve. In the most recent quarter, the retailing giant said strong growth in its private brands helped power solid customer traffic growth in its grocery division. Kroger is leaning on the same general growth initiatives, and so it will be interesting to see where Kroger's sales pace lands in comparison to the 2.1% Walmart delivered last month for its fiscal Q1.

Spending priorities

The bigger contributor to Kroger's slumping share price in the last few years has been its worsening profit picture. Until recently, management aimed to produce annual earnings growth of between 8% and 11%, but the company stepped away from those broader targets, and in fact posted slight profit declines in each of the last two years.

Two major trends are behind those weaker earnings. First, slower industry growth has forced Kroger to cut prices in order to keep customer traffic at healthy levels. That's the right long-term move since it would be more expensive to try to win back lost customers. But it also means lower profit margins, at least until sales growth re-accelerates toward the mid-single-digit percentages.

Second, Kroger has been pouring cash into expanding its e-commerce infrastructure. That's not really optional either, since customers are increasingly shopping through a mix of digital and in-person channels. Walmart, for example, is aggressively expanding its online footprint too, and Kroger can't afford to cede that ground to its rivals.

The 2018 outlook

In Kroger's initial 2018 outlook, management forecast the supermarket operator's sales growth pace would roughly double this year to between 1.5% and 2%. On Thursday, they will have an opportunity to adjust that prediction to reflect the latest customer traffic trends. The current forecast is for EPS in the $1.95 and $2.15 range, which at the midpoint would amount to essentially no growth over last year's $2.04 per share haul.

Management is hoping that the recent investments in its online business, coupled with a steadily improving market share, will position Kroger for a return to robust sales and profit gains as early as fiscal 2019. The next step in that process is an acceleration of comps this year, which might pave the way for stronger pricing trends in the future.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.