What happened
Supermarket giant Kroger (KR 1.51%) outpaced the market last month by gaining 17% compared to a less-than-1% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.
The rally pushed shareholders back into positive territory for the year, although the stock is still far below the all-time highs it reached in the opening days of 2016.
So what
Investors were pleased with the retailer's fiscal first-quarter report that paired modest growth at its physical stores with a sharp jump in the digital sales channel. Kroger's overall expansion rate remained far below the 5% mark it had enjoyed until late 2015, but executives said they saw evidence that their rebound plan was gaining steam.
Image source: Getty Images.
Now what
Like rivals including Wal-Mart and Target, Kroger has warned its shareholders to expect reduced profitability as its sales shift toward the lower-margin online channel. The impact on earnings should fall over time, though, as the company gets its e-commerce infrastructure up and running.
These latest results demonstrate that Kroger can still produce healthy growth in a multichannel sales environment. Yet it's unclear exactly when the company might return to its prior pace of low double-digit annual earnings gains, so it could be while before the stock returns to all-time highs of around $40 per share.
