Until late 2017, Kroger (NYSE:KR) was finding plenty of success chipping away at Walmart's (NYSE:WMT) market share for roughly a full decade. But that trend has reversed itself in recent years as the retailing titan poured cash into revamping its grocery section and adding super-quick delivery and pickup options.

That market share battle will be front and center when Kroger posts its third-quarter earnings report on Thursday, Dec. 5. Let's take a look at a few key metrics for investors to watch in that report.

A man shops for groceries.

Image source: Getty Images.

Faster growth

The growth outlook is positive, given that comparable-store sales rose at the fastest rate in two years last quarter. However, Kroger's 2% comps uptick still significantly trailed the 3% that Walmart has managed in 2019. The retailing giant in mid-November suggested that these market share gains continued, too.

In fact, comps accelerated slightly in the third quarter and management highlighted the grocery segment, both in stores and through online delivery and pickup, as a standout performer. Walmart made further improvements to its fresh food offerings and the layout of that store segment so it will be interesting to see whether some of its gains again came at Kroger's expense. That's likely, but the scale of losses will show up in the supermarket chain's sales growth, along with key loyalty metrics like customer traffic.

Spending money in the right places

Walmart and Target shares have soared in the past year as the companies demonstrated that their efforts to transition into multichannel retailing are paying off. Walmart's returns are generally coming in the form of higher customer traffic, which is supporting its fastest growth rate in the U.S. in a decade. Target is seeing a similar boost, but its focus on high-margin same-day fulfillment options is also lifting profitability.

Kroger has been engaged in many of the same strategies, but investors haven't yet seen strong evidence that management's efforts are lifting sales growth or supporting stronger earnings. On the contrary, operating profit is $1.5 billion for the first half of the year, down from $1.6 billion a year ago.

Kroger is a bit earlier in its transformation process than Walmart and Target, though, and a key pillar in the stock's bullish narrative involves the chain eventually benefiting from the same trends that have lifted those retailers to new highs.

Outlook updates

To that end, investors will be focused on any updates Kroger issues to its short- or long-term growth predictions. As it stands today, the 2019 forecast calls for sales to rise by about 2% to mark faster gains that still trail most national industry peers. CEO Rodney McMullen and his team said in early November that the outlook is brighter for 2020 and beyond. Specifically, Kroger plans to achieve comps that are higher than 2.25% while margins improve.

That model will eventually support "a consistently strong and attractive total shareholder return" through a mix of earnings growth and higher dividends and stock repurchases, executives said. Kroger could go a long way toward supporting those bold claims by showing better earnings results on Thursday.

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