Please ensure Javascript is enabled for purposes of website accessibility

Kroger Raises Its Outlook After Another Double-Digit Sales Boost

By Demitri Kalogeropoulos – Sep 11, 2020 at 10:09AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Home eating habits are likely to keep lifting the supermarket chain's business into 2021.

The pandemic's boost to Kroger's (KR 1.11%) business hardly waned in recent months and is likely to extend at least into early 2021. That was the key takeaway from the grocery chain's latest earnings results, which showed strong sales and profit growth.

The company said revenue growth slowed slightly compared to the fiscal first quarter, but its 15% spike was still significant, and likely reflected modest market share gains against peers such as Walmart (WMT 0.15%).

Like its main competitor, Kroger noted a 100%-plus increase in e-commerce business as shoppers shifted toward online ordering for home essentials. "We delivered extremely strong results," CEO Rodney McMullen said in a press release.

An employee restocks vegetables at a supermarket.

Image source: Getty Images.

McMullen and his team now see sales rising by at least 13% for the full year as spiking demand pushes earnings higher by about 45%. Looking further out, Kroger expects demand shifts related to at-home eating habits to persist into 2021, resulting in higher sales, earnings, and cash flow than the chain had predicted before the pandemic struck.

That means investors should see additional boosts to direct returns through dividends and stock buyback spending, even as Kroger gets more aggressive about investing in growth initiatives and making game-changing acquisitions like its $2.5 billion purchase of Harris Teeter.

Demitri 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.

Stocks Mentioned

Kroger Stock Quote
$47.46 (1.11%) $0.52
Walmart Stock Quote
$148.78 (0.15%) $0.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.