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Kroger Reports Better-than-Expected Q2 Earnings

Kroger Co. (NYSE: KR) reported strong second quarter earnings on Friday and consequently increased its full-year profit outlook. The positive news comes as shoppers build up their grocery stockpile amid the increase in Delta variant infections. Nevertheless, the company’s shares still fell 9.1%.

“Consistent with many retailers, we experienced supply chain constraints and increased warehouse and transportation costs during the quarter,” Kroger Chief Financial Officer Gary Millerchip said on an earnings call.

“We expect supply chain costs to remain elevated in the second half of the year.”

The American retail company reported earnings of USD0.80 per share, compared to the expected USD0.63 a share. Revenue totaled USD31.7 Billion, higher than analysts anticipated USD30.65 Billion.

Additionally, due to the increased costs of materials throughout the pandemic, packaged food manufacturers and grocery stores with their own private-label brands have been forced to increase prices and caution against future price hikes.

“The messaging (from Kroger) was that… some inflation – notably on meat – was not fully passed on to consumers,” J.P. Morgan analysts wrote in a note.

As a means of retaining customers as well as attracting new ones, in Florida the grocer introduced “Kroger Delivery Savings Pass,” to offer unlimited delivery for USD79 a year. Kroger shares have risen 45% throughout the year and has a current market cap of USD31.78 Billion.