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TICKERS: KR

Kroger Shares Trade 8% Higher on FY Earnings and Positive Store & Digital Sales Growth

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The Kroger Co.'s shares rose to a new 52-week high price after the firm reported Q4/19 and FY/19 financial results. The supermarket giant's identical sales (ex-fuel) increased 2% and digital sales grew 29% in 2019.

Earlier today, supermarket giant The Kroger Co. (KR:NYSE) announced its fourth quarter and fiscal year 2019 financial results. The firm also provided an update for investors on the progress of its Restock Kroger framework and how it is repositioning itself to create value for customers, associates and shareholders.

The company reported that total company sales were $28.9 billion in Q4/19, compared to $28.3 billion in Q4/18, and added that excluding fuel and dispositions, sales grew 2.3%.

The firm noted that it repurchased $400 million of shares in Q4/19, and in 2019 reduced net total debt by $1.1 billion and returned $951 million to shareholders. The company stated that in 2019 it increased the annual dividend by 14% to $0.64 per share, up from $0.56 per share in 2018, which marks the 13th consecutive year of dividend increases.

The company's Chairman and CEO Rodney McMullen remarked, "We are pleased with our 2019 results and improving trends in our supermarket business. We delivered on our commitments for ID sales without fuel, adjusted FIFO operating profit, and cost savings in addition to generating over $100 million of incremental operating profit through alternative profit streams in 2019. We also delivered strong adjusted free cash flow during the year, consistent with the total shareholder return model outlined at our Investor Day."

The company stated in the report that "its capital allocation strategy is to use its adjusted free cash flow to invest in the business and drive profitable growth while also maintaining its current investment grade debt rating and returning capital to shareholders."

The firm highlighted some of its achievements under its Restock Kroger initiative designed to redefine the grocery customer experience. The company stated that its Brands achieved its best year ever, exceeding $23.1 billion in sales and that it introduced 39 new Our Brands Plant-Based products in 2019. Additionally, Private Selection brand eclipsed $2 billion in sales for the first time and is Kroger's third $2-billion-dollar brand. The company advised that it expanded to 1,989 pickup and 2,385 delivery locations providing coverage to 97% of Kroger households.

Kroger is based in Cincinnati, Ohio, and operates approximately 3,900 supermarkets, multi-department stores, jewelry stores and convenience stores throughout the U.S. The company employs nearly 500,000 people and serves more than 11 million customers every day.

Kroger has a market capitalization of around $24.8 billion with approximately 800.6 million shares outstanding and a short interest of about 4.40%. KR shares opened slightly lower today at $30.525 (-$0.435, -1.41%) compared to yesterday's closing price of $30.96. Following the open, shares rose to a new 52-week high price of $33.70. The stock has traded today between $30.43 to $33.70 per share and is presently trading at $33.47 (+$2.51, +8.11%).

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