Kroger Posts Rise in Sales on Online Orders, Price Cuts

Kroger Co. increased it sales through improving its ordering online and lowering prices in its stores, a positive sign in the grocer’s battle against increased competition by Amazon.com and discounters.

The grocery chain, based in Cincinnati said on Thursday that its sales increased 1.1% during its November 4 ending quarter at established stores, which topped expectations. Kroger is expecting an increase in sales by a bigger margin during the fourth quarter on the same metric, which excludes sales of fuel.

Digital revenue was more than double during the third quarter as Kroger brought online grocery delivery in another 300 locations. Kroger is planning to have more than 1,000 of its locations outfitted to fill orders that come in online before the end of 2017.

The grocery chain is paying for its rollout of e-commerce and its cuts in prices in part through setting tougher terms with suppliers.

CEO Rodney McMullen said that the pieces we have already in place, when those things are done and our costs are managed, it is obvious the company will grow

Shares of Kroger were over 8% higher in early trading Thursday afternoon. Costco Wholesale Corp shares as well as other food retailers saw their shares increase.

Kroger shares have increased close to 30% during November, its best month in over 29 years.

Kroger has also diversified to attract more new customers, including focusing on prepared foods to create competition with restaurants.

The quest for more revenue is driven partly by the intensifying competition for the core customers of Kroger. Walmart is competing for grocery sales more aggressively, sprucing its stores up, slashing its prices and expanding it offering online.

Costco has expanded its online sales, and reported strong sales growth for November. European discount grocers Lidl and Aldi have opened more stores in the U.S. in 2017, while Whole Foods has seen its sales surge since being acquired this summer by Amazon.

Some industry analysts have questioned whether Kroger will sustain its progress against its competitors. One said he still has reservations about the success.

Other efforts by Kroger to appeal to more customers include its first restaurant that is free-standing, a high-end line of floral products that debuted for this year’s holidays and a new clothing line Kroger is planning to place next year inside its stores.

Kroger’s profit was 44 cents per share for the quarter, with Wall Street expecting 40 cents, while revenue was up 4.5% ending at $27.75 billion.

Leave a Reply

Your email address will not be published. Required fields are marked *