Natural, Organic Foods Help Grow Kroger’s Sales

By Nancy Grodo, Investor’s Business Daily

Traditional supermarkets are known for their razor-thin margins and low sales and profit growth. But Kroger (NYSE:KR) is helping change that perception.

The Cincinnati-based company operates more than 2,800 supermarkets, convenience stores and jewelry stores under local names that include its namesake Kroger as well as Food 4 Less, Fred Meyer and Ralphs. It also runs supermarket fuel centers and food processing plants.

While its profit margins are still thin, the chain has grown its earnings per share at a double-digit clip in nine of the past 10 quarters, and it is forecast to post a 15% increase in the current period. Sales gains have come in at 10% and 12% the past two quarters, with analysts expecting 10% growth this quarter as well as in fiscal Q1.

Last month, Kroger topped views with fiscal Q2 EPS that rose 17% on a 12% rise in revenue. The firm narrowed its full-year 2014 profit guidance to $3.22-$3.28 from the $3.19-$3.27 it saw earlier. The new guidance yields a higher midpoint, though it’s below consensus forecasts for $3.29.

What’s helping fuel growth, somewhat ironically, is a surge in organic and natural food sales. Where pure-play natural food chains like Whole Foods Market (NASDAQ:WFM) had been eating traditional grocers’ lunch, Kroger is now enjoying a growing slice of the natural foods market.

Natural foods are a $4 billion to $5 billion category for Kroger, according to Jefferies analyst Mark Wiltamuth, and it’s growing at a double-digit rate.

Kroger’s January acquisition of upscale chain Harris Teeter also boosted sales in Q2.

Image source

Read more: http://news.investors.com/investing-stock-spotlight/101014-721278-natural-organic-foods-help-grow-kroger-sales.htm

Health Freedom and Natural Living news to your inbox!


Why Is CBD Everywhere?

Enter your email address below to get instant access!

Join Over 10,000 Other Subscribers!

Thank you for sharing. Follow us for the latest updates.

Send this to a friend