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Kroger yesterday said that its Q1 total company sales were $45.2 billion in the first quarter, compared to $44.6 billion for the same period last year.

Same-store sales for the first quarter also were up 3.5 percent, and digital sales for the period were up 15 percent.

Kroger’s Q1 net earnings were $962 million, compared with $664 million a year ago.

Some analysis from the Wall Street Journal:

"Within the grocery universe, Kroger runs middle of the pack - neither enticingly cheap nor selling differentiated, premium products. Its prices were about 9% higher than Walmart on average year to date, according to BofA Research, which tracks a basket of goods on a monthly basis. By comparison, Sprouts Farmers Market and Whole Foods are about 30% more expensive than Walmart. Kroger said on the earnings call on Thursday morning that it saw more business from higher-income customers that are migrating from specialty retailers.

"The numbers, though, aren’t compelling. Direct comparisons are difficult because of differing fiscal quarters, but Kroger’s sales growth seems to be badly lagging that of value peers and isn’t head and shoulders above premium grocers. Walmart U.S. saw grocery comparable sales rise more than 10% in its quarter ended April 29 compared with a year earlier, while Family Dollar’s consumables sales increased 9.8% over the same period. Premium grocer Sprouts Farmers Market’s same-store sales rose 3.1% in its quarter ended April 2—similar to growth seen at Kroger."

However, the Journal writes, "The good news for all grocers is that inflation at restaurants has been running a lot hotter lately. The year-over-year price increase for food away from home exceeded that for food at home in March, April and May, according to data from the Bureau of Labor Statistics. In May, food-at-home prices rose 5.8% on year, while food-away-from-home prices surged 8.3%. This is a sharp reversal after a year and a half during which grocery prices were rising more than restaurant prices."

KC's View:

The Journal analysis strikes me as very interesting - it seems to be accusing the company of being in the mushy middle, which is never a good place to be.

The thing is, all these results have to be seen in the context of how they will be perceived by the Federal Trade Commission (FTC), which is evaluating Kroger's proposed $26.4 billion acquisition of Albertsons.  Will its higher-than-Walmart prices support the argument that a merger is required in order to be price competitive with Walmart?  Or will it not matter, because greater market dominance will actually allow it to maintain higher pricing with fewer worries about competition?

Maybe the idea is that the mushy middle gets less mushy when you control more of it.