What You Need to Know Ahead of Kroger’s Earnings: Q2 FY 2024 Preview
Key Takeaways
- Kroger reports earnings ahead of market open Thursday, with the retailer in the midst of legal fights with regulators over its proposed merger with Albertsons.
- Sales are projected to rise slightly year-over-year, with a profit compared to a net loss a year ago, when Kroger took a $1.4 billion charge related to an opioid settlement.
- Executives said in court this week that it would be able to start lowering prices once the merger is completed. The FTC has said the merger will lead to higher prices and less competition.
Kroger (KR) reports its latest financial results Thursday morning, with the grocery giant in the midst of legal battles with regulators over its proposed $24.6 billion merger with Albertsons (ACI). The Federal Trade Commission (FTC) has said the deal will lead to less competition and higher prices in the grocery sector.
Analysts expect a slight bump in quarterly revenue to $34.04 billion from $33.85 billion in the same quarter of 2023. Profits are expected to rise to $640.8 million, rather than the $180 million net loss Kroger reported in the second quarter of fiscal 2023, when the retailer took a $1.4 billion charge related to the settlement of an opioid lawsuit.
| Analyst Estimates for Q2 2024 | Q1 2024 | Q2 2023 | |
| Revenue | $34.04 billion | $45.27 billion | $33.85 billion |
| Diluted EPS (loss) | 88 cents | $1.29 | (25 cents) |
| Net Income (loss) | $640.81 million | $947 million | ($180 million) |
Key Metric: Sales
The retailer beat sales estimates in the first quarter as same-store sales rose. Kroger said digital sales saw an 8% year-over-year boost, as delivery and curbside pickup became more popular.
Kroger has managed to continue beating earnings estimates as grocery spending has remained consistent amid an overall pullback in consumer spending, with higher prices on essentials leading many Americans to tighten their budgets. Kroger has said in recent quarters that customers have responded well to its efforts to lower prices.
Business Spotlight: Legal Challenges to Albertsons Merger
Regulatory challenges to Kroger’s proposed merger with Albertsons are ongoing, with the retailer heading to court over the last month to defend its injunction against the FTC’s attempts to halt the merger.
In testimony earlier this week, Kroger CEO Rodney McMullen reportedly said the combined company would begin lowering prices as soon as its merger is completed, CBS News reported. The company has previously said that the merger will allow it to lower prices to better compete with mega-retailers like Walmart (WMT) and Amazon (AMZN).
Kroger shares finished Friday down 2%, leaving them up about 16% in 2024 so far.
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