Major Food Retailers Post Solid Comps In Most Recent Financials

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Six of the country’s largest food retailers have posted increased comp sales and solid earnings in their most recent financial periods. Walmart, Kroger, Ahold Delhaize, Target, Publix and Costco have all enjoyed sales increases and many have seen their stock prices grow in recent months.

At Walmart, total revenue for its fourth quarter ended January 26, 2018 increased 4.1 percent to $136.3 billion. At its U.S. stores, comp sales increased 2.6 percent (excluding fuel) and comp traffic rose 1.6 percent.  Its e-commerce business continued to grow rapidly, with the Bentonville, AR-based retailer reporting a 23 percent increase for its fourth quarter, which was less than Walmart’s spectacular 50 percent ecommerce revenue gain its third period.

Consolidated operating income at Walmart was $4.5 billion, a decrease of 28 percent. However, the company said the earnings decline would have decreased less than 1 percent if certain “discrete” charges weren’t included. Some of those “discrete” items include restructuring charges, asset impairments and the awarding of lump sum bonuses.

“We have good momentum in the business with solid sales growth across Walmart U.S., Sam’s Club and international,” said Doug McMillon, president and CEO of Walmart. “We’re making real progress putting our unique assets to work this past year. We’re making decisions to position the business for success and investing to win with customers and shareholders.”

For fiscal 2018, total revenue at the company was $500.3 billion, an increase of $14.5 billion, or 3 percent. Excluding currency rate fluctuations, total revenue was $500.9 billion, an increase of $15.1 billion, or 3.1 percent.

For fiscal 2019, Walmart expects comp sales for the 52-week period, excluding fuel, to rise at a 2 percent rate, with e-commerce growth expected to grow approximately 40 percent.  Capital expenditures are expected to be approximately $11 billion.

At presstime, Walmart’s shares were trading at $87.93, down marginally from $88.05 six months ago.

Kroger reported identical supermarket sales (without fuel) of 1.5 percent in its fourth quarter ended February 3, 2018. Total sales for the quarter increased 12.4 percent to $31 billion compared to $27.6 billion for the same period last year.

Rodney McMullen, chairman and CEO of the Cincinnati, OH based retailer, said: “We launched Restock Kroger in the fall of 2017 and finished this year with positive momentum in our sales and overall business. Customers are letting us know that they see, feel and appreciate our efforts to redefine the customer experience – and they are rewarding us with growing loyalty. This is the cycle that creates long-term value for shareholders.”

He continued: “The Tax Cuts and Jobs Act is a catalyst that is enabling us to accelerate investments in Restock Kroger. We are taking a balanced approach to ensure tax reform benefits our associates, customers and shareholders. What we’ve previously said is that sharing the benefits with our associates and customers will create a more sustainable and stronger business model for the future. This balanced approach is also consistent with our values and Kroger’s purpose, to feed the human spirit.”

Net earnings for the fourth quarter totaled $854 million, or $0.96 per diluted share. Adjusted net earnings totaled $562 million, up from $506 million in the same period last year.

For the full fiscal year, Kroger’s net earnings totaled $1.9 billion, compared with $2.0 billion in 2016.  Total sales in 2017 (excluding fuel, the 53rd week and merger expenses) rose 2.2 percent compared to 2016.

In its fourth quarter release, Kroger detailed its financial strategy of using its free cash flow to drive growth while also maintaining its current investment grade debt rating and returning capital to shareholders. It also announced that it had signed a definitive agreement to sell its convenience store division to UK-based EG Group for $2.15 billion. The Cincinnati-based merchant said that over the past year it has used cash to: contribute an incremental $1.2 billion pre-tax to company-sponsored pension plans and $467 million pre-tax to satisfy withdrawal obligations to the Central States Pension Fund; repurchase 61 million common shares for $6.1 billion; pay $444 million in dividends; and invest $3 billion in capital.

Kroger’s shares at presstime on March 7 were trading at $26.23, up from $21.34 on September 17, 2017.

After announcing “sales only” data last month, Ahold Delhaize posted a strong earnings performance during its fourth quarter ended December 31, 2017, completing its first year as a merged company.

“We delivered synergies ahead of schedule and continued to show underlying operating margin expansion, with stable or increasing market share in our major markets,” said CEO Dick Boer. “In a dynamic environment, our great local brands delivered strong results, tapping into changing consumer behavior.”

In the U.S., Ahold USA’s fourth quarter net sales increased 1.1 percent to $6.8 billion. Comparable store sales, excluding fuel, grew 0.6 percent.

During the quarter, Giant/Martin’s opened eight new in-store “Beer & Wine Eatery” locations, operating 54 of these establishments by year-end. Online grocer Peapod said it improved its customer satisfaction score by improving in the areas of on-time delivery, available delivery slots, in-stock items, value perception and the user-friendliness of its online portal.

Going forward, early this year, the Stop & Shop division will begin a pilot of its Scan it and Go payment solution, which will allow customers to make automatic bank withdrawals at checkout.

At its Delhaize America unit, comparable store revenue (excluding fuel) grew 1.5 percent, with both the Food Lion and Hannaford banners posting positive comp growth. Food Lion continued to benefit from its Easy, Fresh and Affordable store remodel program in the Charlotte, NC market last year and the Richmond and Greensboro, NC markets in 2018, the company said.

Food Lion completed the pilot of its Shop & Earn digital loyalty program which will roll out to all markets in the first quarter of this year. Hannaford’s My Rewards loyalty program became available chain-wide in January of this year. The banner also expanded its click-and-collect service.