U.S. supermarket chain Kroger Co (KR.N) stopped short of raising its annual forecasts on Thursday, saying a coronavirus-driven surge in demand for essential goods was fading as American households reconsider what they have on their shelves. FILE PHOTO: Customers browse grocery store shelves inside Kroger Co.’s Ralphs supermarket amid fears of the global growth of coronavirus cases, in Los Angeles, California, U.S. March 15, 2020. REUTERS/Patrick T. Fallon/File Photo
Demand for fresh produce, meat and soups surged in March and April, and wide-ranging stockpiling in the health crisis forced the grocer to put purchase limits on cold, flu and sanitary products, as well as beef and fresh pork at certain stores.
Reporting on a bumper first quarter, the supermarket group said that it now expected to beat earlier forecasts, which projected a rise of more than 2.25% in same-store sales and earnings of between $2.30 and $2.40 per share this year.
But it did not give a new forecast and said growth in second quarter earnings would be partially offset by investment and pressure on its fuel business after the collapse in oil prices.
Its shares, up 13% this year, fell 5%.
“Investors might be slightly jittery from Kroger not quantifying its FY20 outlook,” CFRA Research analyst Arun Sundaram said.
Digital sales skyrocketed 92% in the first quarter ended May 23, compared with the previous quarter’s 22% increase, as more consumers opted for Kroger’s delivery and pickup services. Overall same-store sales, excluding the impact of fuel prices, rose 19%.
Kroger said same-store sales growth was trending in the mid-teens range so far this quarter, as customers cook more at home.
“Customers are still stocking up, but to a lesser degree than during the shutdowns … We do expect sales to continue to taper as the quarter progresses,” said Chief Financial Officer Gary Millerchip.
The results showed sales rose 11.5% to $41.55 billion, versus an average estimate of $40.72 billion. Excluding one-time items, Kroger earned $1.22 per share, beating market estimates of $1.09.