Q1 profits and sales slip at Kroger

US supermarket chain Kroger, one of the world’s biggest retailers, saw profits and sales dip in the first quarter, but insisted that its transformation programme was on track.

Total first quarter sales were $37.3bn, down marginally on the $37.7bn recorded a year earlier, following the sale of Kroger’s convenience store business. Once the impact of that and fuel was stripped out, total sales rose 2%.

Operating profits came in at $901m against $1.03bn a year earlier, while adjusted net earnings were down a cent year-on-year, at $0.72 per diluted share.

Both sales and EPS were marginally ahead of forecasts, and the retailer maintained its full-year profit guidance.

Kroger, which was founded in 1883, is overhauling its business as it takes on US retail giants Amazon and Walmart. Under its Restock Kroger initiative, it is overhauling stores, including introducing self-service checkouts and rearranging layouts, and investing heavily in its online presence.

Last year it struck a deal with Ocado, under which Kroger will use Ocado’s automated technology to support its online proposition. As part of the deal, Kroger took a 5% stake in the online retailer.

First-quarter digital sales jumped 42%, Kroger said.

Chairman Rodney McMullen said: “We are building momentum in the second year of Restock Kroger, which is off to a solid start.

“The entire company is focused on redefining the grocery customer experience, improved upon by exciting partnerships that will create value. We are on track to generate the free cash flow and incremental adjusted FIFO operating profit that we committed to in 2019 as part of Restock Kroger.”

Shares in Kroger were down 2% by 1430 BST.