Kroger Reports First Quarter 2023 Results and Reaffirms Full-Year Identical Sales without Fuel and Adjusted EPS Guidance
First Quarter Highlights
- Identical Sales without fuel increased 3.5 percent with underlying growth of 5 percent (1)
- Operating Profit of $1,470 million; Adjusted FIFO Operating Profit of $1,669 million
- EPS of $1.32; Adjusted EPS of $1.51
- Achieved strong Adjusted Free Cash Flow leading to a record low net total debt to adjusted EBITDA ratio
- Executed its go-to-market strategy to deliver value for customers
- Grew digital sales 15 percent
- Increased customer households and trips
CINCINNATI, June 15, 2023 /PRNewswire/ — The Kroger Co. (NYSE: KR) today reported its first quarter 2023 results, reaffirmed 2023 guidance for identical sales without fuel and adjusted EPS and updated investors on how Leading with Fresh and Accelerating with Digital continues to position Kroger for long-term sustainable growth.
Comments from Chairman and CEO Rodney McMullen
“Kroger achieved solid first quarter results guided by the execution of our Leading with Fresh and Accelerating with Digital strategy.
As more customers are feeling the effects of inflation and economic uncertainty, we are growing customer households by providing fresher products at affordable prices with personalized rewards. Our amazing associates are bringing this strategy to life every day by delivering a full, fresh and friendly shopping experience with zero compromise on quality, selection and convenience.
Looking forward, Kroger’s go-to-market strategy positions us well in a wide range of economic environments to continue to deliver for our customers, invest in our associates and achieve sustainable and attractive returns for shareholders.”
First Quarter Financial Results
| 1Q23 ($ in millions; except EPS) | 1Q22 ($ in millions; except EPS) | |
| ID Sales* (Table 4)(1) | 3.5 percent | 4.1 percent |
| EPS | $1.32 | $0.90 |
| Adjusted EPS (Table 6) | $1.51 | $1.45 |
| Operating Profit | $1,470 | $1,505 |
| Adjusted FIFO Operating Profit (Table 7) | $1,669 | $1,601 |
| FIFO Gross Margin Rate*(2) | Increased 21 basis points | |
| OG&A Rate*(2) | Increased 14 basis points | |
| * Without fuel and adjustment items, if applicable. (1) Identical sales without fuel would have grown 5 percent in the 1st quarter of 2023 if not for the reduction in pharmacy sales from the previously communicated termination of our agreement with Express Scripts effective Dec. 31, 2022. (2) In the 1st quarter of 2023, the terminated agreement had a positive effect on the FIFO Gross Margin Rate, excluding fuel and a negative effect on the OG&A Rate, excluding fuel and adjustment items. The overall net effect on operating profit was slightly positive. | ||
Total company sales were $45.2 billion in the first quarter, compared to $44.6 billion for the same period last year. Excluding fuel, sales increased 3.5 percent compared to the same period last year.
Gross margin was 22.3 percent of sales for the first quarter. The FIFO gross margin rate, excluding fuel, increased 21 basis points compared to the same period last year. This increase in rate was achieved while also investing in price to maintain a competitive price position and deliver greater value for our customers. The improvement in the FIFO gross margin rate, excluding fuel, was primarily attributable to Our Brands performance, sourcing benefits, lower supply chain costs and the effect of our terminated agreement with Express Scripts, partially offset by higher shrink and increased promotional price investments.
The LIFO charge for the quarter was $99 million, compared to a LIFO charge of $93 million for the same period last year.
The Operating, General & Administrative rate increased 14 basis points, excluding fuel and adjustment items, compared to the same period last year. The increase in OG&A rate was driven by planned investments in associates and the effect of our terminated agreement with Express Scripts, partially offset by sales leverage and continued execution of cost savings initiatives.
For more information, visit the company’s official press release. https://ir.kroger.com/CorporateProfile/press-releases/press-release/2023/Kroger-Reports-First-Quarter-2023-Results-and-Reaffirms-Full-Year-Identical-Sales-Without-Fuel-and-Adjusted-EPS-Guidance/default.aspx