Kroger Stock Spiraling Upon Earnings Release | Financial Buzz

Kroger Stock Spiraling Upon Earnings Release

The Kroger Company (NYSE: KR) left investors feeling weary on Thursday following its disappointing quarterly earnings report. The Company failed to deliver both revenue and profit growth.

Total sales for the quarter came in at USD 37.3 Billion, compared to USD 37.7 Billion during the same quarter last year. Kroger said the slight decrease is due to the sale of its convenience store business unit. Excluding fuel and the effect of selling its convenience store business, Kroger’s sales increased 2% from a year-quarter earlier. Operating profit shrank from USD 1.29 Billion in 2018 to USD 901 Million during Q1 of this year.

Although Kroger’s first quarter results are about in-line with the Company’s expectations, its stock price did not react well. Shares dropped by more than 10% after the results were announced. The year overall has not been friendly to the grocery store chain. Kroger’s stock price is down approximately 14% in 2019.

Prior to the earnings release on Thursday morning, Shares of Kroger were up 8% in pre-market trading. This increase demonstrates that investors were rather confident the grocery chain would report strong earnings. Although the stock had quite the day, experiencing a near 15% swing before lunch, it has since recovered and is only trading about 1% below its price from Wednesday’s close.

Looking into the Company’s financial strategy for the quarter, Kroger invested USD 589 Million in Ocado Securities and Home Chef. The Company also repurchased 5 million common shares for USD 216 Million. Kroger managed to decrease its net total debt by USD 1.7 Billion in the first quarter alone.

Much of Kroger’s focus recently has been centered around the Restock Kroger Plan, a restructuring initiative that includes investing in new technologies, increasing profitability, and improving stores. “Because the retail industry is constantly transforming, we proactively launched Restock Kroger to deliver for our customers and shareholders. It all starts with our customer obsession, which is why Kroger is assembling a platform to deliver anything, anytime, anywhere,” said Rodney McMullen, Chairman and Chief Executive Officer of Kroger. “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. We are confident in our ability to deliver on our plans for the year and our long-term vision to serve America through food inspiration and uplift.”