© Reuters. FILE PHOTO: The headquarters of supermarket chain Kroger is shown in Cincinnati, Ohio, U.S., June 28, 2018. REUTERS / Lisa Baertlein
By Uday Sampath Kumar
(Reuters) – Kroger (NYSE:Co) quarterly profit is not expected to be affected by any widespread demand decline on Thursday, with even price-conscious shoppers Most are also attracted to grocery and home appliance stores.
Major US retailers include Walmart (NYSE:) Inc and Target Corp (NYSE:) has in recent weeks sounded the alarm over how decades of high inflation are affecting US shoppers, stoking fears that the economy could go into recession. Depression.
But with people prioritizing spending on food and household essentials, a shift often seen in recessions, Kroger’s grocery stores aren’t expected to experience drastic price cuts. that other retailers have requested for shipping.
“Compared to Target and Walmart, what Kroger gives them is that they mainly sell consumer goods, so I don’t expect inventory to be an issue,” said CFRA Research analyst Arun Sundaram.
BACKGROUND
Kroger is expected to report a 3.4% increase in first-quarter earnings, helped by steady store traffic and growing demand for cheaper but high-margin store-brand products. .
That contrasts with Target, which saw its profits halve in its last reported quarter. Walmart’s earnings fell about 25%.
“We believe that an inflationary, potentially recessionary, and rate-rising environment remain favorable for a large, consumer goods-driven business model,” Guggenheim analysts wrote in a note on Wednesday. June on Kroger.
That confidence is also reflected in Kroger’s share price, which is up more than 11 percent this year, compared with a 21.7 percent drop.
However, Kroger’s profits are not immune to industry pressure. Analysts warn that rising transportation and labor costs, as well as price competition from other supermarket chains, could reduce operating margins.
BASIC PRINCIPLES
* Kroger is expected to report first-quarter revenue of $44.24 billion, up 7.1% from a year earlier, according to analysts polled by Refinitiv.
* The company is expected to report earnings per share of $1.30, compared with $1.19 a year earlier.
* Kroger has exceeded sales estimates for seven of the past eight quarters, while consistently beating quarterly profit estimates during that time.
SENTIMENTS STREET WALL
* The current average rating of 28 analysts is “hold”, with only six having a “sell” rating or below.
* The average price target is $56, about 11% above the stock’s last closing price.
