US – American retail company Kroger has raised its annual forecast for 2021 after an exceptional first quarter that saw the company surpass its own guidance and Wall Street’s expectations.
Revenue for the Cincinnati based company came in above pre-pandemic levels at US$41.3 billion, surpassing the US$39.78 billion estimate that had been predicted by financial analysts.
To inject fresh energy to a struggling business, Kroger executives propped up the company’s online grocery business, expanding its grocery pick up service to 2,233 stores and increasing its delivery ability to 2,488 stores reaching 98% of its customers.
A partnership with Uk-based technology company Ocado also saw Kroger open its first two customer fulfillment centers and enabled it to enlist the service of robots to more quickly stock, sort, and dispatch goods.
The operator of Ralphs and Fred Meyer stores has also tied-up with third parties such as Instacart to handle deliveries quickly and efficiently.
An increased focus on Fresh food also saw the company introduce 253 new own-brand items while at the same time expanding its partnership with the indoor-grown salad brand 80 Acres Farms to 316 stores.
During the first quarter, Kroger also launched what it called its Go Fresh & Local Supplier Accelerator, a program supporting emerging fresh brands.
The investments in online grocery have paid off, with Kroger posting triple-digit growth (108%) in online sales since the beginning of 2019.
“Kroger’s strong execution delivered identical sales results in the first quarter that exceeded our original expectations. Customers are responding to the investments we have made in digital, as evidenced by our triple-digit growth in digital sales since the beginning of 2019,” commented Rodney McMullen, Kroger Chairman and CEO.
Following a strong Q1, Kroger has adjusted its profit per share forecast for 2021 to between US$2.95 and US$3.10, compared with its prior range of $2.75 to $2.95.
Kroger expects 2021 adjusted same-store sales to fall between 2.5% and 4%, an improvement from an earlier projected decline of up to 5%.
The results represented are the first for the company since it introduced a comprehensive business strategy called Leading with Fresh and Accelerating with Digital, which succeeded its three-year Restock initiative.
The plan calls for Kroger to double its online sales and their associated profitability by 2023, and accelerate its advantages in fresh food.
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