Kroger's Q2 2019
Total company sales were $28.2 billion in the quarter, up from $28 billion a year earlier.
Kroger reported identical sales (not including sales of fuel) of 2.2% during its second quarter of 2019, marking its strongest quarter since it launched its transformation plan.
The grocery retailer is halfway through the second year of its three-year Restock Kroger plan, designed to reposition its core business by 2020 to meet shifting consumer behavior and consumer demands to shop how, when and where they want.
“Our internal customer measures are improving even faster than our identical sales growth,” said chairman & CEO Rodney McMullen during the company’s earnings call. “There is always a lag between improving the customer experience and when the customer will reward us.”
During the quarter, Kroger expanded its digital coverage area to reach 95% of its customers, meaning most of Kroger shoppers now have the option to choose pickup or delivery fulfillment, in addition to shopping in a store. Specifically, Kroger expanded to 1,780 pickup locations and 2,225 delivery locations.
“We know the seamless experience is essential to the customer experience both today and tomorrow, which is why we continue to invest heavily in our capabilities in this area,” noted McMullen.
Kroger's digital sales grew by a solid 31% in the second quarter. Pickup and delivery sales growth continued to perform in the mid 30%.
“Going forward, we expect our digital sales growth rate to moderate year-over-year, primarily due to the cycling of Home Chef and as a result of our disciplined focus on growing the ship customer of our other digital offerings like Vitacost,” said McMullen.
“Importantly, we are starting to see improving operating profit trends in our digital business,” he also noted. “Our digital business is becoming less of a headwind, which is an important inflection point as we continue to invest in new capabilities to support our transition to seamless. However, I do want to note this is still a significant investment for the company. A great example of partnering for customer value is our continued rollout of Ocado sheds.”