Kroeger’s set out to realign its stores to the times two years ago with its “Restock Kroger” investment program.
The program has been designed to overhaul stores, step up online and food delivery, upgrade its private-label offerings, and reduce prices. And the good news is that the new management strategy is working (ref WSJ). The company issued a strong guidance for 2020 fiscal year, finally convincing investors it can do the revamps profitably and sustainably. The planned investments were seen as a necessary response to the “changing grocery landscape” which included the rise of ecommerce, much greater competition from low-cost rivals, and Amazon’s acquisition of Whole Foods. During the 2020 fiscal year, Kroger’s expects same-store sales growth at greater than 2.25%, excluding fuel, an acceleration of its 2019 pace of 2.0-2.25%. The company also said that it would repurchase between $500 million – $1 billion of shares. And its guidance included adjusted earnings of $2.30 – $2.40 a share. Kroeger shares are valued at 11 times forward earnings currently – possibly a great opportunity for the company that is demonstrating that it has the “vision and financial wherewithal to survive and thrive in this new era,” (ref WSJ). Congratulations to a company that has clearly worked hard to turn things around in a challenging operating environment.
ALL THE MOVING PARTS – success comes when organizations can make all their moving parts work together for the good of the whole.