Kroger Co., still working to complete a merger with Albertsons Cos., reported sales slipped in its second quarter, while adjusted earnings gained to top a Wall Street estimate.
Kroger and the Albertsons Cos., meanwhile, announced they entered a definitive agreement with C&S Wholesale Grocers to sell select stores, banners, distribution centers, offices and private-label brands pursuant to the proposed Kroger/Alberstons merger announced in October 2022.
In the meantime, Kroger posted a second-quarter net loss of $180 million, or 25 cents per diluted share, versus net earnings of $731 million, or $1 per diluted share, in the period a year earlier. Adjusted to exclude a charge related to the nationwide opioid settlement in the United States, net earnings were $699 million, or 96 cents per diluted share, versus $661 million, or 90 cents per diluted share, in the year-prior quarter.
A Yahoo Finance-published analyst consensus estimate called for adjusted diluted earnings per share of 91 cents and revenues of $34.13 billion
Identical store sales, excluding fuel contribution, gained 1% in the quarter year over year, Kroger noted. Net sales were $33.85 billion versus $34.64 billion in the period a year before. Operating loss was $479 million versus operating profit of $954 million in the year-previous period, the company reported, while adjusted operating profit was $989 million versus $1.11 billion.
As it continues to satisfy regulatory conditions for the merger with Albertsons, Kroger reported the divestiture transaction involving C&S includes 413 stores, along with the QFC, Mariano’s and Carrs brand names. Stores currently under those banners Kroger keeps will adopt a retained Kroger or Albertsons Cos. nameplate following the close of the transaction. In the four states where C&S would have the license to the Albertsons banner, Kroger will re-brand the retained stores following the close of the merger. Kroger would maintain the Albertsons banner in the remaining states. Also, Kroger would divest the Debi Lilly Design, Primo Taglio, Open Nature, ReadyMeals and Waterfront Bistro private-label brands.
C&S supplies more than 7,500 independent supermarkets, retail chain stores and military bases, and it operates Grand Union grocery stores, as well as Piggly Wiggly franchise and corporate-owned locations in the Midwest and Carolinas.
In announcing the second-quarter financial results, Kroger Chairman and CEO Rodney McMullen said, “The strength and diversity of Kroger’s business model is delivering consistent results in what remains a challenged environment. By investing in price and providing more personalized offers, we are helping customers stretch their budgets and manage the ongoing effects of reduced government benefits, inflation and higher interest rates. Kroger is funding these investments by collaborating with vendors to deliver exceptional value, managing costs and growing alternative profit businesses. We are growing households as our associates are providing a full, fresh and friendly shopping experience across our seamless ecosystem. While we expect the environment to remain challenged going forward, we are committed to delivering exceptional value for our customers and investing in our associates, and by doing so, we expect to generate attractive returns for shareholders.”
