Is Kroger (KR) Eyeing Boxed To Counter Amazon's Dominance?

The Kroger Co. (NYSE:KR) is possibly mulling over purchasing America’s major online wholesaler — Boxed, per sources. Per the sources, this move might help the company to counter the effect from Amazon’s (NASDAQ:AMZN) increasing dominance in e-commerce retailing space.

Kroger has been trying all means to overcome competition and remains well on track to boost market share by expanding store base, introducing new items, digital coupons, and order online, pick up in store initiative. The company’s “Restock Kroger” program is also gaining traction.

Kroger commenced “We Are Local” campaign, launched and opened a new restaurant concept, Kitchen 1883, and added two new product lines under “Our Brands” — an apparel brand to be launched in 2018 and a floral line, BLOOM HAUS, which is available in stores. As part of the program, management is considering the sale of convenience store business and expects to generate $400 million in incremental operating margin by 2020 and over $4 billion of free cash flow in the next three years. The company in collaboration with Chase Pay will offer mobile payments in select markets.

Kroger is looking to expand its “Scan, Bag, Pay & Go and Self-CheckOut” program — piloted at 20 stores — to nearly 400 locations in 2018. Further, Ralphs — a unit of grocery giant — in partnership with Instacart is offering home delivery at select locations in Southern California. Kroger remains optimistic about the acquisitions of Vitacost.com, an online retailer of vitamins and health-oriented products; Harris Teeter, a grocery chain, and the merger of Modern HC Holdings with Axium Pharmacy Holdings Inc., a specialty pharmacy. Kroger also acquired Roundy's, the grocery store operator.

Certainly, Kroger is leaving no stone unturned to attract consumers and attain incremental revenues. We believe that these strategies are likely to bolster the company’s performance and drive the stock further. In the past three months, shares of this Zacks Rank #3 (Hold) have surged 37.7%, outperforming the industry’s growth of 18.6%.

Looking for Solid Retail Picks, Check These

Some better-ranked stocks in the broader Retail sector include Zumiez Inc. (NASDAQ:ZUMZ) and Ross Stores, Inc. (NASDAQ:ROST) .

Zumiez, with a long-term earnings growth rate of 18% has pulled off an average positive earnings surprise of 22.2% in the last four quarters. Also, the stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ross Stores carries a Zacks Rank #2 (Buy) and has a long-term earnings growth rate of 10%. Also, the company’s earnings have outpaced the Zacks Consensus Estimate in each of the trailing four quarters by an average of 5.5%.

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