- Kroger (NYSE:KR) easily topped first-quater expectations on Thursday.
- Digital sales spiked 66% over the previous quarter as Kroger faces increasing competition from Amazon (NASDAQ:AMZN).
- The stock surged more than 8% in early trading.
- Follow Kroger’s stock price in real-time here.
Kroger surged more than 9% early Thursday after the US's largest grocery chain posted earnings that crushed Wall Street expectations thanks to a surge in digital sales.
For the first quarter, Kroger said it earned an adjusted $0.73 per share where analysts had expected $0.63, according to Bloomberg. Revenue of $37.53 billion topped the $37.33 billion consensus.
The company's "Restock Kroger" program, a plan it announced in late 2017 to invest in technology and store-brands, appears to be paying off. Digital sales climbed 66% compared to the previous quarter, the company said, as Kroger and other traditional chains face increasing competition from the likes of Amazon. The company also purchased meal-kit company Home Chef for $200 million in late May, three days before the end of the quarter.
"Everything we do supports our customers engaging seamlessly with Kroger," said Rodney McMullen, chief executive of the company, in a press release. "Kroger is creating the future of retail by innovating our core business and adding exciting partnerships like Ocado (LON:OCDO) and our planned merger with Home Chef. We are on track to generate the free cash flow and incremental FIFO operating profit that we committed to in Restock Kroger. We are confident in our ability to deliver on our plans for the year and our long-term vision to serve America through food inspiration and uplift."
The company also raised its earnings-per-share forecast to between $2 and $2.15 for 2018, where it had previously been expecting $1.95 to $2.15.
"Since the beginning of 2017, there has been plenty of change in food retail," Michael Lasser, an analyst at UBS, said ahead of the earnings call.
"On the value side of the equation, Walmart (NYSE:WMT) has aggressively invested in price while the hard discounters continue to add to their footprints. At the other end of the spectrum, Amazon became a much larger player in the space after purchasing Whole Foods. In this new environment, Kroger has recognized the need to differentiate, and has taken prudent steps to position itself for long term success."
Shares of Kroger were down 4.5% this year through Wednesday.