CINCINNATI — Shares of Kroger Co. dipped nearly 15% on March 7 to as low as $24.45 per share, down from the previous day’s close of $28.44 after the Cincinnati-based retailer posted financials that failed to meet analysts’ expectations.
In the fourth quarter ended Feb. 2, net earnings were $259 million, down 70% from $854 million in the same period a year ago. Last year’s fourth quarter included an income tax benefit of $957 million. Sales for the quarter fell to $28,091 million from $31,031 million.
Net earnings attributable to the Kroger Co. in the year ended Feb. 2 totaled $3,110 million, equal to $3.80 per share on the common stock, up 63% from $1,907 million, or $2.11 per share, in fiscal 2017. Excluding adjustments, which included a pre-tax adjustment for gain on the sale of the convenience store business, net earnings in fiscal 2018 totaled $1,745 million, which compared with $1,779 million in fiscal 2017.
Sales fell 1.3% to $121,162 million from $122,662 million.
Despite the disappointing quarterly results, William R. McMullen, chairman and chief executive officer, said the company “solidly delivered” on its key year-one Restock Kroger commitments.
“When you look at the full year, we delivered against our FIFO (first-in, first-out method) operating profit and our Restock cash flow goals, which sets us up to reach our 2020 targets,” he said during a March 7 conference call with analysts. “We improved identical sales and delivered e.p.s. near the high end of both our original adjusted guidance range, giving us both business momentum heading into 2019. And I’m especially proud that we achieved an unprecedented cost savings of more than $1 billion through process improvements in 2018. Restock Kroger is fueled by cost savings that we will invest in associates, customers and infrastructure.”
Mr. McMullen said Kroger continues to make significant investments to build an omnichannel platform. At the end of 2018, 91% of Kroger households had access to pickup or delivery, he said, a percentage that should rise to 100% by the end of 2019 due to the full integration of Kroger Ship.
The retailer in 2018 introduced 1,022 new items. Simple Truth contributed 15.3% sales growth in 2018, making it a $2.3 billion brand, Mr. McMullen said.