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Kroger shares spike on upbeat earnings

Friday, March 08, 2024

Today’s headlines

What’s happening: Shares of The Kroger Co. gained on Thursday, after the company released results for its fourth quarter.

What happened: The largest grocery operator in the US reported profits that topped market expectations amid lower supply-chain costs.

Kroger also issued a strong outlook for the fiscal year ending January 2025.

How were the results: The Cincinnati, Ohio-based company reported a single-digit increase in sales for the fourth quarter.

  • Sales grew by 6.4% year-over-year to $37.064 billion, slightly below the consensus estimates of $37.112 billion.
  • Adjusted earnings came in at $1.34 per share. Adjusted earnings, excluding the 53rd week, stood at $1.14 per share, topping Wall Street expectations of $1.13 per share.

Why it matters: The US witnessed a trend of more people cooking at home rather than dining out, as grocery prices eased at a faster rate than restaurant menu prices. This trend gave a boost to Kroger’s customer traffic.

Kroger is facing an antitrust roadblock in its deal to buy smaller rival Albertsons. However, the company said it is committed to defend the deal in court following the US Federal Trade Commission’s lawsuit.

Kroger’s comp sales, excluding fuel, contracted by 0.8% in the fourth quarter. Its operating, general and administrative expenses rose by 7.4% year-over-year to $6.3 billion. Operating margins expanded to 3.2%, while operating income surged 44.5% to $1.2 billion.

“Kroger achieved strong 2023 results, in line with our long-term growth model and built upon three consecutive years of historic growth…As customers manage macroeconomic pressures, we are lowering prices and offering even more ways to save with personalized promotions and rewards,” CEO Rodney McMullen said during the earnings call.

Management guided to adjusted earnings of $4.30 to $4.50 per share for fiscal 2024, versus market estimates of $4.34 per share. The company sees full-year identical sales without fuel rising 0.25% to 1.75% and projected adjusted FIFO operating profit of $4.6 billion to $4.8 billion.

How shares responded: Kroger’s shares jumped 9.9% to close at $55.48 on Thursday, following the release of quarterly results. The stock has added around 22% over the past month.

What to watch: Investors will continue monitoring Kroger’s plans to drive traffic at its stores as the company is focusing on discounted prices and promotions to increase demand this year. The company is also looking to add over 800 new products to its private-label portfolio in 2024.

The markets today

The Canadian dollar will be in focus today, ahead of jobs data from Canada

Context: The CAD/USD forex pair moved higher on Thursday, as investors digested recent economic reports.

Details: Data released on Thursday showed Canada recording a trade surplus of C$0.5 billion in January, versus a deficit of C$0.9 billion a month ago. The figure also came above market estimates of a C$0.1 billion surplus. Exports fell to C$62.3 billion, while imports declined by 3.8% to C$61.8 billion in January.

The total value of building permits in Canada surged by 13.5% to $10.8 billion in January, after an 11.5% plunge in the previous month. Earlier this week, the Bank of Canada held its benchmark interest rate unchanged at 5.0%.

Weakness in the US dollar also lent support to the loonie. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.5% to 102.82 on Thursday.

Some weakness in the price of crude oil, one of Canada’s major exports, limited the overall gains for the Canadian dollar. WTI crude oil futures fell 20 cents to settle at $78.93 per barrel on Thursday.

The CAD/USD forex pair added around 0.4% to reach 1.3461 on Thursday. The S&P/TSX Composite Index jumped 0.93% to close at 21,794.56.

What to watch: Investors await the release of jobs data from Canada today. The unemployment rate in Canada is expected to rise to 5.8% in February, from 5.7% in January. Analysts expect employment in Canada to increase by 20,000 in February, following a 37,300 gain in January.

Average hourly earnings for permanent employees in Canada is projected to increase by 5.3% year-over-year in February.

Other Markets: US trading indices closed higher on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.34%, 1.03% and 1.56%, respectively.

The news shaping the markets

Ukraine President Volodymyr Zelenskyy is scheduled to visit Turkey to hold a meeting with President Recep Tayyip Erdogan to discuss the ongoing war with Russia and the Black Sea grain deal. The news sent the RUB/USD lower in forex trading this morning.


The Philippines said its unemployment rate rose to a four-month high of 4.5% in January, from a record low of 3.1% in the prior period, which exerted pressure on the PHP/USD forex pair.


Japan’s value of loans rose 3% year-over-year in February, versus a 3.1% increase in January, sending the JPY/USD pair higher in forex trading this morning.


Brazil’s car production jumped by 24.3% to 189,684 units in February, after recording a decline for two straight months, which lent support to the BRL/USD forex pair.


US nonfarm business sector labour productivity rose by 3.2% in the fourth quarter, matching the preliminary reading, which sent the Dow Jones index higher by over 100 points on Thursday.

What else to watch today

Germany’s industrial production and producer prices, France’s balance of trade and current account, Spain’s industrial production, Italy’s producer price inflation, Eurozone’s number of employed persons and GDP growth rate, Brazil’s loan growth, India’s value of loans, deposit growth and foreign exchange reserves, as well as US nonfarm payrolls, unemployment rate, average hourly earnings, Baker Hughes crude oil rigs and Baker Hughes total rigs.


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