Kroger reports Q4, full year results
In reporting its fourth quarter and fiscal year 2024 results three days following the resignation of CEO Rodney McMullen, Kroger chairman and CEO Ron Sargent expressed his excitement to join the "talented and experienced management team" in his role as interim CEO.
Sargent said, "I am committed to ensuring that we execute with speed and that our teams continue to advance our go-to-market strategy to deliver for our customers, associates, communities, and shareholders," Sargent said, adding, "Kroger is operating from a position of strength, delivering fourth quarter results that came in ahead of expectations due to the strength of our model and the disciplined execution of our teams. We enter 2025 with positive momentum, focused on delivering an incredible customer experience through great quality at low prices."
Kroger’s total company sales were $34.3 billion in the fourth quarter compared to $37.1 billion for the same period last year, including $2.7 billion from the 53rd week in 2023 and $737 million from Kroger Specialty Pharmacy sales. Excluding fuel, Kroger Specialty Pharmacy and the 53rd week in 2023, sales increased 2.6% compared to the same period last year.
Kroger’s gross margin was 22.7% of sales for the fourth quarter compared to 22.3% for the same period last year. The improvement in gross margin was primarily attributable to the sale of Kroger Specialty Pharmacy and lower shrink, partially offset by lower pharmacy margins and the LIFO charge.
[Read more: Kroger announces resignation of CEO Rodney McMullen]
The retailer's total company sales were $147.1 billion in 2024, which includes $2 billion of Kroger Specialty Pharmacy sales, compared to $150 billion for the same period last year, including $2.7 billion from the 53rd week in 2023 and $3.2 billion of Kroger Specialty Pharmacy sales. Excluding fuel, Kroger Specialty Pharmacy and the 53rd week in 2023, sales increased 1.8% compared to the same period last year.
Fourth Quarter Highlights:
- Identical Sales without fuel increased 2.4%
- Operating Profit of $912 million; EPS of 90 cents
- Adjusted FIFO Operating Profit of $1,174 million and Adjusted EPS of $1.14
- Delivered 11% digital sales growth, excluding the 53rd week in 2023
Fiscal 2024 Highlights:
- Identical Sales without fuel increased 1.5%
- Operating Profit of $3.8 billion; EPS of $3.67
- Adjusted FIFO Operating Profit of $4.7 billion and Adjusted EPS of $4.47
- Delivered more than $13B in digital sales
- 17% increase in Media, excluding the 53rd week in 2023, contributed to $1.35B in Operating Profit from Alternative Profit Businesses
- Increased associate wages resulting in average hourly wage of more than $19 and rate of more than $25 with comprehensive benefits factored in, which is a 38% increase in rate in the last seven years
Kroger's Full-Year 2025 Guidance:
- Identical Sales without fuel of 2% – 3%
- Adjusted FIFO Operating Profit of $4.7 – $4.9 billion
- Adjusted net earnings per diluted share of $4.60 – $4.80
- Adjusted Free Cash Flow of $2.8 – $3.0 billion
[Read more: Kroger taps David Kennerley as chief financial officer]
Kroger’s CFO Todd Foley said, "Kroger's 2024 results demonstrate the resilience of our value creation model, which is generating solid results and strong free cash flow. Investments made to diversify our business have added more ways for Kroger to drive sustainable future growth. With our strengthened balance sheet, we plan to continue to invest in our business through new store growth, grow our dividend subject to board approval, and return excess cash to our shareholders through share repurchases to drive shareholder returns in 2025, consistent with our long-term growth expectations. The strength of our model and the momentum in our business give us confidence in our 2025 growth plans."