'We are accelerating the momentum in our business'

CINCINNATI — Kroger Co. on Thursday reported solid fourth-quarter results that included an identical store sales gain  of 10.6% (excluding fuel) and digital sales growth of 118%.

“I am incredibly humbled by the strength of our associates and what we continue to accomplish together,” Kroger chairman and CEO Rodney McMullen said. “Our customers are at the center of everything we do and we will continue to serve them as we have since the beginning of the pandemic, through our leadership in food and as a health partner, providing COVID-19 testing and vaccines.

“Kroger continued to grow market share during the quarter. Our ability to meet our customers’ evolving needs is a testament to our deep competitive moats, disciplined investments in our increasingly robust digital capabilities, as well as our associates’ relentless focus on our customers. We finished fiscal year 2020 with strong sales and earnings, as heightened demand for fresh, convenient food and meal solutions across modalities, including in store, pick up and home delivery, continued throughout the fourth quarter.

“Supported by our strong performance and cash position, we were pleased to commit more than $2.5 billion to safeguard the environment our associates and customers work and shop in and to reward associates, including nearly $1 billion to better secure pensions.”

Total company sales were $30.7 billion in the fourth quarter, compared to $28.9 billion for the same period last year. Excluding fuel and dispositions, sales grew 10.7%. For the fourth quarter, Kroger reported adjusted earnings per share of $0.81 and an operating loss of $158 million, which included a $989 million charge for UFCW pension commitments.

Total company sales were $132.5 billion for the full year in 2020, compared to $122.3 billion for the same period last year. Excluding fuel and dispositions, total sales grew 14.2%.

“As a result of strong execution of our strategy, enabled by continued investments in our customers and associates, we are accelerating the momentum in our business,” Kroger CFO Gary Millerchip said. “Looking ahead to 2021, evaluating our performance using the two-year period of 2020 and 2021 more accurately measures this underlying momentum. We expect our two-year identical sales stack to be in the range of 9% to 11%. In addition, we expect our adjusted net earnings per diluted share and adjusted FIFO operating profit to have compounded annual growth rates of between 12% and 16% and 5.4% and 8.5%, respectively. Over the two years, this would result in total shareholder return significantly above our previously communicated target of 8-11%.

“Our 2021 guidance contemplates continued investments in associates and customers plus ongoing COVID-19 related costs, balanced with continued execution of cost savings initiatives and growth in our alternative profit businesses.