Neil Saunders’ Post

This wasn't a good quarter for Kroger. * Total sales were down by 2.3% * Total sales excluding gasoline were up by 1.0% * Comparable sales excluding gas were up by 1.0% * The company made a net loss of $180 million The bottom line is dire, especially as Kroger made a $731 million profit last year. However, all of this is because of a $1.4 billion opioid settlement, so it's an exceptional blip. However, the weak sales are more serious. This is the third quarter in a row in which Kroger has missed analyst expectations for sales growth. And Kroger's comparable are below inflation and are at the bottom of the pile for food retailers. This isn't a good performance and underlines that Kroger is losing market share. From an investor standpoint, this makes the deal with Albertsons all the more pressing. Kroger needs a growth story and the merger provides that narrative. #retail #retailnews #supermarkets ___ Chart shows percentage comparable sales growth for various grocery players in the latest quarter. Where applicable, only sales from US divisions have been included.

🚨FOOD INDUSTRY NEWS🚨 Grocery super chain - Kroger - has reported revenue for the first quarter that beat analysts' estimates and said it would pause stock buybacks as it works to get regulatory approval of its $24.6 billion acquisition of rival Albertsons. #Revenue was $45.27 billion, up 0.2% from a year ago and above analysts' projections. Same-store #sales, excluding gas, were 0.5% higher. Kroger added that #digital sales rose more than 8%, and that its delivery and pickup options together brought double-digit percent growth. It noted that total households, loyal households, and customer visits all increased. Diluted earnings per share (#EPS) came in at $1.29, down from $1.32 in the year-ago period and below analysts estimates. 🤑 #earnings #grocery #retail #foodindustry #newsletter

Over the past 10 years, Costco has traded shares at an average “normal” price of 34x earnings. Costco is a fantastic high-quality business, but I wouldn’t buy it at current prices. There’s a better-discounted play in this market you should have your eyes on. 👇 This one is Kroger🙌 Kroger is the second-largest grocery retailer in the United States and with more than 62 million households enrolled in their loyalty program, they have a ton of data on what its customers want. Kroger is a reliable dividend grower that has consistently increased its payouts 18 years in a row. Yep, 18 years. ⬆️ It’s also a great recession-resistant business. Why? 🤔 Because people tend to buy more groceries and cook at home instead of eating at restaurants when times are tough. Also, at the end of January, the shares yielded 2.5% and traded at 10.8x earnings. And, as of Wednesday, their dividend yield was 2.3%. So, this makes Kroger a great option for your portfolio! I would love to know, do you invest in Kroger? #future #investing #business #success #motivation

This is going to be really interesting to watch unfold... ::gets popcorn ready:: C&S, one of the largest distributors in the food world, is buying 413 Kroger / Albertsons stores. I've seen this story before. From the front lines. I was at SUPERVALU when they thought it would be "easy" to buy 1,500+ Albertsons stores and integrate them into their amazing distribution model. 🤦♂️ That last 7 PAINFULLLLL!!!!! years. Supervalu ultimately sold the stores back to Albertsons/the capital group, and almost entirely exited retail to focus on distribution again. I am less than 50% on C&S making this work. It's one thing to be great at distribution, it's another thing to try and compete against the rest of the retail world at selling groceries. The one optimistic part of it - they are buying some Kroger stores that are used to centralized buying. If they can somehow get the Albertsons part of this deal to come along for centralizing, maybe they can leverage their scale and make this thing work.

I don't typically comment on federal regulations and antitrust, but for the Kroger and Albertsons Companies merger not to be approved for fear of reduced grocery competition shows the regulators haven't been paying attention to where people are buying groceries. This The Wall Street Journal article shows the dominant force Walmart has become in grocery and continues to grow (it reached 28.3% share in 2023). Grocery also accounts for 60% of Walmart's sales (source: Supermarket News). Target is also in the mix with approximately 21% of their sales coming from grocery. And more important, a Capital One Shopping study shows American's are spent 17% of their grocery budgets online at the end of 2022. Grocery shopping has changed dramatically and a merger won't depress competition as long as Walmart and Target remain aggressive for shoppers' grocery dollars. #groceryshopping #grocerysales #consumerchoice #shoppinghabits

In today's The Wall Street Journal. Antitrust enforcers don't seem to recognize the amount of competition coming at traditional grocers from virtually all sides. Albertsons and Kroger hopefully are bringing the regulators' attention to the statistic showing that the grocery store channel has seen its share of food expenditures drop from ~70% in the 1960s to 24% in 2022 (the latest year available) - for all supermarket retailers, not just Kroger + Albertson's. This loss of share has come not only from other retail formats but also from the restaurant channel. Click on the image in my comment below to see a table illustrating this. The food market has become MUCH broader than the supermarket channel! #grocerybusiness #foodbusiness

FLICKINGER ON Reuters: "The FTC challenge to Kroger's acquisition of Albertsons on antitrust grounds just makes Walmart stronger." Siddharth Cavale and Jessica DiNapoli correctly point out that Walmart's close relationships with suppliers already give them a price advantage over other chains. One factor in Walmart's success has been its buying power with major food and household staples suppliers, such as Procter & Gamble and Conagra Brands. Walmart alone already accounts for 15% of P&G's total annual sales to retailers, and 28% of Conagra's. I am also quoted as saying, "If the deal fails following the FTC's challenge, companies that make consumer products like Tide detergent and Huggies diapers will continue to be beholden to Walmart." The implications are clear: the FTC's move not only impacts Kroger and Albertsons, but it also sets the stage for Walmart's continued reign. Link: The article is featured on Yahoo Finance! today: https://yhoo.it/3OZjAvG Article written by @Siddharth Cavale and @Jessica DiNapoli Yahoo Finance National Grocers Association #FTC #KrogerAlbertsonsMerger #Antitrust #Walmart

FLICKINGER ON Reuters: "The FTC challenge to Kroger's acquisition of Albertsons on antitrust grounds just makes Walmart stronger." Siddharth Cavale and Jessica DiNapoli correctly point out that Walmart's close relationships with suppliers already give them a price advantage over other chains. One factor in Walmart's success has been its buying power with major food and household staples suppliers, such as Procter & Gamble and Conagra Brands. Walmart alone already accounts for 15% of P&G's total annual sales to retailers, and 28% of Conagra's. I am also quoted as saying, "If the deal fails following the FTC's challenge, companies that make consumer products like Tide detergent and Huggies diapers will continue to be "beholden to Walmart." The implications are clear: the FTC's move not only impacts Kroger and Albertsons, but it also sets the stage for Walmart's continued reign. Link: https://yhoo.it/3OZjAvG Article written by @Siddharth Cavale and @Jessica DiNapoli Yahoo Finance National Grocers Association #FTC #KrogerAlbertsonsMerger #Antitrust

FLICKINGER ON Reuters: "The FTC challenge to Kroger's acquisition of Albertsons on antitrust grounds just makes Walmart stronger." Siddharth Cavale and Jessica DiNapoli correctly point out that Walmart's close relationships with suppliers already give them a price advantage over other chains. One factor in Walmart's success has been its buying power with major food and household staples suppliers, such as Procter & Gamble and Conagra Brands. Walmart alone already accounts for 15% of P&G's total annual sales to retailers, and 28% of Conagra's. I am also quoted as saying, "If the deal fails following the FTC's challenge, companies that make consumer products like Tide detergent and Huggies diapers will continue to be "beholden to Walmart." The implications are clear: the FTC's move not only impacts Kroger and Albertsons, but it also sets the stage for Walmart's continued reign. Link: https://yhoo.it/3OZjAvG Article written by @Siddharth Cavale and @Jessica DiNapoli Yahoo Finance National Grocers Association #FTC #KrogerAlbertsonsMerger #Antitrust