Kroger E-Commerce Turns Profitable as Cost Pressures Spark 8.4% Drop
COST•Kroger’s Q1 saw identical sales up 1.0% and online sales jump 19% while management reaffirmed full-year guidance; shares plunged 8.4% after investors reacted to cost concerns voiced by new CEO Greg Foran. The company reported cost-of-goods savings 30% ahead of plan and eCommerce, including its Precision Marketing arm, turned profitable this quarter.
1. Q1 Performance and Stock Reaction
Kroger reported identical-store sales growth of 1.0% and a 19% increase in online sales for the quarter, while reaffirming its full-year guidance. Despite these results, shares fell 8.4% on June 18 to around $58, near the 52-week low, as analysts trimmed price targets.
2. CEO Highlights Cost Challenges
New CEO Greg Foran openly stated that operating costs are rising faster than sales and are putting margin pressure on the company. Investors were unsettled by the lack of detailed remedies, prompting concerns that the promised turnaround plan remains vague.
3. Early Successes in Cost Savings and eCommerce Profit
Kroger achieved cost-of-goods savings 30% ahead of its internal plan and announced that its eCommerce business, including Kroger Precision Marketing, turned profitable this quarter. Online sales growth of 19% and a media business increase of over 20% highlight the potential of its digital growth strategy.
