Kroger’s total sales rose 8.4% to $ 132.5 billion in the pandemic-hit 2020.
The Cincinnati-based grocer also posted annual profits of $ 2.6 billion, an increase of 5.6%. A key sales metric, identical sales with no fuel, rose 14.1% in 2020.
Kroger’s growth was fueled by an epic shift in customer eating habits during the COVID-19 pandemic: Nearly $ 1 out of $ 4 Americans used to spend on eating has shifted to food consumed at home – So that’s mostly $ 162 billion more in supermarket checkouts, according to the US Department of Agriculture. In early 2020, Americans spent 49 cents of their grocery dollars in grocery stores, now they are spending about 56 cents.
The pandemic has also resulted in consumers ordering groceries online for either home delivery or roadside pickup.
Kroger’s digital sales are over $ 10 billion
Kroger said his total digital sales more than doubled, growing 116%. During a conference call with analysts, Kroger executives confirmed that the digital business had exceeded $ 10 billion in 2020 – more revenue than dozens of Fortune 500 companies, including local insurer Cincinnati Financial and Michigan-based industry competitor SpartanNash.
Kroger predicted sales and profits will decline this year as more consumers are vaccinated and resume previous shopping habits.
The company predicted that identical sales would decrease 3% to 5% without fuel. The forecast for earnings per share of $ 2.75 to $ 2.95 suggests earnings of $ 2.1 to $ 2.2 billion are expected this year.
Food workers receive wage increases
Kroger also updated his average hourly wage for his workers. The company announced that the value has increased from $ 15 an hour to $ 15.50 in 2020. The grocer said it spent $ 300 million in 2020 to raise regular wages for its employees.
Looking ahead, Kroger plans to spend an additional $ 350 million through 2021 to boost total wages, but didn’t make a forecast for an increase in the average hourly wage.
The increases come from its largest union, United Food and Commercial Workers International, campaigning hard to get Kroger to suspend the “hero bonus” of $ 2 an hour to temporarily pay the grocer on offer. The company said such a permanent increase would be too costly.
Kroger is the largest supermarket chain in the country.
In addition to Kroger stores, the grocer operates several regional supermarket chains in 35 states, including Fred Meyer, Harris Teeter, Ralphs, Marianos, Frys, Smiths, King Soopers, QFC and others. The company has nearly 2,800 stores employing nearly 500,000 people.
The latest figures were released on Thursday as Kroger posted fourth-quarter sales results that fell short of Wall Street’s expectations. Quarterly revenue was $ 30.7 billion, up 6.4% – but less than the $ 31 billion analysts predicted, according to Zacks Investment Service. The company posted a loss of $ 77 million for the quarter.
Kroger said the loss was due to a one-time charge of $ 989 million required in the fourth quarter to reflect expenses to meet previously disclosed union pension obligations.
“We ended fiscal 2020 with strong sales and earnings as the increased demand for fresh, convenient grocery and eating solutions continued across modalities including in-store, pick-up and home delivery,” said CEO Rodney McMullen in an explanation.
In fiscal 2019, Kroger posted sales of $ 122.3 billion and profits of $ 1.7 billion.
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