Kroger gearing up to keep Express Scripts patients; reports 35th consecutive quarter of positive ID sales
CINCINNATI — Kroger president, COO and director Rodney McMullen told analysts Friday morning that the grocer is gearing up for Walgreens’ reunion with Express Scripts’ pharmacy network as of Sept. 15. "We’ve done a lot of research to make sure we understand those customers — what they like about Kroger, what they like about Walgreens — and we’ve aggressively worked on trying to make sure that the things those customers liked better about Walgreens, [that] we’ve changed that," he said. "Overwhelmingly, the things they liked [about Kroger] was the one-stop, the value, the pricing that we offer. … Customers are really satisfied with where we are there, which we think will really help with the stickiness of those customers."
Kroger on Friday reported a 3.9% increase in total sales, including fuel, to $21.7 billion for the second quarter ended Aug. 11. Fuel contributed 100 basis points to the percent increase. Sales per diluted share totaled 51 cents, up 10.9%, beating analyst consensus by 2 cents.
Kroger’s stock was trading 2.5% down at around $22.50 in afternoon trading.
Kroger shares were down 10.2% for the year through Tuesday, noted Charles Grom, research analyst for Deutsche Bank, in a note released earlier this week. Even though Kroger has been delivering on sales growth rates, many investors have shied away from supermarket stocks given competitive challenges across the industry. "Investors have grown more concerned about the impact nontraditional food retailers are having on sales/profitability in the conventional grocery space," Grom noted. "As such, multiples have come down across the board."
Kroger reported identical supermarket sales growth, without fuel, of 3.6% in the second quarter. With that, Kroger recorded its 35th consecutive quarter of positive identical supermarket sales, which the grocer credited to increased transactions and total household growth.
“Kroger shareholders once again benefited from our Customer First strategy," stated David Dillon, Kroger chairman and CEO. "Increased customer loyalty and solid cost controls allowed us to grow sales, profitability and shareholder value.” The Kroger Customer First strategy focuses on realizing cost savings and efficiency gains across Kroger’s "four keys," which comprise of prices, people, products and shopping experience.
Kroger is bullish on the recovering economy, and accordingly increased its raised earnings per diluted share guidance for the fiscal year to a range of $2.35 to $2.42. Identical store sales growth rates are still expected to fall between 3% and 3.5%, Mike Schlotman, Kroger CFO and SVP, told analysts Friday morning.
UrgentRx partners with Broncos to kick up awareness
DENVER — UrgentRx, developer of fast-acting over-the-counter flavored powder medications, has established a partnership with the Denver Broncos to raise awareness and educate fans about the company’s convenient, single-dose fast powders.
Through the partnership, UrgentRx will distribute samples of its Headache Relief to Go and Heartburn Relief to Go products at tailgating events before Denver Broncos home games through Oct. 28.
“We wanted to create a fun and interesting way to connect with fans while still providing important information about our products,” stated Jordan Eisenberg, president of UrgentRx. “Overindulgence is a common occurrence at sporting events. … The home games provide a perfect opportunity to showcase our headache and heartburn products to a receptive and engaged audience.”
Study of Gen Y shopping habits further underscores importance of multichannel
WHAT IT MEANS AND WHY IT’S IMPORTANT — Serving as yet further evidence to support the importance of being a multichannel retailer and supplier is the new RedPrairie study illustrating the shopping habits of Gen Y.
(THE NEWS: RedPrairie report reveals shopping preferences of Gen Y. For the full story, click here)
Gen Y, also known as millennials, represents a generation of digitally adept multitaskers. According to the U.S. Census Bureau, their numbers are 80 million to 90 million strong, and they are more ethnically diverse and technology-focused than previous generations — pretty important stats, no doubt, and not ones to be taken lightly.
As David Bruno, director of corporate messaging at RedPrairie, indicated, successfully reaching tech-savvy millennials is about adding value to their shopping experience and respecting their preferred methods of communication.
Bruno went on to say, “When it comes to trying to satisfy millennials, the bottom line for brands is adaptability. One minute they want to shop and compare online and via every social networking site available, and the next they want to purchase in store. “
Meanwhile, a recent report from IBM noted a rise in mobile shopping and a dip in social media sales during the second quarter — further evidence supporting the importance of a multichannel approach.
We’ve said it before and we’ll say it again: Today’s retailers and suppliers need to embrace the importance of being multichannel in order to successfully engage with today’s shoppers. And that obviously includes Gen Y.
In fact, the explosion of mobile technologies and social networking has unleashed new revenue possibilities for Walgreens, and Walgreens’ leaders have been pushing to upgrade communications capabilities and reach consumers through every channel, from stores and drive-through pharmacies to social media and smartphones.
“Multichannel shoppers are three times more valuable to a retailer than a single-channel shopper,” president and CEO Greg Wasson said in January.
These studies and the move by Walgreens are just a few examples and clearly are just the tip of the iceberg.
What do you see as some of the most effective and innovative multichannel approaches out there today?