Kroger’s Q3 reports sales decrease amid store revamps
Kroger’s income fell in the third quarter as it continues to invest in online and offline initiatives to shore up — and transform — its business.
Kroger’s total sales decreased 0.3% to $27.67 billion, just above estimates, amid disruptions as the company continues to revamp stores to allow more shelf space to best-selling products. Excluding fuel, the convenience store business unit divestiture and the merger with Home Chef, total sales increased 1.7% in the quarter over the same period last year. Same-store sales, excluding fuel, rose 1.6%. Digital sales grew over 60%.
Neil Saunders, managing director, GlobalData Retail, commented that, given the unfavorable metrics around online, Kroger needs to counterbalance its digital efforts with growth strategies in other, more profitable parts of the business.
“In our view, online grocery has yet to prove itself as a viable business model,” Saunders explained. “Even in the U.K. – where the market is far more advanced and where the higher population density is more favorable to distribution – online has not been particularly helpful to the bottom line. If anything, it has eroded profits and put margins under severe pressure.” For more analysis, click here.
Net income fell to $317 million, or 39 cents per share, in the quarter ended Nov. 10, from $397 million, or 44 cents per share, in the year-ago period. It reported adjusted earnings of $394 million, or 48 cents per diluted share, when accounting for its investment in online U.K. grocery retailer Ocada Group, above the 44 cents a share analysts had estimated.
Kroger has launched a number of initiatives in recent months, including, most recently, a pilot with Walgreens to sell grocery items in the drug store chain’s stores. In November, it announced that it would open its first customer fulfillment center, with the automated facility leveraging digital and robotic capabilities, will be the first project that it is collaborating on with Ocado.
“Kroger is transforming our business model,” said Kroger chairman and CEO Rodney McMullin. “We’re moving from a traditional grocer to a growth company with both a strong customer ecosystem that offers anything, anytime, anywhere, and asset-light, high-margin alternative partnerships and services. We are strengthening the Kroger ecosystem by reducing costs and investing the savings in our associates, technology, and price to grow units, traffic and share. Leveraging our store, logistics and data assets in turn creates incremental new profit streams, which then further redefines the customer experience. In this way, our new growth model will be a virtuous cycle.
Kroger lowered its net earnings guidance for the year to $3.80 to $3.95 per diluted share from $3.88 to $4.03 previously. It maintained its adjusted operating profits of $2.00 to $2.15 for the year.
Albertsons’ new identity platform secures online customer data
Albertsons’ new identity platform is securing online customer data, a move that will enhance the grocer’s digital experience, and drive loyalty.
To ensure it could protect the digital information among the more than 30 million customers it serves each week, the supermarket giant implemented the Identity Cloud platform from identity software provider Okta. Serving as the first step of online interaction between Albertsons and its customers, the platform will power user registration and authentication for Albertsons’ website and mobile app.
Further, the scalable software’s single sign-on, universal directory and API access management will provide one central identity platform for all digital experiences. Overall, the company expects the platform to support a more secure customer experience.
“As one of the U.S.’s largest grocery retailers, we needed a solution that could scale with us,” said Ramiya Iyer, general VP of IT, digital and marketing, Albertsons. “We’re confident that we found that in the Okta Identity Cloud, which now serves as an important part of our customers’ digital experience with Albertsons.”
Albertsons continues to step up efforts related to its online experience. In October, the company announced a partnership with Takeoff Technologies to test an artificial intelligence-based “micro-fulfillment center” concept supported by Albertsons’ existing supply chain and store footprint. AI-enabled robots and a system of totes and conveyors will collect items for online grocery orders within minutes, and deliver items delivered to an Albertsons employee, who prepares the order for the customer.
The “hyper-local” automated center will be piloted in an existing store early in 2019.
To further bolster its e-commerce offering, earlier this year, the supermarket giant launched Albertsons Performance Media, a digital media capability designed to improve the digital advertising performance of its CPG brand partners.
In addition, the company opened its digital marketplace — a service that enables customers to purchase items online directly from manufacturers — to outside vendors. Albertsons also recently joined forces with driver service Instacart, a move to offer same-day delivery of online orders to customers in as little as an hour. The grocer planned to make the service available in more than 1,800 of Albertsons’ banners across the country by mid-2018.
The company was also the first national grocery retailer to acquire a prepared-meals company. The supermarket chain acquired online meal company Plated last fall.
AmerisourceBergen Foundation donates nearly 1M drug deactivation resources
The AmerisourceBergen Foundation recently announced that it has collaborated with more than 20 not-for-profit organizations in order to provide funding against the ongoing opioid epidemic.
The Valley Forge, Pa.-based company also has distributed nearly one million drug deactivation resources through its Safe Disposal Support Program in 44 states and 140 organizations across the United States.
“Our Foundation has strategically aligned itself to address today’s biggest health-related issues and concerns. The epidemic of opioid misuse is a complex, multifaceted problem — and one that demands action, attention and a collaborative approach,” Gina Clark, president of the AmerisourceBergen Foundation, said. “I look forward to the next phase of our foundation’s work as we continue to identify partnerships aligned to our mission that will help maximize our impact and drive sustained change.”
In addition, the foundation has identified and developed opioid misuse and abuse initiatives, including the Opioid Research Grant Program, to redefine the best practices, advance innovative ideas from the nonprofits and help improve the well-being of various communities, the company said.
Recognizing the foundation’s efforts to support the opioid crisis, Eluna — formerly The Moyer Foundation — awarded AmerisourceBergen with its annual Corporate Partnership Award. The two organizations have worked together over the years to reach underserved youth who have been impacted by a family member’s substance use disorder and provide them with addiction prevention resources and support services, the companies said.
“We have been grateful for the continuous support of the AmerisourceBergen Foundation and their response and collaboration to address the needs of children affected by addiction,” Mary K. Fitzgerald, CEO of Eluna said. “With such a critical health issue facing our families and neighbors, the work of a dedicated organization like the AmerisourceBergen Foundation is not only appreciated, but necessary as nonprofits continue to care for those in need.”