Kroger stock broke out on Thursday, after the grocery-store operator forecast full-year profit and same-store sales that were above expectations and reported fourth-quarter earnings and revenue that beat estimates.
Other grocery stocks made big moves. Albertsons climbed up the side of a cup-shape base. Sprouts Farmers Market flashed an early entry and kept rising to flirt with an outright breakout.
Kroger reported as supermarket customers try to manage higher food prices — after a wave of stimulus, supply-chain issues and, now, Russia's invasion of Ukraine. And as the company and other retailers try to manage worker demands for higher wages and better benefits after two years of stressful conditions during the pandemic.
The earnings report also arrived as Kroger braces for a string of contract negotiations for employees this year, and warned against "unrealistic proposals" from local unions. The company is also holding a business update on Friday.
Kroger Earnings, Kroger Stock
Kroger — which operates grocery stores like Ralphs, King Soopers, Fred Meyer and its namesake locations — forecast full-year earnings per share of $3.75 to $3.85. That topped FactSet estimates for $3.45. Planned pay raises are included in that forecast.
It also expects a same-store sales gain of 2% to 3%, above FactSet estimates for 1.6%. BMO analyst Kelly Bania, in a research note, said that forecast was "likely supported by continued inflation."
For the fourth quarter, Kroger earned 91 cents per share, up 12%. That was above FactSet estimates for 74 cents.
Revenue rose 7.5% to $33 billion. The top-line figure was also above expectations for $32.7 billion. Same-store sales, excluding fuel, rose 4%, helped by the company's fresh-food offerings. That was above Consensus Metrix forecasts for a 2.5% gain.
Both EPS and sales showed slightly faster growth for a second straight quarter.
Kroger Stock
Kroger stock gapped up 11.6% to 55.10 in the stock market today. Shares punched through a 50.25 buy point of a cup base. KR stock is now extended, especially in the current volatile, uncertain market. But if shares consolidate for a time, investors could buy the gap up.
The relative strength line for KR stock had hit a high several days ago, a bullish signal.
Shares have a strong 92 Composite Rating. The company's EPS Rating is 78.
Along with Kroger stock, other grocery store stocks jumped as well.
Sprouts Farmers Market ran up 7.4% to 31.44, clearing a traditional consolidation buy point of 31.41. But SFM stock offered an early entry of 30.06 Thursday morning. Early entries have often been a safer bet over the past year.
Elsewhere, Albertsons rallied 11.6% to 35.70. Shares are in a consolidation with a 37.85 entry.
Weis Markets rose 5.4% to 66.35. That stock was in a flat base with a 68.27 entry. Natural Grocers by Vitamin Cottage rose 5.8% to 18.55, and was in a 13-month consolidation. The highish handle buy point is 19.03. Investors could have bought NGVC stock on Wednesday as it broke the trendline in the handle.
Kroger Stock And Inflation
Kroger's management, during the company's earnings call, said customers had begun to lean on coupons, dining at home more, and changing their spending habits — at least outside of food.
"We are starting to see customers engaging in coupons a little bit more aggressively than before," CEO Rodney McMullen said during the call.
But management noted those shifts in consumer behavior were just beginning. And they said they expected higher prices to ease in the second half of the year, as prices lap increases over the prior year.
The company noted that it was taking steps to keep its supply chain running smoothly. Those efforts included using data resources to shorten lead times, and efforts to expand transportation contracts, after the pandemic and consumer demand snarled global distribution channels.
Labor Tensions
Meanwhile, tensions appeared to remain elevated with Kroger's employees, even as the company offers what it said were "generous wage increases." The company said its hourly rate had increased to $17. Wall Street has worried about the impact of higher wages on Kroger stock and other retailers.
Union members who work at King Soopers stores in Colorado in January ratified a new contract, following a 10-day strike. Management said that it had contract negotiations with the United Food and Commercial Workers International Union for employees in Las Vegas, Southern California, Seattle and several other cities this year.
"Our objective is to negotiate contracts that balance competitive wage increases and affordable health care for associates with keeping groceries affordable for the communities that we serve," CFO Gary Millerchip said on the call.
"If negotiations do become contentious, we have contingency plans in place to continue to support our communities," he added.
