Kroger Our Brands Sales Continue to Grow

Sales of Kroger’s Our Brands product assortment continued to grow as the grocer reported a 4.9% increase in revenue for its private label products during its fiscal year first quarter ended May 20.

“Our Brands delivered another solid quarter led by our namesake Kroger brand,” said Rodney McMullen, Kroger’s chairman and CEO. “Our Brands are always a winner with our customers as (the products) help our shoppers save money without sacrificing quality. While inflation may have been the reason for some customers trying Our Brands, taste and quality makes the customer love these products and continue to repurchase them.” 

McMullen’s comments came during Kroger’s investor conference call to discuss first quarter results.

As the value proposition of Kroger’s private brands continues to attract a growing number of shoppers, the assortment is also providing financial benefits to the company. Gary Millerchip, senior vice president and chief financial officer, noted private brand products typically provide higher margins in the range of 6% to 8% when compared to national brand products. 

While continued high prices are the main motivator for consumers to make the jump to private brands at Kroger, Millerchip noted the grocer’s continuing efforts with innovation is also a major factor. He pointed to the recent launch of the expanded menu under the Home Chef brand as an example.

As previously reported by Store Brands, Kroger added a new slate of items to its menu designed specifically for families. The new Family Menu offers 10+ weekly rotating recipes, including flavorful meals such as One-Pan Chicken Cutlets and Orzo, One-Pan BBQ Al Pastor Chicken Tacos, Lasagna-Style Bolognese Gemelli and more. The meals range from $6.99 to $8.99 per serving.

Looking ahead, Kroger officials remain bullish on future growth for its broad selection of Our Brands products, even as inflation rates begin to decrease. 

“While we don’t target specific growth for Our Brands, as we use data to identify what the customer is looking for, we do expect sales to stay at a more elevated level even as current economic challenges dissipate,” Millerchip said. 

With private brand product sales continuing to rise, Kroger reported a solid quarter company-wide with total sales of $45.2 billion, up from sales of $44.6 billion for the comparable quarter the previous year. Net earnings for the quarter were $962 million, up from net earnings of $664 million in the previous fiscal year’s first quarter.

Regarding the merger with Albertsons, McMullen said integration is “progressing nicely” and plans remain on track to complete the merger in early 2024. 

“We are working cooperatively with regulators and to identify potential buyers for stores we expect to divest to obtain clearance for the transaction,” he said. “We remain committed to not laying off any associates or closing stores, distribution centers or manufacturing facilities.”