Kroger's Private Brand Performance Leads to Record FY22
The Kroger Co. is building upon record fiscal years in 2020 and 2021 with an impressive set of earnings for the fourth quarter, ended Jan. 28, and full year of fiscal 2022. The grocer expects to bring that momentum into 2023 and deliver revenue and EPS growth on top of these record results.
Kroger’s Q4 saw identical sales without fuel increase 6.2%, while total company sales were $34.8 billion, compared to $33.0 billion for the same period in 2021. Gross margin was 21.8% of sales and operating profit totaled $826 million. The grocer’s private label identical sales increased 10.1% and its digital sales grew 12%.
"We appreciate our associates for remaining customer-focused, delivering the products customers want, when and how they want them, with zero compromise on quality, convenience and selection,” said CEO Rodney McMullen. “Our associates enable our success, and we are committed to investing in theirs by continuing to improve wages, comprehensive benefits and career development opportunities. Providing affordable food is even more essential at a time when inflation is affecting so many of our customers' lives. We do this by delivering fresh products at a great value, trusted Our Brands items, and personalized promotions.”
The grocer’s Q4 brought a year-over-year decrease in its operating, general and administrative rate to 56 basis points, excluding fuel and adjustment items, which was driven by sales leverage, execution of cost savings initiatives and the cycling of several one-time expenses. Additional fourth quarter highlights include a 22% increase in delivery sales over last year, a new Kroger Delivery Customer Fulfillment Center in the Denver Metro area, and an increase in digitally engaged households by approximately 900,000, compared to the same period last year.
As for its full FY22, Kroger saw a year-over-year total company sales increase of 5.2%, excluding fuel, to $148.3 billion, compared to $137.9 billion in 2021. Gross margin was 21.4% of sales for 2022, and the company’s net total debt to adjusted EBITDA ratio is 1.57, compared to 1.63 one year ago. Delivered adjusted EPS growth was 15% and LIFO charge for the year was $626 million, compared to $197 million for the same period last year, driven by higher product cost inflation.
Kroger invested approximately $600 million in incremental wages in 2022, for a total of $1.9 billion in incremental investments since 2018. Honors for 2022 included a spot on Computerworld's 2023 Top 100 Best Places to Work in IT list, a 2023 Campus Forward Award for excellence in career hiring from Ripplematch and recognition as one of Newsweek's Most Responsible Companies for 2023.
"Kroger's 2022 results demonstrate the strength of our value creation model,” said CFO Gary Millerchip. “In 2023, we expect to build on this momentum and deliver revenue and EPS growth on top of the record results achieved over the past three years.”