Kroger (KR) saw a surge in same-store sales last month as US consumers stocked up on goods to manage during the COVID-19 pandemic, while the grocery chain said it’s expecting volatility throughout the rest of the year but maintained guidance for the period.
Identical retail supermarket sales without fuel jumped 30% in March, “driven by dramatically heightened demand in the middle of the month as customers were stockpiling, which then tapered, but remained higher than normal in the final week, as customers adjusted to the new dining, work and travel restrictions,” Cincinnati-based Kroger said in a statement.
The shift in customer buying started in the last few days of February, with demand seen across grocery and fresh departments, Kroger said. Identical sales excluding fuel and adjusted earnings per share are expected to be better than the annual rate of growth given in its full-year guidance, it added.
“We are seeing strong sales and are at the same time investing in our business to support our customers and associates through the current uncertainty,” said Chief Financial Officer Gary Millerchip.
The company opted to maintain its guidance, with adjusted earnings for 2020 forecast between $2.30 to $2.40 a share and identical sales seen growing greater than 2.25%.
Kroger said it’s expecting sales volatility through the year and said investments to help customers and workers during the pandemic will have an impact on its results. Also likely to weigh on results is the delay of some cost-savings initiatives, uncertainty around the longer-term impact of COVID-19 and a potential “long-term shift in customer behavior toward eating more food at home.”
The company borrowed $1 billion under its revolving credit facility on March 18, and said it will pause share repurchases for the rest of the fiscal first quarter to “maintain financial flexibility.” Kroger had bought back $355 million so far in the period, and had authorization from its board to buy another $245 million.
The retailer said this week it was giving workers a $2 premium above their standard base rate of pay for hours worked from March 29 to April 18, in addition to an hourly bonus for front-line workers that will be paid out on Friday.