Kroger Delivers Mixed Q4 Following CEO Exit
On the heels of Rodney McMullen’s unexpected resignation as CEO earlier this week, The Kroger Co. is moving forward and sharing its financial results for the fourth quarter and full fiscal year 2024.
In Q4, total company sales were $34.3 billion, compared to $37.1 billion for the same period last year, reflecting an increase of 2.6% with the exclusion of fuel, Kroger Specialty Pharmacy and the 53rd week in 2023. A slight improvement in gross margin was primarily attributable to the sale of Kroger Specialty Pharmacy and lower shrink.
Identical sales without fuel increased 2.4% in Q4, while operating profit totaled $912 million. The grocer also saw 11% digital sales growth, excluding the 53rd week in 2023.
As for the full FY2024, total company sales were $147.1 billion, including $2 billion of Kroger Specialty Pharmacy sales. Excluding fuel, Kroger Specialty Pharmacy and the 53rd week in 2023, sales increased 1.8% compared to the same period last year. Operating profit was $3.8 billion, with an EPS of $3.67, while adjusted FIFO operating profit was $4.7 billion and adjusted EPS was $4.47.
McMullen, who stepped down following an internal investigation into his personal conduct, was quickly replaced on an interim basis by Ron Sargent, lead director of Kroger’s board of directors. Kroger contends that McMullen’s alleged breach of corporate ethics was not related to the business, including its financial performance, operations, reporting or talent.
"I am excited to join this talented and experienced management team in my role as interim CEO,” said Sargent. “I am committed to ensuring that we execute with speed and that our teams continue to advance our go-to-market strategy to deliver for our customers, associates, communities, and shareholders."
Continued Sargent: “Kroger is operating from a position of strength, delivering fourth quarter results that came in ahead of expectations due to the strength of our model and the disciplined execution of our teams. We enter 2025 with positive momentum, focused on delivering an incredible customer experience through great quality at low prices."
According to a new report from foot traffic and location analytics firm Placer.ai, Kroger and its banners captured about 16% of total U.S. grocery store visits during 2024, although visits were down 1.2% year-over-year in Q4.
Looking forward to FY25, Kroger anticipates identical sales without fuel of 2%-3%, adjusted FIFO operating profit of $4.7-$4.9 billion, and adjusted net earnings per diluted share of $4.60-$4.80.
"Kroger's 2024 results demonstrate the resilience of our value creation model, which is generating solid results and strong free cash flow,” said outgoing CFO Todd Foley, who will soon be succeeded by PepsiCo Europe’s David Kennerley as SVP and CFO.
"Investments made to diversify our business have added more ways for Kroger to drive sustainable future growth,” said Foley. “With our strengthened balance sheet, we plan to continue to invest in our business through new store growth, grow our dividend subject to board approval, and return excess cash to our shareholders through share repurchases to drive shareholder returns in 2025, consistent with our long-term growth expectations."
"The strength of our model and the momentum in our business give us confidence in our 2025 growth plans," Foley concluded.
Following its failed merger with Albertsons Cos., Kroger revealed in December that it will resume share repurchases after a pause of more than two years. Its board of directors approved a new share repurchase program authorizing the repurchase of up to $7.5 billion of common stock.
The Kroger Family of Companies’ nearly 420,000 associates serve more than 11 million customers daily through a digital shopping experience and retail food stores under a variety of banner names. The Cincinnati-based grocer is No. 4 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America. PG also named Kroger one of its Retailers of the Century.
