Even with the uncertainty surrounding trends in the food at home market as COVID vaccines roll out, the company remains optimistic.
“Our insight suggests there are a number of consumer changes that have occurred during the pandemic that will prove to be more structural and lasting, which, combined with our strong execution and flexible financial model, give us confidence we will be able to manage through the current unknowns,” Gary Millerchip, Kroger’s senior vice president and chief financial officer, said during the call.
Kroger expects sales to drop 3 to 5 percent this year, Millerchip said.
Last year’s rise in sales and profits also saw the company updating average hourly pay for its workers up to $15.50 compared to $15 last year. With comprehensive benefits factored in, its average hourly rate is more than $20, Millerchip said.
Kroger said it invested $300 million to boost regular wages to its associates last year. For this year, it expects to invest an incremental $350 million in continued average hourly wage increases for its associates, Millerchip said.
Also this week, Kroger reported a loss of $77 million for its fiscal fourth-quarter, which ended Jan. 30, after reporting a profit in the same period a year earlier.
The company said it had a loss of 10 cents per share. Earnings, adjusted for non-recurring costs, were 81 cents per share.
The results exceeded Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of 69 cents per share.
The supermarket chain posted revenue of $30.74 billion in the period, which fell short of Street forecasts. Five analysts surveyed by Zacks expected $31.01 billion.
For the year, the company reported profit of $2.59 billion, or $3.27 per share. Revenue was reported as $132.5 billion.
Kroger expects full-year earnings in the range of $2.75 to $2.95 per share.
Kroger shares have climbed roughly 5% since the beginning of the year, while the S&P’s 500 index has risen roughly 2%. The stock has climbed 13% in the last 12 months.
Kroger continued to grow market share during the quarter, McMullen said in a statement.
“Our ability to meet our customers’ evolving needs is a testament to our deep competitive moats, disciplined investments in our increasingly robust digital capabilities, as well as our associates’ relentless focus on our customers,” he said. “We finished fiscal year 2020 with strong sales and earnings, as heightened demand for fresh, convenient food and meal solutions across modalities, including in store, pick up and home delivery, continued throughout the fourth quarter.”
The Associated Press contributed to this report