According to the Zhongtong Finance APP, on June 20th pre-market trading, US well-known retailers Kroger (KR.US) announced the financial performance of Q1 2024. Financial report data shows that Kroger's same-store sales and profits exceeded Wall Street's expectations, to some extent due to the continued US inflation and tighter household budgets, more customers flocked to their stores to buy inexpensive groceries, especially cheap food.

Financial report data shows that Kroger's Q1 total sales were $45.3 billion, slightly higher than analysts' average expectations, a slight increase of 0.3% year-on-year; Q1 same-store sales (excluding fuel projects) increased by 0.5% year-on-year, while analysts' average expectation was only a growth rate of 0.13%.

Kroger's Q1 net income attributable to the company was $947 million, compared with $962 million in the same period last year; Kroger's GAAP diluted EPS in Q1 was $1.29, compared with $1.32 in the same period last year. Non-GAAP EPS adjusted for Q1 was $1.43, better than analysts' average expectations of $1.35, compared with $1.51 in the same period last year.

Kroger's adjusted FIFO operating profit in Q1 was $1.499 billion, compared with $1.699 billion in the same period last year. Kroger's FIFO gross profit margin, excluding fuel and other adjustment items, decreased slightly by 7 basis points compared to the same period last year.

Thanks to the better-than-expected latest performance, the company's stock price rose more than 2% in early trading on the US stock market, but then turned into a slight decline. The $24.6 billion merger transaction between the company and the smaller competitor Albertsons is currently undergoing antitrust review.

Public data shows that Kroger is one of the largest chain grocery brands in the United States, offering a wide range of products, including food, health and beauty products, pharmaceuticals, and fuel. Albertsons also operates food and drug retail, with a store network spread across the United States, offering groceries, general merchandise, health and beauty care products, pharmacies, fuel, and other items. Kroger's market cap is close to $40 billion, far exceeding Albertsons' market cap of around $11.5 billion.

In the view of Wall Street analysts, the main reason for the merger of the two parties is to enhance competitiveness in the increasingly fierce US retail market. The newly merged retailer is expected to significantly save costs through economies of scale, offer more competitive prices and a wider range of product choices, enhance customer experience through technology integration, and expand its geographic footprint in the US market, which is particularly crucial in the face of competition from large retailers such as Walmart and Amazon.

As US food prices begin to ease faster than restaurant menu prices, budget-conscious American consumers are choosing to cook at home more rather than eat out, which helps boost grocery sales. Unadjusted data from the US Bureau of Labor Statistics shows that US domestic food prices in May rose 1% compared to the same period last year, while household food prices under the restaurant dining benchmark rose 4% compared with May 2023.

Kroger has taken multiple measures such as promotions and lowering grocery prices to attract more consumers at lower prices, while also increasing investments to improve its online procurement business and adding more products to its own brand portfolio to drive sales.

According to the latest data from Placer.ai, analyzing customer location and traffic, Kroger's customer visits growth rate was 5.1% year-on-year below average from February to May this year.

Chain retailer Kroger also reiterated its full-year same-store sales performance guidance, expecting same-store sales growth prospects between 0.25% and 1.75% excluding fuel projects, and adjusted profit prospects between $4.30 and $4.50 per share, higher than analysts' average expectations of $4.40-$4.43 per share; Kroger also expects full-year adjusted FIFO operating profit of $4.6 billion to $4.8 billion, and expects full-year adjusted free cash flow of $2.5 billion to $2.7 billion.

Last month, American membership-based retail giant Costco (COST.US) also saw strong demand from consumers for fresh and baked goods, and customers also snapped up its low-priced and practical optional consumer products.

Analyst Arun Sundaram from CFRA Research said, "The first quarter is expected to be the low point of this year, which means that as consumer shopping progresses this year, revenue and net income will show stronger growth." Regarding Kroger's reiterated performance guidance, Sundaram pointed out, "Investors will be happy to see this reiterated performance guidance, as there are concerns that Kroger may lower its expectations."