Bigger than ever: Kroger sales surge to $132.5B in unusual pandemic year
Kroger’s total sales surged 8.4% to $132.5 billion in pandemic-ravaged 2020 – tallying extra receipts to add the equivalent of nearly two Fortune 500 companies to its total revenues.
The Cincinnati-based grocer also posted a $2.6 billion profit for the year, a 5.6% increase.
A key sales metric, identical sales without fuel, increased 14.1% in 2020.
Kroger’s growth was propelled by an epic shift of customers’ food consumption habits amid the COVID-19 pandemic: nearly $1 of every $4 that Americans used to spend going out to eat has shifted away to food consumed at home – so that’s $162 billion extra mostly going into supermarket coffers, according to the U.S. Department of Agriculture. In early 2020, Americans were spending 49 cents of their food dollars at grocery stores, they are now spending about 56 cents.
The pandemic has also spurred consumers’ embrace of ordering groceries online for either home delivery or curbside pickup.
Kroger digital sales top $10 billion
Kroger said its total digital sales more than doubled, growing by 116%. During a conference call with analysts, Kroger executives confirmed the digital business had topped $10 billion in 2020 – more sales than dozens of Fortune 500 companies, including local insurer Cincinnati Financial and industry rival Spartannash based in Michigan.
Kroger predicted its sales and profits will drop this year as more consumers get vaccinated and resume previous shopping habits.
The company predicted identical sales without fuel would drop 3% to 5%. The $2.75 to $2.95 earnings per share forecast it provided suggests it anticipates a $2.1 billion to $2.2 billion profit this year.
Grocery workers get wage boosts
Kroger also updated its average hourly pay for its workers. The company said that rose to $15.50 in 2020, up from $15 per hour. The grocer said it spent $300 million in 2020 to boost regular wages to its associates.
Looking ahead, Kroger said it plans to spend an extra $350 million in 2021 to boost overall wages, but did not provide a forecast for increasing average hourly pay.
The raises come as its largest union, the United Food and Commercial Workers International, has lobbied intensely for Kroger to reinstitute $2per-hour “hero bonus” pay the grocer offered on a temporary basis. The company has said such a permanent increase would be too costly.
Kroger is the nation’s largest supermarket chain.
Besides Kroger stores, the grocer operates several regional supermarket chains in 35 states, including Fred Meyer, Harris Teeter, Ralphs, Mariano’s, Fry’s, Smith’s, King Soopers, QFC and others.
The company has nearly 2,800 stores that employ nearly 500,000 workers.
The latest figures were reported Thursday as Kroger posted fourthquarter sales results that fell short of Wall Street expectations. Quarterly sales were $30.7 billion, an increase of 6.4% – but shy of the $31 billion analysts had predicted, according to Zacks Investment Service.
The company also logged a $77 million loss in the quarter.