“Kroger is even better positioned to connect with our customers than we were prior to the pandemic as a result of our relentless focus on leading with fresh and accelerating with digital. I am incredibly proud of our amazing associates who continue to be there for our customers, communities, and each other when they need us most and who strive to deliver a full, fresh, and friendly experience to every customer, every time,” said Chairman and CEO, Rodney McMullen.
He went on to say, “Kroger’s strong execution delivered identical sales results in the first quarter that exceeded our original expectations. Customers are responding to the investments we have made in digital, as evidenced by our triple-digit growth in digital sales since the beginning of 2019. We were disciplined in driving costs out of the business and we achieved record growth in Kroger’s alternative profit business, demonstrating the power and attractiveness of our long-term model.
“We are raising our guidance based on the strength of our results and we remain confident in our ability to deliver consistently attractive total shareholder return.”
Total company sales were $41.3 billion in the first quarter, compared to $41.5 billion for the same period last year. Excluding fuel, sales decreased 4.0% compared to the same period last year.
Gross margin was 22.6% of sales for the first quarter. The FIFO gross margin rate, excluding fuel, decreased 65 basis points compared to the same period last year. This decrease was primarily related to sales deleverage, higher shrink, continued price investments, and charges related to COVID-19, partially offset by sourcing benefits and growth in Alternative Profits.
First Quarter 2021 Highlights
Leading with Fresh
- The Kroger Private Brand team launched 253 new items during the quarter, including seasonal fresh produce and products to elevate summer cooking
- Announced expansion of partnership with 80 Acres Farms to 316 stores reaching more shoppers in the Midwest – both in store and online
- Announced Go Fresh & Local Supplier Accelerator, providing Kroger with the opportunity to discover more local and regional suppliers to partner with to advance freshness, quality, and Fresh for Everyone commitment
- Launched a digital farmers market pilot, creating an e-commerce marketplace that connects local farmers and businesses to customers seeking fresh and delicious products
Accelerating with Digital
- Opened first two Kroger Delivery facilities powered by Ocado in Monroe, Ohio and Groveland, Florida, a new geography
- Expanded to 2,233 Pickup locations and 2,488 Delivery locations, covering 98% of Kroger households
- Increased capacity for Pickup by 15% with focus on adding high-demand time slots
- Named “Retail Innovator of the Year” during the Path to Purchase Institute’s first Industry Innovator Awards
- Announced Kroger Drone Delivery pilot with partner Drone Express, reinforcing the importance of flexibility and immediacy to customers
Live Our Purpose
- Providing the chance to win one of five $1 million checks or one of 50 groceries-for-a-year prizes through the Community Immunity Giveaway to help support the Biden Administration’s goal to have 70% of U.S. adults vaccinated by July 4
- Kroger Health administered more than 5 million COVID-19 vaccines to date, including customers and associates
- 2020 Zero Hunger | Zero Waste directed $213 million of $301 million in total charitable giving to help end hunger in communities, and a record one-year total of 640 million meals to people across the country while achieving 81% waste diversion from landfills company-wide
- Zero Hunger | Zero Waste Foundation announced the second cohort of its Innovation Fund, selecting 10 startups to receive a combined $2.5M in funding to launch innovative new consumer products made with surplus food or food byproducts and technologies to advance the upcycled food industry
- Purchased $4.1 billion from diverse suppliers during 2020, an increase of 21% versus a year ago and advancement of commitment to reach $10 billion in diverse supplier spend by 2030
- Supported disaster response to uplift communities affected by the Texas winter storm by providing aid, including issuing $270,000 in Helping Hands Fund emergency grants to more than 500 associates, partnering with the City of Dallas and City of Houston, and supplying drinkable water to local communities and not-for-profit organizations
- Launched free and downloadable Small Business Resource Guide to encourage supplier diversity as part of Framework for Action: Diversity, Equity & Inclusion plan