Kroger Prospers on Q2 Numbers

The Kroger Co. (NYSE: KR) Thursday reported its second quarter 2019 results and provided a Restock Kroger progress update on the company's three-year transformation plan.

The grocery giant, based in Cincinnati, reported that Earnings per Share came in at $0.37, while Adjusted EPS of $0.44. Identical sales without fuel grew 2.2% and digital sales grew 31%. KR achieved operating profit of $559 million.

Total company sales were $28.2 billion in the second quarter, compared to $28.0 billion for the same period last year. Excluding fuel, dispositions and merger transactions, sales grew 2.5%.

Gross margin was 21.9% of sales for the second quarter. The FIFO gross margin rate, excluding fuel, decrease of 29 basis points was primarily driven by industry-wide lower gross margin rates in pharmacy and continued growth in the specialty pharmacy business.

Gross profit excluding fuel and retail pharmacy saw 12 basis points of gross margin investment.

Adjusted FIFO operating profit was $626 million. Alternative profit streams were on track to contribute an incremental $100 million in operating profit in 2019 compared to last year.

Kroger also confirmed identical sales, Adjusted Operating Profit and Adjusted EPS guidance for 2019.

Consistent with its financial strategy, Kroger reduced net total debt by $1.3 billion over the last four quarters. Kroger's net total debt to adjusted EBITDA ratio is 2.46, compared to 2.59 a year ago.

The company's net total debt to adjusted EBITDA ratio target range is 2.30 to 2.50.

Earlier this year, Kroger increased the dividend by 14%, marking the 13th consecutive year of dividend increases.

Shares climbed 97 cents, or 3.8%, to $26.51