Kroger opens a new facility in a key market to deliver groceries as the company takes on competitors.
Krogering is about to get a lot easier in a key market for the supermarket operator.
kroger (CR) – Get a free reportthe largest supermarket operator in the US, turned its name into a verb in a jingle to describe the shopping experience in its stores.
The retail giant has come a long way since 1883, when Barney Kroger invested his life savings of $372 to open a store at 66 Pearl Street in downtown Cincinnati.
The company now owns nearly 2,800 stores in 35 states operating under 28 different names.
In October, Kroger and Albertsons (ICA) – Get a free reportagreed to a $25 billion merger deal that will create the nation’s largest independent supermarket chain with nearly 5,000 stores and annual revenue of more than $200 billion. The deal still faces regulatory scrutiny.
The two companies are advancing plans to sell 250 to 300 stores to help ease US antitrust concerns about their combination, Reuters reported on February 10, citing people familiar with the matter.
Being on top means having a bullseye on your back and Kroger faces increasing competition from bog box retailers Walmart (WMT) – Get a free reportcostco (COST) – Get a free reportand objective (TGT) – Get a free report .
Expanding technology is one way to stay ahead of rivals, and earlier this month, Kroger announced the opening of a new hub in South Florida that will deliver groceries to consumers’ doors.
The 60,000 square foot hub facility will employ 90 people and will work in conjunction with the Groveland, Florida distribution center.
“Whether they use the Kroger app or browse our weekly ad on Kroger.com, customers can enjoy fresh, affordable, high-quality food delivered by the best uniformed drivers,” said Bill Bennett, Kroger vice president and chief operating officer. e-commerce said in a sentence.
Kroger said the expansion into South Florida, including Miami, expands its collaboration with the Ocado Group, a UK-based grocery e-commerce company.
Kroger posts strong earnings
Kroger said it currently operates customer fulfillment centers in Monroe, OH, Groveland, FL, Forest Park, GA, Pleasant Prairie, WI, Dallas, TX, Romulus, MI and Aurora, CO with additional customer fulfillment centers slated for California. , Frederick, MD, Phoenix, AZ, Cleveland, OH, Charlotte, NC, as well as South Florida and the Northeast.
In December, Kroger posted stronger-than-expected third-quarter profit while raising its 2022 profit forecast for the third time in a year as the grocery chain retained more value-focused shoppers with higher prices. low prices and a further boost in online sales.
But then in January, R5 Capital analyst Scott Mushkin twice downgraded Kroger’s rating to sell from buy with a $37 price target.
Mushkin said the company’s research indicates that the fundamentals of the supermarket industry have “deteriorated rapidly” and he fears that “the industry could face a very unpleasant climate of rising unemployment, slowing inflation, volume pressures and increased promotional activities” in the next two quarters.
The analyst sees Kroger as “particularly vulnerable” given that it competes more than any supermarket against Walmart and other discounters, prompting the firm’s recommendation that investors with a shorter time horizon of six to nine months sell the actions.
However, the firm still believes the long-term story around the Albertsons acquisition remains intact, saying it “suggests that a capital value of more than $50 post-closing is possible.”
