Kroger Posts Revenue Beat, Halts Stock Buybacks as It Seeks Approval of Albertsons Deal

Kroger (KR) reported revenue for the first quarter that beat analysts’ estimates and said it would pause stock buybacks as it works to get regulatory approval of its $24.6 billion acquisition of rival Albertsons (ACI). Shares initially surged after the earnings release Thursday before turning lower in intraday trading.

The supermarket chain said it was putting a hold on share repurchases “to prioritize de-leveraging” ahead of the deal, which is being challenged by regulators over concerns about the merger potentially limiting competition. In April, the two companies agreed to sell off more locations in an effort to win approval. 

Growth From Digital Sales, Delivery and Pickup Options

Kroger posted revenue of $45.27 billion, up 0.2% from a year ago and above analysts’ projections. Same-store sales, excluding gas, were 0.5% higher. Kroger added that digital sales rose more than 8%, and that its delivery and pickup options together brought double-digit percent growth. It noted that total households, loyal households, and customer visits all increased.

Diluted earnings per share (EPS) came in at $1.29, down from $1.32 in the year-ago period and below analysts estimates. However, adjusted EPS of $1.43 beat projections.

CEO Rodney McMullen said Kroger had a “better-than-expected performance of our grocery business.” He noted the company benefited from lower prices and personalized promotions. 

Kroger also reiterated its full-year outlook, and reported that it would continue to pay dividends, and increase them over time, pending board approval.

Kroger shares were 2.9% lower at $50.48 as of 11:30 a.m. ET Thursday, though they’ve gained over 10% since the start of the year. Albertsons shares were 0.8% lower at $19.77 Thursday and have lost about 14% in 2024 so far.