Kroger Co (NYSE:KR) stock rose 3.86% (As on March 7, 11:19:45 AM UTC-4, Source: Google Finance) after the company posted mixed result for the fourth quarter of FY24. The gross margin was 22.7% of sales, driven by the sale of Kroger Specialty Pharmacy and lower shrink, partially offset by lower pharmacy margins and the LIFO charge. The FIFO gross margin rate, excluding rent, depreciation and amortization, fuel and the 53rd week in 2023, increased 54 basis points year over year. The adjusted FIFO operating profit was $1,174 million, down from $1,307 million reported in the year-ago period. Kroger ended the quarter with cash of $216 million, total debt of $17,905 million and shareowners’ equity of $8,281 million. Net total debt increased $3,584 million over the last four quarters.
Meanwhile, Kroger chairman and Chief Executive Officer (CEO) Rodney McMullen stepped down following an internal investigation into his personal conduct. The Board announced that McMullen would be replaced by Ronald “Ron” Sargent as chairman and interim CEO until a new appointment is made,
KR in the fourth quarter of FY24 has reported the adjusted earnings per share of $1.14, beating the analysts’ estimates for the adjusted earnings per share of $1.12, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue of $34.31 billion in the fourth quarter of FY24, missing the analysts’ estimates for revenue of $34.56 billion. This indicates a $2.7 billion impact from the 53rd week in 2023 and $737 million from Kroger Specialty Pharmacy sales. Excluding fuel, Kroger Specialty Pharmacy and the extra week in 2023, sales grew 2.6% year over year. The identical sales without fuel rose 2.4%. Digital sales grew 11% during the quarter. The operating, general & administrative rate rose 16 basis points, excluding fuel, adjustment items and the 53rd week in 2023. The rise was primarily driven by the divestiture of Kroger Specialty Pharmacy, higher incentive plan expenses and investments in associate wages, partially offset by ongoing cost-saving initiatives.
The company guided capital expenditures in the band of $3.6-$3.8 billion and expects to generate adjusted free cash flow between $2.8 billion and $3 billion in fiscal 2025. For fiscal 2025, the company foresees identical sales without fuel to increase between 2% and 3%. Adjusted earnings are envisioned to be $4.60-$4.80 per share compared with the $4.47 reported in fiscal 2024. Management anticipates an adjusted FIFO operating profit of $4.7-$4.9 billion for fiscal 2025, whereas it reported $4.7 billion in fiscal 2024.