Today's Analysis on Whole Food Market and Kroger: Improving Economy a Boon
LONDON, February 7, 2013 /PRNewswire/ --
Back in 2011, grocery stores were struggling due to rising food costs and weak economic environment. Also, increasing competition from big box retailers and dollar stores was hurting grocery stores. However, the improving U.S. economy, including an improvement in labor market and consumer confidence, suggests that the challenging period for grocery stores is now over. For companies such as Whole Food Market Inc. (NASDAQ: WFM) and Kroger Co. (NYSE: KR), the improved economic outlook augurs well. StockCall posted technical analysis on Whole Food Market and Kroger and these can be accessed for free upon registering at http://www.stockcall.com/technicalanalysis
Improving Labor Market and Consumer Confidence
Data released in the past few months has shown that the U.S. economy continues to see an improvement. The only negative news on the economic front in recent months has been a surprise contraction in fourth quarter GDP. Apart from the fourth quarter GDP numbers, economic data has generally been solid.
The most encouraging thing has been the improvement in the labor market. The unemployment rate is now below 8%. Last week, figures released by the Labor Department showed that the U.S. economy added 157,000 jobs in January. Initial jobless claims have also fallen in recent weeks. Improving labor market has also boosted consumer confidence. Last Friday, a report showed that the Thomson Reuters/University of Michigan final index of U.S. consumer sentiment climbed to 73.8 in January.
Increasing Competition
The grocery stores industry has also been seeing increasing competition from specialty grocery stores, big box retailers and dollar stores. As a result, conventional grocery stores have been looking at ways to improve the shopping experience for customers. The outcome has been good for grocery stores as highlighted by Kroger's strong third quarter results and outlook released back in November. Sign up today and read the full analysis on Kroger at http://www.StockCall.com/KR020713.pdf
Kroger CEO David B. Dillon said back in November that the company's proven Customer 1st Strategy continues to boost customer loyalty, identical supermarket sales and market share.
Kroger's Strong Q3 Results
In November last year, Kroger reported record financial results for the third quarter ended November 3, 2012. Excluding fuel, the company's identical supermarket sales growth, a key measure for grocery stores, rose 3.2%. In fact, the company achieved its 36th straight consecutive quarter of positive identical supermarket sales.
Including fuel, Kroger's total sales for the third quarter rose 5.9% to $21.8 billion. Total sales, excluding fuel, rose 3.7% in the quarter. Net earnings for the quarter were $316.5 million, or $0.60 per share.
CEO Dillon noted that the third quarter illustrates that the strength of the company's core business positions it to accelerate earnings per share growth.
Kroger also raised its full-year earnings outlook in November and now expects earnings to be between $2.44 per share and $2.46 per share.
Specialty Grocers Also Seeing Growth
Specialty grocers have been seeing significant growth in recent years as highlighted by Whole Foods' fourth quarter results reported in November last year. In the quarter ended September 30, 2012, Whole Foods posted a 24% increase in sales. Comparable-store sales for the quarter rose an impressive 8.5%, while identical store sales for the quarter rose 8.3%. John Mackey, CEO of Whole Foods, expects healthy comparable store sales growth and continuing margin improvement in fiscal 2013. Register with us and access the free reports on Whole Foods at http://www.StockCall.com/WFM020713.pdf
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