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The spread of the more infectious Delta variant in the United States has delayed a return to normal and forced people to consolidate their shopping trips, boosting businesses of big traditional grocers such as Kroger (NYSE:KR).
The operator of Ralphs, Dillons and Fred Meyer stores said it expected a 1% to 1.5% fall in full-year adjusted same-store sales, compared with a 2.5% to 4% decline forecast previously. Analysts expect a decline of 2.9%, according to Refinitiv data.
Kroger has also been strengthening its online business by partnering with Ocado (LON:OCDO) Group Plc for the UK-based company’s advanced robot technology for warehouses and third-party delivery firms like Instacart Inc.
It has launched “Kroger Delivery Savings Pass,” a service that offers subscribers unlimited delivery for $79 annually, in Florida in a direct challenge to similar services from rivals Albertsons Cos Inc and Walmart (NYSE:WMT) Inc.
The company said it expected annual adjusted profit between $3.25 and $3.35 per share, compared with its prior range of $2.95 to $3.10 a share. The forecast was higher than estimates.
Same-store sales, excluding fuel, fell 0.6% in the second quarter ended Aug. 14 from a year earlier, when people stockpiled groceries and cleaning products at the height of COVID-19 lockdowns. Analysts on average expected a 2.8% decline.
Kroger earned 80 cents per share on an adjusted basis, beating estimates of 64 cents.
The company’s shares declined 2.7% before the bell, having jumped around 45% so far this year.