Grocery retailer Kroger is known for its chains like Food 4 Less and Ralphs, as well as its product lines under brands such as Private Selection, Simple Truth and Home Chef. The company operates nearly 2,800 grocery and multi-department stores across 35 states, making it a big part of many consumers’ lives and meal plans. New fulfillment centers announced in October will give even more Americans access to Kroger groceries and products from partner retailers.
Kroger’s Push To Compete With Amazon and Walmart
Kroger has been working to catch up with Amazon since 2018, when the grocer teamed up with Walgreens to experiment with an order pickup system that allows Kroger shoppers to pick up a selection of essential groceries at Walgreens stores. The purpose of the pilot program was to keep Kroger competitive against retail titans like Amazon and Walmart. The following year, the partnership expanded to additional Walgreens stores, with some Walgreens private-brand products becoming available in Kroger grocery stores.
The partnership with Walgreens saved Kroger customers from having to make an extra stop while shopping, but two years later, customers don’t have to visit a store at all. Kroger e-commerce has taken off since the pandemic, allowing customers to shop from home and have their groceries delivered. The chain has further capitalized on the at-home movement that began during lockdowns with Home Chef meal kits containing recipes and the ingredients needed to prepare them. The kits surpassed $1 billion in annual sales in October, Kroger announced in a statement.
In September, Kroger announced it would be the first grocery retailer to directly provide a national convenience delivery solution. Available through Kroger.com and Instacart’s Convenience Hub, Kroger Delivery Now is a virtual convenience store that delivers fresh foods and household essentials via Instacart in as few as 30 minutes.
A month laster, Kroger announced it would build new order fulfillment centers in partnership with Ocado, allowing it to serve the Northeast market for the first time and expand its California and Florida operations. The centers will facilitate same-day and next-day deliveries.
Not to be surpassed by its competitors’ advertising programs, Kroger Precision Marketing launched a new advertising marketplace to leverage its customer data.
The digital initiatives appear to be paying off. Kroger reported third-quarter 2021 earnings that beat analysts’ expectations and rose 2.9% compared to same-quarter earnings for 2020. Kroger’s solid Q3 results drove the company to increase its guidance on identical sales and earnings per share for the full year.
|CEO Rodney McMullen’s Salary||$1.3M|
|What Kroger Is Worth|
|Share Price, 52-Week Range||$30.35-$47.99|
|GOBankingRates’ Evaluation of Kroger’s Net Worth||$84.61B|
|Information on 52-week range is accurate as of Dec. 19, 2021.|
Kroger’s Market Cap: $32.93B
Market capitalization is determined by the total dollar value of a company’s outstanding shares, which helps investors determine the relative size of a company. Kroger’s market cap of $32.93 billion reflects how the market as a whole values the company.
Kroger’s sales trend might forecast a bigger valuation in the future if the stock price continues to increase.
Kroger’s Net Worth: $84.61B
Although market cap can give you a sense of how much the market values a company, it’s not strictly accurate because it’s based on market sentiment — essentially reflecting the frequently changing opinions of investors. The GOBankingRates Evaluation of a company’s value, on the other hand, calculates a company’s net worth based on measurable figures like assets and revenue. It’s a more conservative valuation than the market value, taking into account full-year profits and revenue from the last three years, as well as the company’s assets and debts.
Based on Kroger’s revenue and profits from the last three years, the company is worth $84.61 billion.
Kroger Handles About a Sixth of the Grocery Industry’s Sales
Kroger history begins in 1883, when Barney Kroger used his life savings of $372 to open a grocery store. Fast-forward more than 130 years, and Kroger’s thousands of stores now contribute to a grocery market expected to reach $758.5 billion in sales in 2021. The company’s brands accounted for $132.5 billion in annual sales in 2020.
Like many companies, Kroger has grown through partnerships and acquisitions. Its biggest merger happened in 1999, when it joined forces with Fred Meyer Inc. A more recent merger occurred in May 2018, when Kroger ate up meal kit service company Home Chef.
Kroger partnerships include Walgreens, Instacart, Bed Bath & Beyond and Buy Buy Baby.
Should You Invest In Kroger Stock?
The pandemic, which initiated a trend toward at-home meals that continues to this day, proved beneficial to grocery retailers, including Kroger. As 2021 draws to a close with COVID-19 still going strong, the stock is up over 10% for the month and 41.03% year to date.
Analysts predict that the grocery category in general might be in for a tough time as surging pandemic-era sales begin to normalize and price competition, digital sales reliance and increased disruption from Amazon and other discounters pick up pace, Morningstar reported. That’s one reason analysts currently rate Kroger stock a “hold.”
However, Kroger seems well positioned to ride out the storm, thanks to its private label product line and expanded digital presence. In addition, Morningstar noted that Kroger’s loyalty program will allow it to expand its monetization of customer data, which will benefit its ad program and its ability to entice customers back into stores.
Good To Know
One way to reduce the risk of a stock purchase is to invest in a fund that owns stocks you’re interested in. Vanguard Total Stock Market Index Fund, Vanguard 500 Index Fund and iShares MSCI USA Minimum Volatility Factor Exchange-Traded Fund are Kroger’s three top holders among funds. Each holds a number of different securities in addition to Kroger stock, which makes them a safer option than purchasing stocks individually.
Sean Dennison contributed to the reporting for this article.
Methodology: The GOBankingRates Evaluation assesses a company’s net worth based on the company’s total assets, total liabilities, and revenue and net income from the last three years. Base value is established by subtracting total liabilities from total assets from the company’s last full fiscal year. Income value is established by taking the average of the revenue from the last three full fiscal years, plus 10 times the average of the net profits from the last three full fiscal years, and then calculating the average of those two figures. The final GOBankingRates Evaluation number is the sum of the base value and the income value.
Data is accurate as of Dec. 19, 2021, and subject to change.
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- Kroger. 2021. "Kroger Delivery Expands with New Fulfillment Centers."
- Kroger. 2021. "Kroger and Instacart Launch "Kroger Delivery Now" Nationwide to Provide 30-Minute Delivery Enabled by First-of-its-kind Virtual Convenience Store."
- Kroger. 2021. "Kroger Reports Third Quarter 2021 Results and Raises Full-Year Guidance."
- Kroger. 2021. "Kroger Delivers Strong Fourth Quarter and Fiscal Year 2020 Results."
- Morningstar. 2021. "Kroger Is Positioned for Long-Term Success, but Now May Not Be the Time to Buy."
- IBISWorld. 2021. "Supermarkets & Grocery Stores in the US - Market Size 2003–2027."