Kroger Co. reported a 10% decline in fourth-quarter revenue for the first time since October 2017, citing ongoing $3.2 billion annual modernization costs to upgrade stores and digital infrastructure. The Cincinnati-based retailer’s shares dropped 9.5% to $25.76 in afternoon trading amid revised 2019 profit guidance below Wall Street forecasts.
The company’s "Restock Kroger" initiative, launched over a year prior, includes automated warehouses, self-driving delivery trials, and smart shelving systems. CEO William McMullen acknowledged transformation challenges but emphasized progress on commitments, stating, "We are on track to deliver on our Restock Kroger commitments."
Kroger’s net income fell to $259 million for the quarter ending February 2, 2019, down from $854 million in the same period in 2018. Revenue missed estimates by $290 million, partly due to higher gas prices reducing fuel sales. Full-year earnings guidance of $2.15-$2.25 per share also fell short of the $2.26 analyst target.
Moody’s analysts described 2019 as a "transition year" with limited operating income growth, noting Kroger had completed most store remodels in 2018. The retailer plans targeted improvements to minimize customer disruption while investing in automation and digital services to compete with Amazon and Walmart.
