Kroger doesn’t know what the new normal looks like, and neither does anyone else

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Kroger doesn’t know what the new normal looks like, and neither does anyone else

By Mike Troy - 04/02/2020

Following a 30% sales surge in March, Kroger said it was too early to speculate about what food at home consumption will look like going forward.

Kroger disclosed a stunning 30% increase in identical supermarket sales for March that revealed the extent of stock up activity related to COVID-19. Although the demand surge has begun to taper off, sales remain higher than normal as customers adjust to the new dining and travel restrictions, people working from home and children home from school, according to the company.

“Beyond this phase, it's too early to speculate what will emerge as the ‘new normal’ in food consumption at home,” the company said.

Despite the lack of visibility into future behaviors and the duration and magnitude of the COVID-19 situation, Kroger maintained its full year financial guidance while acknowledging it expects volatility.

That volatility is likely to show up in April as the retail industry experiences a lack of demand in some of the key categories that drove the sales surge in March. With household pantries full and replenishment needs diminished, Easter will also be a headwind to April sales. Because social distancing measures are in place, sales related to Easter gatherings will suffer. For example, Dollar Tree reported its same store sales for the seven days ended March 29 declined nearly 20%, largely as a result of weak sales of Easter seasonal merchandise.

As for Kroger, while it is maintaining its current guidance for full-year 2020, the company is delaying certain cost-saving initiatives to focus all resources on the COVID-19 pandemic. The company is continuing to make investments in its workforce, associate and customer safety, and the supply chain to provide shoppers what they need.

“Kroger’s most urgent priority is to provide a safe environment for associates and customers, with open stores, comprehensive digital solutions and an efficiently operating supply chain, so that our communities have access to fresh, affordable food and essentials,” said Rodney McMullen, Kroger’s chairman and CEO.

He described the company’s employees as “heroes,” and accordingly Kroger is paying a "Hero Bonus" wage that is a $2 premium above the standard base rate of pay received by hourly frontline grocery, supply chain, manufacturing, pharmacy and call center associates. The pay increase applies to hours worked March 29 through April 18. This is in addition to other bonuses announced earlier. 

Kroger has also hired more than 32,700 new associates in the last two weeks, many from restaurants, hotels and foodservice distributors that were out of work due to the coronavirus.

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