The Kroger Company (KR) plans to appoint 20,000 permanent associates across its supermarket divisions in order to tap growing opportunities and serve customers better. The grocery retailer currently employs more than 375,000 associates serving in 2,640 supermarkets and multi-department stores across 34 states and the District of Columbia.
Over the past 6 years, the company has increased the headcount by approximately 40,000, excluding 25,000 staff added on account of Harris Teeter's acquisition and workers deployed for capital projects. The company has also created job opportunities for veterans, hiring 22,500 since 2009.
A dominant position among the nation’s largest grocery retailers enables Kroger to sustain growth in top and bottom lines, expand its store base, and boost its market share by introducing new items. The company’s strong corporate and national brands helped gain customers’ loyalty.
In our view, Kroger’s customer-centric business model provides a strong value proposition to consumers and positions its well to deliver higher earnings primarily through strong identical supermarket sales growth (excluding fuel). Identical supermarket sales are expected to grow between 3% and 4% during fiscal 2014. The company’s Customer 1st strategy that enriches consumers shopping experience and convinces them to return to the store is also favorable.
We believe that fiscal 2014 presents huge opportunities to augment identical supermarket sales, alleviate gross margin pressure, improve operating margin and enhance return on invested capital.
Kroger is slated to report second-quarter fiscal 2014 results on Sep 11. Analysts polled by Zacks expect earnings to come in at 69 cents a share, up 15% year over year. The current Zacks Consensus Estimate for revenue is $24,921 million.
Kroger currently carries Zacks Rank #2 (Buy). Other stocks worth considering include ConAgra Foods, Inc. (CAG), The Hain Celestial Group, Inc. (HAIN) and J&J Snack Foods Corp. (JJSF), all carrying the same Zacks Rank as Kroger.
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