By Evie Liu

Kroger, the biggest U.S. supermarket chain by sales, is working to accelerate growth as higher prices for eggs and groceries continue to pressure consumer spending. But the company is facing a lot of uncertainties: After the attempted merger with rival Albertsons failed, it's now getting a major shift in the C-suite as well.

The company is set to report fourth-quarter earnings on Thursday before the market opens. For the three months ended in January, Wall Street analysts polled by FactSet expect the grocer to post $1.12 in earnings per share, 16% down from a year ago. Sales are expected to decline nearly 7% from a year ago to $34.6 billion.

The lower numbers are a continuation of third-quarter results, when much of the sales decline were attributed to Kroger's divestiture from its specialty pharmacy business last year. Lower fuel prices have led to reduced fuel sales, hitting the company's overall revenue.

Excluding these factors, Kroger's identical sales without fuel grew by 2.3% year over year in the third quarter. For full-year 2024, the company expects identical sales without fuel to grow 1.2% to 1.5% and said this week that the numbers will likely come at the high end of that range.

Management also expects 2024's full-year adjusted earnings to come slightly above the high end of its guidance of $4.35 to $4.45 per share. Analysts polled by FactSet have a consensus of $4.46 per share.

The earnings report comes just a few days after the company announced the resignation of CEO Rodney McMullen following a board investigation into his personal conduct that was inconsistent with the company's ethics policy.

Kroger said on Monday that the conduct was unrelated to the company's business or other associates. Kroger's lead independent director Ronald Sargent will serve as chairman and interim CEO while the company searches for a permanent replacement for McMullen.

McMullen's resignation is the latest change to Kroger's top executives over the past few months. Chief merchandising and marketing officer Stuart Aitken left the firm in December. Last month, Kroger also hired PepsiCo veteran David Kennerley as its new CFO.

Wall Street is generally unbothered by McMullen's exit.

Sargent, the interim CEO, is "familiar with the business and well-known and liked by Wall Street," wrote Telsey Group analyst Joseph Feldman on Monday, "We are surprised by the news but don't believe it will impact the near-term financial performance or strategy."

Kroger should continue to benefit from its various growth initiatives, he wrote, including expansion into new regions, better product assortment, a seamless digital experience, and stronger customer loyalty through personalization and paid membership.

Kroger shares have fallen 3.9% this week.

The earnings report also comes amid legal fights between Kroger and Albertsons after their merger attempt failed in December. The deal was blocked by a federal judge as the companies couldn't meet the demand from antitrust regulators to divest from regions where they have larger market shares.

Shortly after the companies stopped pursuing the deal, Albertsons sued Kroger, saying the grocer didn't do enough to win regulatory approval for the deal and seeking billions of dollars in damages, including a $600 million termination fee. Kroger has refuted those allegations.

The deal would have united the two largest supermarket operators in the country and allowed them to better compete with big-box retailers like Walmart and e-commerce giant Amazon.

Separately, Albertsons said on Monday that CEO Vivek Sankaran would be leaving the firm in a planned retirement.

Write to Evie Liu at evie.liu@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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March 05, 2025 17:30 ET (22:30 GMT)

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