Kroger Co.’s ecommerce sales grew 31% during its second fiscal quarter ended Aug. 17. The grocery chain didn’t break out exact figures. Kroger is No. 17 in the Internet Retailer 2019 Top 1000.
Kroger’s digital business is closer to profitability, as new investments in ship-from-store capabilities wind down, CEO Rodney McMullen told investors in a call transcribed by Seeking Alpha.
During the quarter, the retailer’s digital coverage expanded to nearly its entire customer base; 95% of its bricks-and-mortar customers live within an area where they are can order groceries online for delivery from stores. The grocer also generated an increased return on its ecommerce investments thanks to a boost in repeat business during the quarter from consumers who shopped both online and in stores.
Kroger’s partnership with Ocado is helping to reduce the ecommerce fulfillment costs. The British ecommerce grocer provides technology for Kroger’s latest ecommerce fulfillment centers. The automation technology, including robotic packing and truck route planning to reduce the chance of spoilage, is being implemented in five new warehouses currently being constructed.
“What’s so exciting about Ocado is that their model to deliver to customers is significantly less costly than our existing model,” McMullen said.
Going forward, Kroger expects ecommerce growth to slow as its meal-kit company Home Chef reaches maturity and the grocer focuses on increasing profitability of existing ecommerce operations.
Overall sales for the quarter were nearly flat, coming in at $28.17 billion compared with $28.01 billion during the same period last year.
In other earnings news:
- Department store chain Hudson’s Bay Co. (No. 41) reported a 19% increase in ecommerce sales for its second fiscal quarter ended Aug. 3. Hudson’s Bay, which owns Saks Fifth Avenue and sold Lord & Taylor to Le Tote Inc. (No. 946) this year, said data-driven marketing and technology improvements helped boost ecommerce revenue, but the retailer didn’t elaborate.
- Online sales at video game retailer GameStop Corp. (No. 46) fell 11.2% to $227.2 million during the second fiscal quarter ended Aug. 3. The merchant blamed the slowdown on a weaker lineup of new titles that usually drive sales increases during the quarter.
- Direct-to-consumer braces alternative SmileDirectClub (No. 140) shares sank 28% from the initial public offering price in Thursday’s debut, becoming the first U.S. firm since at least 2008 to raise more than $1 billion and price its IPO above range, yet sink in its opening trades.
Bloomberg contributed to this report.
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