Kroger said Thursday it plans to continue investing in its digital and technology initiatives as it also ramps up grocery delivery tests with Uber.
It also comes as the Cincinnati-based supermarket chain grows its online-ordering service called ClickList, which offers same-day ordering and pickup at brick-and-mortar locations. Kroger also is generating digital sales with its online order platform known as Express Lane.
"As our customers change and evolve, we are taking steps to meet them where they are and more importantly where they are going," Rodney McMullen, Kroger's chairman and CEO, said on the company's fourth-quarter earnings call Thursday. "We're making meaningful investments in digital. We feel great about these investments because customers tell us they are important to them."
Kroger indicated it grew the number of ClickList and Express Lane locations by just over 50 percent in fiscal 2017, from 420 to more than 640 online order service locations.
The CEO said the Uber tests are underway currently in several locations and the grocer plans to expand them this year. Under the test program, customers can order through ClickList and choose to have their groceries delivered by a local Uber driver.
"We have a couple of other home delivery tests as well," McMullen added, although not providing specifics.
The Kroger CEO also took a dig at competitors in the online grocery space.
"There are a lot of companies out there right now investing in digital and e-commerce in opportunistic ways that will likely never create value for their shareholders," he said. "A core strength of Kroger is our ability to both create shareholder value today and to make meaningfully strategic investments for the future."
Shares of Kroger were down 3 percent in early trading. The company's fourth-quarter earnings per share for the quarter ended Jan. 28, 2017, were in line with estimates but analysts were concerned with the challenging outlook the company provided for the current full year. Comps also were seen as lighter than some Street estimates and the capital expenditures guidance for fiscal 2018 was lower too.
"In sum, this was not an impressive print, and we expect the stock to underperform today," said JPMorgan analyst Ken Goldman in a morning note.
- EPS: 53 cents per share, versus 52 cents expected by Thomson Reuters consensus estimate.
- Revenue: $27.6 billion, versus $27.3 billion expected by Thomson Reuters.
- Comparable sales (or identical supermarket sales without fuel): down 0.7 percent, versus 0.10 percent expected by Consensus Metrix.
Kroger's expansion into the online grocery space comes as Amazon is becoming more aggressive too.
A Cowen research report released Wednesday forecasts Amazon's growth in grocery will allow the e-commerce giant to go from the ninth-largest U.S. grocery retailer in 2017 to the third-largest grocer by 2021, putting it only behind Wal-Mart Stores and Kroger.