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On Tuesday, Melius analysts downgraded Kroger stock, listed on the New York Stock Exchange under the ticker (NYSE:KR), from Hold to Sell, setting a price target of $58.00. The stock, currently trading at $67.69 and near its 52-week high of $68.51, has seen 13 analysts revise their earnings estimates downward for the upcoming period, according to InvestingPro data. The move reflects a shift in the competitive landscape of the U.S. grocery market, where Walmart (NYSE: NYSE:WMT) has made significant strides in reclaiming market share across most categories.
The analysts pointed out that Kroger’s high point spanned from 2013 to 2015, a period during which Walmart was struggling and Kroger’s offerings were notably superior in quality and service. Despite current challenges, Kroger maintains a strong market position with $147.12 billion in revenue and has demonstrated commitment to shareholder returns, having raised its dividend for 19 consecutive years. This advantage is contrasted with the present situation, where Walmart has closed the gap with improved service levels, fresh offerings, store merchandising, and an expanded assortment. Moreover, Walmart’s digital capabilities have given the retail giant a clear edge over conventional grocers.
Kroger, which was once close to challenging Walmart’s dominance in the U.S. grocery sector, is now facing increased pressure due to Walmart’s aggressive improvements. The analysts highlighted that Walmart’s comparable sales performance has been significantly better than that of other traditional grocery stores, a sign of its growing dominance.
The price target of $58.00 set by Melius suggests a cautious outlook for Kroger’s stock performance. The downgrade to Sell indicates a belief that Kroger’s shares may face downward pressure as Walmart continues to expand its foothold in the market.
The downgrade comes at a time when competition in the grocery sector is intensifying, with players like Walmart enhancing their offerings and leveraging their scale to offer competitive pricing. InvestingPro analysis shows Kroger maintaining a GOOD overall financial health score, with particularly strong metrics in profit and price momentum. Subscribers to InvestingPro can access over 10 additional exclusive insights and a comprehensive Pro Research Report covering Kroger’s complete financial picture. This has put conventional operators like Kroger under increased scrutiny as they strive to maintain their market position amidst a rapidly evolving retail landscape.
In other recent news, The Kroger Co . has announced its quarterly dividend of 32 cents per share, set for payment on June 1, 2025, to shareholders of record as of May 15, 2025. This announcement highlights Kroger’s commitment to dividend growth, boasting a 13.5% compounded annual growth rate since 2006. Additionally, Kroger has appointed Ronald Sargent as interim CEO and Chairman, effective March 13, 2025, with an annual base salary of $4,350,000 and 60,515 shares of restricted stock. In a strategic move to enhance its digital presence, Kroger has promoted Yael Cosset to executive vice president and chief digital officer, leading a newly established eCommerce business unit.
Kroger’s eCommerce sales reached $13 billion in 2024, demonstrating significant growth under Cosset’s leadership. The company is also engaging customers with its "Elite Ate" Snack Bracket promotion, offering exclusive discounts on popular snacks during the college basketball season. Meanwhile, insights from the UBS Global Consumer and Retail Conference indicate uncertainty in the retail sector, with companies like Kroger navigating economic challenges. These developments reflect Kroger’s ongoing efforts to strengthen its market position and deliver value to shareholders.
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