Business is booming at Kroger. The grocery behemoth reports strong second-quarter sales and profits, and is adding another private-label brand to its extensive portfolio. And its retail ad network, Kroger Precision Marketing, is expanding its private programmatic marketplace to include video and CTV inventory.
Kroger's comparable sales, without fuel, rose 5.8% for the quarter, with total revenues increasing to $34.6 billion, compared to $31.7 billion for the same period last year. Sales in its Our Brands portfolio jumped 10.2%, while digital sales gained 8%.
Operating profit rose to $954 million, up from $839 million in the year-ago period.
Based on the strength of this quarter's results, the Cincinnati-based company is raising its guidance for the full year and now expects comparable sales, without fuel, to be in the range of 4% to 4.5%.
It's introducing Smart Way, a new opening price point in its Our Brands product line, offering 150 items.
The retailer says the launch is a response to high inflation, with consumers looking for more ways to save while buying food.
"We know they are looking to stretch their dollars further than ever before," said Stuart Aitken, Kroger's senior vice president and chief merchant and marketing officer, in the announcement. "Smart Way is an exciting, eye-pleasing product line that will be easy for customers to find. By adding a simplified opening price point brand strategy to Our Brands portfolio, we will further cater to every customer, every time."
The Our Brands portfolio also includes 16 legacy brands, such as the Kroger brand, Simple Truth, Private Selection, Home Chef and Heritage Farm.
Zain Akbari, an analyst who follows the company for Morningstar, attributes the better-than-expected results to Kroger’s broad portfolio, including extensive private-label offerings, which contribute to its competitive advantages.
“We are encouraged that management indicates Kroger’s pricing relative to competitors is on solid footing, and the company’s increasing reliance on personalized promotions should improve efficiency in its customer acquisition and retention efforts,” he writes in his note on the results. “Kroger has also done well to use its omnichannel flexibility to engage customers across channels, with 8% digital expansion in the quarter.”
Separately, Kroger Precision Marketing says it is expanding its private marketplace to include video and CTV advertising. Its new programmatic capability applies first-party retail data, boosting ad efficiency.
The move builds on the Kroger Private Marketplace, launched in 2021. The self-service platform lets advertisers applying first-party retail sales data -- information Kroger collects from customers and owns -- to programmatic campaigns within their preferred ad-buying platform.
The company says the move is aimed at helping consumer-packaged goods marketers, continually frustrated by fragmentation in the world of traditional TV.
"Streaming is the number-one way people consume TV today," says Cara Pratt, senior vice president, Kroger Precision Marketing, in the announcement. "That means the majority of TV viewing hours can now be optimized in the programmatic environment. Our retail data precisely reaches households, such as lapsed or infrequent brand buyers, and then matches advertising exposure to store sales to measure brand impact."