Kroger Company (NYSE:KR) shares are trending higher today despite posting a loss for the second quarter due to a $1.4 billion charge associated with its nationwide opioid settlement framework. Additionally, the company and Albertsons (NYSE:ACI) have agreed to sell over 400 outlets and eight distribution centers to wholesale grocer C&S Wholesalers for $1.9 billion. The strategic move is part of Kroger’s bid to gain antitrust approval for its $25 billion merger with Albertsons, expected to close in early 2024.
During the quarter, revenue declined by 2.3% year-over-year to $33.85 billion, missing expectations by $270 million. However, its adjusted EPS of $0.06 outperformed estimates by $0.05. Identical sales rose by 1%, compared to a growth of 5.8% in the year-ago period. Owing to the $1.4 billion opioid charge, Kroger incurred an operating loss of $479 million, compared to an operating income of $954 million a year ago.
Furthermore, the $1.4 billion charge will be settled over a period of 11 years, with a major portion of these payments being tax deductible. For Fiscal Year 2023, Kroger expects identical sales growth (excluding fuel) to range between 1% and 2%. It anticipates EPS to be in the range of $4.45 to $4.60, with capital expenditures ranging from $3.4 billion to $3.6 billion.
Overall, the Street has a consensus price target of $52.09 on Kroger, alongside a Moderate Buy consensus rating.
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