Rodney McMullen, CEO of Kroger, said the pandemic-induced spike in food prices is easing on Friday while the home cooking trend continues even after the coronavirus situation improves.
"Looking ahead, we're seeing lower inflation than we have seen in recent months. This is one of the reasons we didn't run through all of inflation in the second quarter," he said on CNBC. Close the bell. "
"If you look at meat in particular and some of those areas … we don't see inflation as it was at the beginning of the year when the crops came back up," he said. "There are a lot of raw material stocks. It is just a question of the facilities that can process them."
On the flip side, McMullen said he believes the surge in cooking sparked by the Covid-19 outbreak – as restaurants have been forced to close their dining rooms and lockdown orders kept families at home together – will outlast the health crisis.
"When we talk to our customers about what they tell us – and it's fascinating – when they have a young child, they love to bake with their children and it's something they like to do together. When they are older Having kids is like, "Well, we really enjoy our time together," said McMullen, whose comments followed Kroger's strong earnings report on Friday.
“Everything we can see is a long-term trend because, on the one hand, people have learned to cook and, on the other, they have found that they really enjoy it. And the other special thing is when families eat like this. As a family, they stay together Children don't get in that much trouble. Things like that, "he added. "But for us, what excites us most, our customers tell us that they actually enjoy it."
The Cincinnati-based grocer reported profits ahead of Bell Friday that exceeded Wall Street's profit and loss expectations. Revenue was $ 30.49 billion when analysts searched for $ 29.95 billion. Earnings per share of $ 0.73 exceeded forecast of $ 0.55.
A customer walks past the freezer aisle at a Kroger Co. grocery store in Louisville, Kentucky.
Luke Sharrett | Bloomberg | Getty Images
Kroger stock closed 1.07% on Friday at $ 34.37 apiece. The stock outperformed the broader market this year, rising 18.61% through 2020. The S&P 500 has risen by a little more than 3% during this time.
Due to optimism about continued food demand, Kroger also raised its forecast, stating that sales in the same no-fuel store will grow more than 13% for the year. This is above the previous growth forecast of more than 2.25%.
Kroger also saw online sales jump 127% for the quarter, building on 92% growth in the previous quarter as the coronavirus pandemic deepened in the US.
Earlier this month, Walmart announced it was launching a paid subscription service called Walmart +, where grocery delivery is a key component. Walmart is the largest grocer in the country while Kroger is the largest supermarket chain in the country.
McMullen said Kroger's digital grocery, which it invested in before the pandemic, was different from its competitors. & # 39;
"For us it's the whole experience. … One of the reasons our digital business is strong is because of things that are personalized. We do incredibly well with Frisch. Customers tell us and they expect our Frisch to really be is good, and good compared to our competition, and it's really all of these things put together, "he said.