Groger Co. This year’s strategic development plan – led by New Foods and Digital – was unveiled at its Virtual 2021 Investor Day conference.
Chairman and CEO Rodney McMullen told analysts and investors yesterday that Cincinnati-based Crocker aims to deliver 8% to 11% of total shareholder returns annually, with the support of a financial model now having a high operating profit margin and a “clear path” of revenue growth of 3% to 5%. Up to%.
For fiscal year 2020, which ended Jan. 30, Crocker added $ 10 billion to its top tier. Sales totaled $ 132.5 billion, up 8.4% from 2019. Excluding fuel sales and sentiment, that growth was 14.2%. Excluding gas and changes, uniform sales rose 14.1% year-on-year.
“When the epidemic hit last year, our world changed dramatically. Being sustainable is what people need for food, and we were there to meet that need through new channels and formats, constantly focusing on quality, value and convenience,” McMullen said. Not only did we meet the immediate needs of our customers, but we also used this unique time to accelerate our own transformation. Thanks to our team’s response and guided by our mission and our values, we have turned the crisis into a catalyst for sustainable growth. ”
McMullen says Groger currently has a 10% share of the food-home-market, with a No. 1 or No. 2 share of the majority of the major markets in which it operates. Supermarket company e-commerce sales have now surpassed $ 10 billion, which he described as “a massive change from where we were a few years ago”.
“In the post-Govt era, the three main trends that shaped the industry were: e-commerce, home cooking and pet food preparation. It is true that switching to spending more time at home and eating less in restaurants was a barrier to our industry and as a result we will face severe comps. We also hope that those who can turn motivation into long-term competitive advantage will emerge as winners, and that is what we are doing, ”McMullan said.
“If so, how do we pay for total shareholder income today and in the future? By guiding new food and accelerating with digital,” he said.
“First, our new diet will help us gain a leadership role,” McMullan explained. Second, digital is now a growth machine, and with retail media, scale economies and technology and process improvements we have a clear path to digital profitability, which will reduce the cost of our service. Third, with the power of the Groger platform, we are well positioned to compete and win in the post-COVID world. Our four competing trenches – seamless, customizable, new and our brands – are stronger today than ever before, strengthening our confidence in our potential to grow sales and market share. ”
According to McMullon, brick and mortar is a strong new offering that attracts shoppers whether they are online or not.
“We know that customers make decisions about where to shop based on their perception of the freshness of that retailer’s food. In this way, food is our main platform,” he said. “Our new offering is an important sales drive and a competitive advantage for Grocer. Customers are superior to all major national retailers in our new sectors. “
Croger recorded digital sales growth of 118% in fiscal 2020, with the online grocery delivery service providing significant impetus. At the end of the year, the retailer had 2,223 pickup sites and 2,472 distribution points, covering 98% of its market areas. Annually, 60 million households shop with groceries in the store or digitally. McMullan emphasizes the value of this “stickiness”, as Crocker sees a 98% retention rate when customers shop and engage online.
“Digital is a significant growth opportunity. Through Digital, the Groger ecosystem we have built over the past few years can deliver anytime, anywhere, anywhere, regardless of channel, pickup, delivery or shipment, ”said McMullen. “Today, we see new customers engaging in our seamless ecosystem. Since the epidemic, we have doubled our digital business by 2020. We will continue to build on this momentum.”
What’s more, by 2020 the online customer contacts had increased by 30% in its digital assets to over 1.3 billion, and the company delivered nearly 11 billion personalized referrals per week. McMullen says improved adaptation will increase customer loyalty and increase sales.
“Our significant access allows us to customize the customer experience in a meaningful way. At the same time, our ecosystem monetizes the traffic and data intelligence generated by our advanced customer experience,” he said. We pay in ways. These include our retail media business, mature businesses such as Groger Precision Marketing and Groger Personal Finance and our data analytics firm 84.51. All of these contribute to increased operating profit growth and marginalization. ”
Crocker cites its “our brands” private-label portfolio as the main differentiator for shoppers. McMullen previously announced that 2020 would be its “best year,” with sales of our brands surpassing .2 26.2 billion, with 13.6% growth in 2020. The five-year-old Simple Truth natural and organic brand tops the list with 20% growth in 1% billion sales.
“Our brands really offer a unique reason to shop at Crocker. Simply put, customers tell us that they love our brands and choose them more than other leading competitor brands,” McMullan told investors. It ranks eighth on the list of CPGs. “
On March 3, Croger executed its first online order through the Okado-powered Customer Completion Center (CFC), the first of the automated CFCs – ready to operate the 335,000-square-foot facility in Monroe, Ohio. So far, Groger has announced locations for 10 CFCs as part of its May 2018 launch of a partnership with United Kingdom-based Okado, which has called for the opening of 20 facilities in the United States.
Okado CFC will be key to Groger’s goal of doubling its digital sales and digital pass-through profit margin by the end of 2023, Groger’s Chief Information and Digital Officer Yale Cossett told a Virtual Conference on Investor Day.
“With the opening of our second Okado-powered facility later this spring, we are expanding the range of customers by launching inventory delivery in Florida and entering completely new geographies,” Cosette said.
Groger is also testing a service called “hometown pickup” to increase customer proximity. “We started an initiative to support first responders, create parking spaces in local hospitals and make it easy for them to get their groceries where and when they are most comfortable without compromising on cost. We have seen firsthand how much difference it has made in their lives to return that time to them.” He explained. “We take this learning and skills together and make new geography and a pickup service available to customers who do not have immediate access to one of our stores. This pilot, whom we call ‘hometown picking’, brings the Croger new food experience to new communities, with the potential to significantly increase customer access and convenience. ”
Gabriel Areca, senior vice president of video chain, said in a video conference that most of the Crocker Go shoppers live within two miles of the company’s store, which can reach 45% of the U.S. population. The introduction of more Okado CFCs will create the opportunity to serve 75% of the American population within a 90-mile radius. Plans are afoot to open six more CFCs across the country in 2022 and 2023.
“We are investing in Okado because it will enhance our strategy at any time and anytime for further growth and profitability in the future,” Areca said.
During the Investor Day event, Crocker reaffirmed his financial 2021 guidance. Based on the rough comparisons with epidemic-driven profits by 2020, the company plans to cut uniform sales by 3% to 5%, but shows growth of 9.1% to 11.1% in the two-year tier. Operating profit for 2021 is projected at $ 3.3 billion to $ 3.5 billion, a growth of 5.4% to 8.5% on a two-year basis.
On the downside, Kroger has forecast adjusted earnings for the 2021 fiscal year from 75 2.75 to 95 2.95 per share. Analysts, on average, adjusted the project EPS to $ 2.84, with ratings ranging from $ 2.55 to $ 3.51, according to Refinitive.
“Despite the uncertainties in the food-home-market in the coming year, we are confident in our ability to guide these unknowns,” said Chief Financial Officer Gary Millership, adding that “we will continue to use structural valves as key trends in shaping our industry.”