In the early weeks of COVID-19, most of us have seen videos of shoppers stampeding grocery aisles and scooping up almost everything in sight, especially toilet paper and cleaning supplies (you know who you are).
Early financial results are now coming in, and Kroger reports a 30% year-over-year increase in March sales. Many other essential retailers should see similar results. For merchants, a downside is that their costs are going through the roof.
COVID-19 requires special health and safety actions for employees and customers alike. Additionally, many stores are looking to hire thousands of employees to handle supply chain management and online order fulfillment. So as retailers report quarterly earnings, sales will benefit, but often at the expense of profits. Expect uncertainty to continue to be an overriding theme.
The following Grocery Dive article reports more on this topic, which is excerpted below:
“Following a stock-up surge in the middle of March, Kroger said sales have moderated, but still remain higher than average as shoppers get used to restrictions put in place to combat the coronavirus pandemic, the company announced Wednesday. The grocer reported a 30% increase in comparable store sales excluding fuel for March.
Despite the March boost, Kroger said it remains to be seen how shoppers will adjust to widespread business closures and stay-at-home restrictions in the weeks ahead. The company said it “expects volatility in sales throughout the year” and noted increased investments along with delays in cost-saving measures could impact its long-term results. Kroger reaffirmed its fiscal 2020 financial guidance, which calls for identical store sales above 2.25% and earnings per share between $2.30 and $2.40.
On Tuesday, Kroger announced it will boost all hourly employees’ wages by $2 an hour between March 29 and April 18. This comes in addition to bonuses of $150 for part-time and $300 for full-time employees. Over the past two weeks, Kroger said it has hired more than 32,700 workers, including individuals from the restaurant, hotel and foodservice industries.”
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group
