Keeping in mind the rapid increase in the number of food lovers, one of nation's largest grocery retailers, The Kroger Co.KR disclosed its intention to launch an entirely new brand - HemisFares concurrent with its second-quarter fiscal 2015 earnings call, which was held on Sep 11.
An international food brand, HemisFares will give customers access to different types of foods from all around the globe. The brand is expected to be launched later this month.
"No one else has a brand like this," claimed Kroger's CEO Rodney McMullen. He also added that every product under the HemisFares brand is procured from its place of origin and imported directly to the company's stores. The company feels that the brand will appeal to customers from all sections including millennials and foodies.
The brand launch, however, was obscured by the company's robust second-quarter fiscal 2015 results, wherein earnings of 44 cents a share beat the Zacks Consensus Estimate of 40 cents, and surged 25.7% from 35 cents earned in the prior-year quarter.
Kroger's huge customer base and dominant position enable the company to sustain growth, expand store count and boost market share. The company currently operates 2,623 supermarkets and multi-department stores in 34 states and the District of Columbia under approximately 24 local banners. We believe that the company's strong corporate and national brands helped it gain customer loyalty.
Moreover, Kroger's customer-centric business model offers a strong value proposition to consumers. It is well positioned to maintain its growth momentum primarily through identical supermarket sales growth. However, intensifying price war among grocery stores to lure budget-constrained consumers may adversely impact Kroger's sales and margins.
Kroger currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Ingles Markets, Inc. IMKTA and Jeronimo Martins SGPS SA JRONY . While Jeronimo Martins carries a Zacks Rank #1 (Strong Buy), Ingles Markets holds a Zacks Rank #2 (Buy). Another stock in the related industry worth considering is Target Corp. TGT , also with a Zacks Rank #2.
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