Grocery Market on Edge as Major Retailers Prepare Earnings Reports
Leading grocery retailers, including Costco, BJ’s Wholesale Club, and Kroger, are set to release their earnings reports on Thursday, following recent warnings about potential price hikes in the grocery sector. The announcement comes as Target cautioned that tariffs could drive up produce costs in the coming days. In anticipation, Costco stock experienced a slight uptick, while shares of BJ’s, Kroger, and Target declined.
Albertsons also made headlines after news broke that it would be added to the S&P MidCap 400 index, leading to a rebound in its stock value. Market watchers are closely monitoring these developments as the earnings reports could influence retail stock performance in the coming weeks.
Earnings Forecast and Market Performance
Analysts expect a mixed performance across major grocery chains in the upcoming earnings reports. Kroger is projected to report a 17% decline in earnings, with revenue expected to fall by 7% to $34.57 billion despite a 2% increase in same-store sales. The grocery giant remains the third-largest online grocery retailer in the U.S., trailing behind Walmart and Amazon. Online grocery sales in the U.S. are projected to reach $220.48 billion by 2025, indicating continued growth in the sector.
BJ’s Wholesale Club is expected to report a 21% drop in earnings per share, down to $0.88, with total revenue declining nearly 2% year-over-year to $5.27 billion. This marks BJ’s first revenue decline in six quarters. Meanwhile, analysts anticipate that Costco will report a 10% earnings increase, bringing its earnings per share to $4.09. Total revenue is expected to rise 8% to $63.07 billion, with same-store sales climbing 6.4%.
Despite shifts in revenue trends, Costco, Kroger, and Albertsons remain some of the largest grocery retailers in the U.S. Food and fresh groceries continue to dominate their sales, accounting for over 70% of revenue at Kroger, BJ’s, and Albertsons. In contrast, food sales make up only 22% of Target’s total revenue. The previously planned merger between Kroger and Albertsons fell through last year, leaving both companies to navigate the competitive grocery landscape independently.
Stock Market Reactions and Retail Strategy Adjustments
Ahead of the earnings announcements, Costco stock gained 1%, maintaining its position above a key buy point. Kroger and BJ’s stocks showed support at crucial levels but remained just below buy points. Meanwhile, shares of Amazon and Walmart rebounded after recent market-wide declines, with Walmart stock hovering just below a key resistance level.
Albertsons’ stock surged 5.3% following its S&P MidCap 400 inclusion announcement. The company also confirmed a CEO succession plan and reaffirmed its 2024 financial outlook. Analysts from Goldman Sachs resumed coverage of Albertsons stock with a buy rating, signaling confidence in its market position.
Costco, known for its resilience amid economic uncertainties, continues to demonstrate strong performance. Analysts predict a 10% growth in Costco’s earnings for both 2025 and 2026. Costco’s recent membership fee hike in September 2024 is expected to contribute to additional revenue, bolstered by steady renewal rates and new sign-ups. The company has also expanded its product offerings, including gold bars, as part of its strategy to attract customers amid rising inflation. Year to date, Costco stock has climbed 14.3%, outperforming the broader market.
