How Much Will Kroger’s Revenue And EBITDA Grow By 2020?

by Trefis Team
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Kroger is the second largest grocer in the United States with a 10.2% share of U.S. food and grocery sales, behind Wal-Mart (NYSE: WMT), which has a share of over 21%. Kroger has been grappling with a fairly high debt load and flattish margins, which has impacted its performance of late. Kroger is investing heavily in e-commerce and omni-channel retail strategies in order to keep up with changing industry dynamics and compete with internet retailers such as Amazon (NASDAQ: AMZN) and traditional retailers such as Wal-Mart. The company is expanding its store base, introducing new items and digital coupons, re-designing the store front end, and pushing into the online grocery space with a pick up from in-store initiative. Additionally, the company’s “Restock Kroger” program is also gaining traction, which could help grow its top line going forward.

We expect Kroger’s revenue and EBITDA to grow by $8.4 billion (2% CAGR) and $855 million (6% CAGR), respectively, through fiscal 2020. To arrive at our fiscal 2020 net revenue and EBITDA margin estimates for Kroger, we have broken down the revenue and margins and estimated separately. We have also created an interactive dashboard analysis which provides a detailed analysis of how to arrive at this growth number. You can make changes to these variables to arrive at your own revenues estimates for the retailer.

In the first section, we highlight Kroger’s total revenue growth forecast from FY’17 to FY’20. Additionally, we show the increase in the company’s supermarket revenues by further breaking down into number of stores, square footage per store, and revenue per square foot, based on past trends in subsection [1.1]

In the second section, we have estimated the company’s adjusted EBITDA margin for FY’18, FY’19 and FY’20 based on the guidance provided by the company and our own understanding of the business.

 

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