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Grocery chain Kroger Co (NYSE: KR) reported Thursday morning its fourth-quarter results with management confident enough that recent trends will continue in 2021, offering it an optimistic outlook, Kroger CEO Rodney McMullen said Thursday on CNBC's "Closing Bell."
Confidence In Guidance: Kroger expects 2021 identical store sales to come in higher by 9.1% to 11.1% on a two-year basis while EPS is expected to grow 12% to 16% on a two-year basis.
Management feels recent at-home trends can continue into 2021 and beyond as it found around 60% of Kroger customers say the highlight of their day is the family dinner, McMullen said. Kroger customers have come to appreciate its product offerings and have shown a willingness to spend more for premium items.
Inflation Outlook: Kroger expects food inflation to remain within a "pretty normal" range of 1% to 2% in 2021, the CEO said. But, the path will be "very bumpy" along the way, despite large inflation in meat prices in the second quarter last year.
Addressing Store Closure Controversy: Kroger dominated headlines in February when it closed several stores on the West Coast after city councils mandated an incremental $4 per hour pay increase for grocery-store workers.
The stores that were closed were "struggling" even before the pandemic and the grocery-store industry already operates with "razor-thin" profit margins, the CEO said.
Meanwhile, the average hourly rate for Kroger workers is above $15.50 an hour, while pensions and other benefits add another $5 an hour on average, he said.
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