Anibal Quevedo
Professor Persily- Lamel
KSB 100- 001
Blog 4
The financial crisis of
2008 did not affected Kroger Inc. as badly as it did to most of the other
companies in the Grocery Industry. However, it slowed its growth rate. In 2007,
one of the best financial years for Kroger, it had $70,235 million in sales. Compared
with the $66,111 million in sales in 2006, it yielded a 6.2 % in sales growth
alone. If we do the same comparison with 2008 ($70, 24 million) and 2009 ($76,
73 million), we get that sales grew 7.57 %; not a bad number if we take into
account they were amid a financial crisis. This was
possible thanks to capital investment taken forward by the company in 2007 and
2008. Moreover, the ramifications of the crisis would show up later in 2010. Sales
only grew 0.95 % from 2009 to 2010. That was due to the drop of the share price
in October 2008. They lost 12 % of the
value of the company in a period of 8 days. Again, it was not as dramatic as
the price drop of other companies in the industry. The lack of operational and
investment capital led them to stop expanding. Additionally, customers moved a bit
towards cheaper options.By 2011, however, they had recovered their traditional growth percentage range. Kroger Inc. had a 7.11 % growth in sales in 2011 and 9.96 % in 2012, being the latter year a record in sales growth for them.
Looking at other companies in the industry, for example Safeway, we see that they could not avoid a negative revenue growth for 2009 (-7.38 %) so it’s easy to conclude that the crisis affected them much more. Whole Foods Inc. on the other hand, had a relatively good performance through the worst years of the crisis. They had a 12.13 % and 12.24 % sales growth in 2010 and 2011 respectively.
That's great to know that Kroger and Whole Foods could avert from diving into the negative growth patterns. This only proves that Kroger is a super strong and stable competitor in the grocery industry and that Whole Foods is in the hunt to pull their way to the top eventually.
ReplyDeleteYes, that is one of the facts that make them both good stocks to invest in. They were able to go through the crisis without major drawbacks. It shows good managerial skills and vision from its leaders.
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