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Our customers ‘actually enjoy it’

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Kroger CEO Rodney McMullen said Friday the pandemic-related spike in food prices is subsiding, while the at-home cooking trend is here to stay even after the coronavirus situation improves. 

“As we look forward, we see lower inflation than what it’s been over the last several months. It’s one of the reasons why we didn’t pass through all of the inflation that we incurred in the second quarter,” he said on CNBC’s “Closing Bell.” 

“When you look at meat especially, and some of those areas, … we do not see the inflation the way it was earlier in the year as the plants come back on,” he said. “There’s plenty of raw materials supply out there. It’s just a matter of the plants being able to process it.” 

On the other hand, McMullen said he believes the increase in cooking that was sparked by the Covid-19 outbreak — as restaurants were forced to shutter their dining rooms and lockdown orders kept families cooped up at home — will outlast the health crisis. 

“When we talk to our customers, what they tell us — and it’s fascinating — if they have young kid they love baking with their kids, and it’s something they enjoy doing together. If they have older kids, it’s like, ‘Well, we really enjoy time together,'” said McMullen, whose comments followed Kroger’s strong earnings report earlier Friday. 

“So everything that we can see, it’s something that will be a long-term trend because people have, one, learned how to cook and, two, found they really enjoy it. And the other thing that’s special, is when families eat as a family, they stay together. The kids don’t get into as much trouble. Those kinds of things,” he added. “But for us the thing that gives us the most excitement, our customers are telling us they actually enjoy it.” 

The Cincinnati-based grocer reported earnings before the bell Friday that surpassed Wall Street expectations on the top and bottom lines. Revenues checked in at $30.49 billion, when analysts were looking for $29.95 billion. Earnings per share of $0.73 beat forecasts of $0.55.

A customer walks past the frozen food aisle inside a Kroger Co. grocery store in Louisville, Kentucky.

Luke Sharrett | Bloomberg | Getty Images

Kroger shares closed lower by 1.07% Friday to $34.37 apiece. The stock has outpaced the broader market this year, having risen 18.61% so far in 2020. The S&P 500 is up a little over 3% in that time. 

Reflecting optimism about sustained demand for groceries, Kroger also hiked its guidance and indicated it expects same-store sales, excluding fuel, to rise greater than 13% for the year. That is up from its previous forecast of growth greater than 2.25%.

Kroger also saw its online sales rise 127% in the quarter, building on the 92% growth it reported in the prior quarter as the coronavirus pandemic intensified across the U.S. 

Earlier this month, Walmart announced it was launching a paid subscription service, called Walmart+, with grocery delivery being a key component of it. Walmart is the country’s largest grocer, while Kroger is the nation’s biggest supermarket chain. 

McMullen said Kroger’s digital grocery offering, which it had been investing in prior to the pandemic, is distinct from its rivals.’ 

“For us, it’s the whole total experience. … One of the reasons why our digital business is strong is things that are personalized. We do incredibly well on fresh. Customers tell us and they expect that our fresh is really good, and good relative to our competition, and it’s really all of those things together,” he said. 

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lowest TV ratings for World Series game ever

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Mookie Betts #50 of the Los Angeles Dodgers hits a home run in the sixth inning during Game 1 of the 2020 World Series between the Los Angeles Dodgers and the Tampa Bay Rays at Globe Life Field on Tuesday, October 20, 2020 in Arlington, Texas.

Kelly Gavin | Major League Baseball | Getty Images

The Los Angeles Dodgers’ appearance in Major League Baseball’s top event couldn’t save the league from the impact of a sports viewership decline.

Game One of the Dodgers’ series against the Tampa Bay Rays attracted 9.1 million viewers, Fox Sports said. The game was the most watched program on Tuesday but also became the least-watched World Series game ever — or at least since Nielsen began tracking ratings in 1968.

The last time viewership dipped below 10 million for a World Series contest came was Game 3 in 2008 when the Rays played the Philadelphia Phillies (9.8 million viewers). That game was affected by a 90-minute rain delay.

The Dodgers took a 1-0 series lead after an 8-3 win on Tuesday, as the team seeks its first championship since 1988. The World Series is not moving between the teams’ home stadiums as usual, but is taking place at Global Life Field in Arlington, Texas, as MLB switched to a bubble postseason after due to the coronavirus pandemic pandemic. 

The last time the Dodgers reached the World Series in 2018 against the Boston Red Sox, Game One drew 13.8 million viewers.  Last year’s World Series opener between the Washington Nationals and Houston Astros attracted 12.1 million viewers for the first game.

The dugout reacts as Eduardo Nunez #36 of the Boston Red Sox celebrates his three-run home run during the seventh inning against the Los Angeles Dodgers in Game One of the 2018 World Series at Fenway Park on October 23, 2018 in Boston, Massachusetts.

Elsa | Getty Images

On Tuesday, the network also reported 9.7 million viewers watched game seven of the National League Championship Series on Fox and its FS1 channel. The Dodgers overcame a 3-1 series deficit to the Liberty Media-owned Atlanta Braves to advance to the World Series.

By way of comparison, Fox’s telecast of game seven of the 2017 American League Championship Series featuring the New York Yankees and Houston Astros drew 9.9 million viewers.

Game two of the World Series is Wednesday at 8:00 p.m. Eastern time. The series takes a one-day break on Thursday before resuming for game three on Friday.


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