• BLACK FRIDAY LIMITED-TIME OFFER...

    GET THE BEST DEAL WE OFFER ALL YEAR

    EXPIRES SOON... THEN IT DISAPPEARS

Below is a brief excerpt from a complementary research note written by our Consumables analysts Howard Penney and Daniel BiolsiWe are pleased to announce our new Sector Pro Product Consumables Pro. Click HERE to learn more.

Food Retailers Face Off With The Grocery Sector - 11 18 2020 12 30 44 PM

The largest food retailer’s earnings reports have numerous takeaways for the grocery sector. Walmart’s (covered by Hedgeye’s Brian McGough) U.S. SSS increased by 6.4%, ex. fuel in Q3 with transactions down 14.2% and ticket up 24%.

Walmart’s traffic has been negatively impacted by the reduction in operating hours during the pandemic. Placer.ai’s traffic counts show an improvement in October, with Walmart’s traffic improving to -7.6%, as seen in the following chart.

Food Retailers Face Off With The Grocery Sector - bp1

Walmart said comp sales accelerated from August, helped by the food category, which was up to mid to high single digits. Walmart cited strong comp sales in food categories helped by expanded store hours, improving in-stock levels, and its price positioning.

Management said there wasn’t much change in the promotional in Q3 from Q2 for food and consumables. The acceleration in Walmart’s SSS did not cause a notable deceleration for Albertson’s, which reported on Oct. 20th that comps month to date were up low double digits.

Kroger reported on Sept. 11 that comps QTD were up double digits. Kroger cites Walmart as the food retailer with the most overlap with its store network.

Walmart said its price gaps relative to the competition widened in Q2 and remained the same in Q3 as other grocers pulled back on promotions. It is notable that Kroger’s gross margins only expanded 5bps in the most recent quarter and management cited the competitive environment’s promotional level.  

In Canada, SSS increased 7%, with Walmart citing strength in food and consumables. Loblaw reported an SSS of 6.9% last week but noted an uptick in promotions.