CINCINNATI -- The billion-dollar Simple Truth and Private Selection brands aren’t enough for The Kroger Co. So, the Cincinnati-based grocery chain is launching a new international-foods brand called HemisFares.
“No one else has a brand like this,” Kroger CEO Rodney McMullen told analysts during Kroger’s second-quarter earnings call Friday. “Imagine landing in a country known for its incredible food and experiencing the finest examples of its region’s most famous and delectable eats. Every HemisFares product is curated from the source and imported directly to our stores.”
The brand-launch news was buried by the company’s stellar results for the second quarter. Kroger booked a $433 million profit, or 44 cents per share, exceeding analyst expectations. It also increased its annual profit outlook by 3 cents per share and predicted that its identical store sales growth will be on the high end of previously announced guidance.
That means Kroger is likely to extend its industry-leading streak of 47 consecutive quarters of identical-store growth.
Wall Street reacted with a rally. Kroger shares jumped 7 percent in pre-market trading before settling at roughly $37 by mid-day, up about 5 percent from Thursday’s close.
Kroger has been a Wall Street darling in 2015 because of its ability to predictably grow revenue, using data to better understand its customers and making capital investments in new stores and digital marketing strategies that increase consumer loyalty and provoke higher spending.
McMullen said the HemisFares brand is an extension of that strategy. Kroger’s corporate brands team used data analysis from the digital marketing firm 84.51 along with other research to develop a product that satisfies foodies and millennials.
Kroger expects the product to be available in every store, although there will be some offerings that might end up in short supply because of the lead time it takes to produce and import it. Among the offerings will be fresh pasta and sauces. More details are expected when the product formally launches later this month. Social media and blog items indicate the product has been available in select stores for several months.
“If you look at the quality of this product, if you would go to a restaurant and eat food – eat something of this quality, it would cost four or five times as much as what it costs with us,” he said.
“The whole idea of HemisFares is to allow our customers to take a journey of food experience around the globe without having to leave home,” Kroger CFO Michael Schlotman told analysts. “It will be very specific on the packaging where the product's from. And some of this product it's the first time that anybody's gone through the trouble of importing the product with some of the items in into the U.S. that we have.
"They've done a phenomenal job with this and we're really excited about yet another great offering for our customers in the stores," Schlotman added.