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Report: Boxed rejects Kroger Co.’s purchase offer

BY CSA Staff

Boxed is staying private — for now, anyway.

The retailer that sells bulk groceries, household products and other items online rejected a $400 million acquisition offer from Kroger. As a result, the online retailer is pursuing a new funding round to remain private, according to Bloomberg.

A source told Bloomberg that Boxed’s board voted last week to reject the offer from the supermarket chain. While the company also has interest from Amazon, Target, and Costco Wholesale, Kroger was the only company to make a bid.

Boxed has a $470 million valuation.

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Kroger posts strong earnings growth but outlook disappoints

BY Marianne Wilson

Kroger Co.’s earnings and revenue rose in the fourth quarter, but it issued a conservative profit outlook for 2018 as competition in the supermarket sector continues to intensify.

Kroger’s net income for the fourth quarter totaled $854 million, or 96 cents a share, compared with $506 million, or 53 cents a share, a year earlier. Excluding one-time items, Kroger earned 63 cents a share, matching analysts’ estimates and up from 53 cents a share in the year-ago period.

Revenue increased 12.4% to $31 billion, slightly ahead of forecast for $30.8 billion.

For the full year, Kroger reported net earnings of $1.9 billion, or $2.09 per diluted share. Adjusted net earnings totaled $1.9 billion, or $2.04 per diluted share.

Total sales increased 6.4% to $122.7 billion in 2017.Excluding fuel, the 53rd week and the Modern Health merger, total sales increased 2.2% in 2017 compared to 2016. Kroger’s gross profit margin fell 0.2% in 2017.

“We launched Restock Kroger [Kroger’s term for its updated strategy] in the fall of 2017 and finished the year with positive momentum in our sales and overall business,” stated chairman and CEO Rodney McMullen. “Customers are letting us know that they see, feel and appreciate our efforts to redefine the customer experience – and they are rewarding us with growing loyalty. This is the cycle that creates long-term value for shareholders.”

Kroger launched its Restock plan in October, amid growing pressure from Amazon, Walmart, Aldi and others. It includes an accelerated commitment to digital and e-commerce efforts, a front-end transformation and an increased emphasis on it private-label brands.

For fiscal 2018, Kroger said it expects earnings of $1.95 to $2.15 per share, below the $2.15 analysts were expecting.

“As we embark on our first full year of Restock Kroger, we are encouraged at the start of 2018 and confident in our ability to deliver on both our plan for the year and our long-term vision to serve America through food inspiration and uplift,” McMullin said.

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American Eagle Outfitters Q4 sales top Street; raises outlook

BY Deena M. Amato-McCoy

A big increase in digital sales and increased demand for its Aerie brand helped American Eagle Outfitters end the year on a strong note, with the chain reporting its 12th straight quarter of same-store sales growth.

Total net revenue increased 12% to $1.23 billion for the quarter ended Jan. 28, which included an extra week, beating analysts’ estimates of $1.12 billion. The 53rd week provided an additional $43 million of sales.

Same-store sales rose 8%, also better than expected. Online sales rose more than 20% in the quarter.

Net income rose to $93.96 million, or 52 cents per share, from $54.62 million, or 30 cents per share, a year earlier. Excluding non-recurring items, including a benefit from recent tax legislation, adjusted earnings per share came to 44 cents, in line with estimates.

“I’m pleased that we ended 2017 with a strong quarter, achieving record sales and an EPS increase over last year,” said Jay Schottenstein, American Eagle’s CEO. “In the fourth quarter, we saw an acceleration in sales, continued sequential margin improvement and EPS growth that was on the high end of our guidance. The digital business continued its exceptional growth, rising over 20% in the quarter, and we were encouraged with improved brick-and-mortar trends, delivering positive sales comps in both American Eagle and Aerie stores.”

For the year, American Eagle had total revenue of $3.80 billion compared to $3.61 billion for the 52 week period last year. Consolidated comparable sales for the 53 weeks increased 4% over the same period last year.

The company ended the year with a total of 1,047 stores, which includes 109 Aerie stores. Internationally, the company ended the year with 214 licensed stores.

During the fiscal year, the company also incurred restructuring and related charges totaling $30 million, or approximately $0.11 per share. This consisted primarily of charges related to the closure or conversion of international owned and operated stores to licensed partnerships, home office restructuring activities and charges related to the planned exit of a joint business venture.

The company also raised its quarterly dividend 10%, to $0.1375 per share, marking the company’s 55th consecutive quarterly dividend.

Looking ahead, American Eagle is confident that it is positioned for growth.

“We started the spring season with positive momentum, positioning us well for strong results in 2018, Schottenstein said. “The dividend increase we announced today reflects confidence in our business, strong free cash flow and our continued commitment to delivering returns to shareholders.”

The company forecast same-store sales in its first quarter will rise by mid-single digits and expects EPS of 20-22 cents, above consensus views for 19 cents.

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