Episode summary
Kroger Rises After Lifting Outlook on Healthy Grocery Demand | Bloomberg Intelligence
Bloomberg Intelligence
· · Hosts: Scarlet Fu, Norah Mulinda · Guests: Jennifer Bartashus, Lindsay Dutch, George Ferguson, Jeffrey Langbaum
Summary
Kroger’s outlook raise set the tone for the episode, with the host and Jennifer Bartashus arguing that stable food spending, value-seeking behavior, and more cooking at home are supporting grocery demand. Bartashus said middle- and lower-income shoppers are retrenching, while health and wellness trends are reinforcing at-home eating. She also said Kroger is using the moment to streamline, including a harder look at e-commerce investments and non-core assets, even though delivery remains the least profitable fulfillment method.
Lindsay Dutch said the wellness category is a much larger opportunity than beauty alone, estimating wellness at $400 billion to $500 billion versus roughly a $100 billion beauty market. She argued that retailers such as CVS, Ulta Beauty, Walmart, Amazon and Dollar General can gain by merging wellness and beauty in-store and online, especially because consumers want both expert advice and influencer-backed products. Dutch said Ulta sees wellness as a potential billion-dollar opportunity.
George Ferguson said Delta Air Lines is still seeing strength at the high end, with revenue tracking to the high end of its original range, even as lower-income travelers remain pressured. Jeffrey Langbaum said REIT investors should focus less on recent earnings and more on the outlook, with rental housing positioned to benefit from a wide rent-versus-own gap, elevated mortgage rates, and limited housing supply.
Key takeaways
- Bartashus said Kroger is benefiting from value-seeking customers and a shift toward cooking at home, especially among middle- and lower-income consumers.
- Bartashus said Kroger is leaning into efficiency by reassessing e-commerce investments and non-core assets such as Fred Meyer jewelry and Vitacost.
- Dutch said the wellness market is about four to five times the size of beauty, creating room for CVS, Ulta, Walmart and others to cross-sell.
- Dutch said 70% of surveyed shoppers prefer to buy beauty and wellness together, and 34% value celebrity or influencer backing.
- Ferguson said Delta’s premium demand is holding up even as lower-income travelers stay challenged.
- Langbaum said rental housing could see better rent growth into 2026 because owning a home remains significantly more expensive than renting.
Notable quotes
“They're being a little bit more careful about where they're spending. Um, and this is something we usually see when there's any kind of threat of inflation”
“the wellness market is huge. 400 to$500 billion at least. That's four to five times the beauty market alone”
“we think that the opportunity for retailers both big and small to sort of break into this wellness category and gain share is to bring the two categories together”
“I think that as we look forward to next year, we could see rental growth accelerate um for those guys”
How the episode opens
Bloomberg Audio Studios podcasts radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern — On Apple CarPlay and Android Auto with the Bloomberg Business App. — Listen on demand wherever you get your podcast or watch us live on YouTube. Let's move over to talk a little bit about food. I love to talk about food here and we're talking about the grocery industry.
My stomach is growing. So,
Mine is too. So, this is very timely here. But apparently, we're seeing through Kroger's results here that it's attracting value seeeking customers who are now opting to eat at home as opposed to potentially ordering out.
I don't know that I can include myself in that segment, but clearly the street likes what Kroger has to say here. We're seeing shares that are up as much as 4.2% in trading today, now trading about 1.5% higher. It's really been a great year for Kroger.
They're up about 11% year to date. But we are joined by somebody who's able to break this down more in depth for us for us. That's Jennifer Bartacius.
She is Bloomberg Intelligence senior analyst of retail staples and packaged food here to break down these earnings for us. Jen, talk to us about what you're seeing from this report. Are people apparently cooking more?
Well, it it would it would appear so, especially with um middle and lower income consumers. They're being a little bit more careful about where they're spending. Um, and this is something we usually see when there's any kind of threat of inflation. People sort of retrench and they cook more at home. Um, and it's also complemented by, you know, a growth in awareness about health and wellness. Um, whether it's GLP1 drugrelated or whether it's just self-induced.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- kroger earnings
- consumer spending grocery demand
- retailers wellness and beauty
- airline premium seating strategy
- us real estate
Companies and tickers mentioned
- KR
- CVS
- ULTA
- WMT
- DAL
- Kroger
- CVS Health
- Ulta Beauty
- Walmart
- Delta Air Lines
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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