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Kroger, based in Cincinnati, operated about 2,700 retail supermarkets and multidepartment stores in 35 states at the end of FY24. We estimate that these stores generated over 90% of the company's $150 billion in sales in FY24. KR also operated 1,665 supermarket fuel centers, more than 225 Little Clinics, and 33 food processing plants in the U.S. These plants make about 31% of KR's private-brand units. The company's name plates include Kroger, Ralphs, Fred Meyer, Food 4 Less, King Scoopers, Smith's, Fry's, Dillon's, City Market and Harris Teeter. Some 15% of the supermarkets are in California, 9% are in Ohio and 8% are in Texas. Wal-Mart and Sam's Club are primary competitors in most major markets. KR has pharmacies in about 82% of its food stores. The company has 179 million square feet of supermarket space. KR completed the sale of 782 convenience stores in the first quarter of FY19. Non-Perishables represented 51% of FY24 sales, Fresh foods were 24%, Supermarket Fuel 11%, Pharmacy 9.5% and Other 4%. The company's fiscal year ends on the Saturday closest to January 31. Kroger's fiscal first quarter is 16 weeks. The second, third and fourth quarters are each 12 weeks. The current FY25 is a 52-week year.

Big Tech earnings start this week, with a broad range of companies reporting. As well, key inflation data is due as is an update on GDP. Last week, markets were volatile and there was a theme of rotation out of Information Technology and into small caps. The Dow Jones Industrial Average was up 0.7% for the week, the S&P 500 lost 2%, and the Nasdaq fell 3.7%. Year to date, the Dow is higher by 7%, the S&P is up 15%, and the Nasdaq is 18% ahead. On the economic calendar, Friday is the big day, with fresh inflation data. Economists are looking for more evidence that inflation is tracking lower. If it is, that should help build the case for a Fed rate cut. This week, the data comes in the form of the Personal Consumption Expenditures Index (PCE). In May, both PCE and Core PCE came in at 2.6%. We expect both to slow to 2.4% for June. In other economic news, Existing Home Sales data will be reported on Tuesday. On Wednesday, New Home Sales come out. On Thursday, GDP and Durable Goods Orders hit the tape. And on Friday, Personal Income and Personal Spending will be updated. On the earnings calendar, Monday brings news from Verizon. On Tuesday, Alphabet, Tesla, Comcast, Coca-Cola, GE Aerospace, General Motors, Philip Morris, UPS, and Lockheed Martin. On Wednesday, IBM, AT&T, Chipotle, and Ford. On Thursday, Northrop Grumman, American Airlines, Southwest Airlines, Juniper Networks, AstraZeneca, and Union Pacific. And on Friday, 3M, Bristol Myers Squibb, Colgate-Palmolive, and Charter Communications. Earnings are coming in 11.1% higher this quarter than a year ago, but only 14% of S&P 500 companies have reported so far. Expectations are for 8%-12% earnings growth in the second quarter. This follows 8% growth in 1Q and 10% in 4Q23. At Argus, we forecast that full-year 2024 EPS will come in 8%-9% better than last year. Last week, mortgage rates fell 12 basis points to 6.77% for the average 30-year fixed-rate mortgage. Gas prices rose a penny to $3.50 per gallon for the average price of regular gas. The Atlanta Fed GDPNow indicator is forecasting for 2Q and calls for expansion of 2.7%. The Cleveland Fed CPINow indicator forecasts 3.01% for July CPI. The next Fed rate decision is on July 31, with odds at 4% for a cut. Then in mid-September, there is a big jump in odds for a cut, to 98%. That spike follows that recent news that inflation is tracking down and the labor market is showing some weakness. As the probability is so high for a rate cut at the September meeting, the odds have jumped to 60% for a second cut in November. In December 18, odds increase to 94% for that second cut. All of this data is according to the CME FedWatch Tool.

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Conagra Brands is a packaged food company that operates predominantly in the United States (over 90% of fiscal 2024 revenue). Most of its revenue comes from frozen food, including brands like Marie Callender’s, Healthy Choice, Banquet, and Birds Eye. Conagra also sells snacks, shelf-stable staples, and refrigerated food through brands like Duncan Hines, Hunt’s, Slim Jim, Vlasic, Orville Redenbacher's, Reddi-wip, Wish-Bone, and Chef Boyardee. The company primarily sells through the US retail channel, with just 9% of fiscal 2024 revenue coming from international markets and 10% from foodservice.