Kroger, BJ's Wholesale, Victoria's Secret: Trending tickers

Thursday morning recorded a slew of retail earnings. Yahoo Finance anchors Seana Smith and Brad Smith delve into the details of the results, highlighting the increasing difficulties companies face navigating the rise of value-consciousness in consumers.

Kroger (KR) shares jumped in early trading after the company reported a strong full-year forecast. The grocery giant announced plans to focus on investing in its workforce, including employees and wages. This strategic move comes amid Kroger's ongoing battle to acquire Albertsons (ACI), a bid that has faced regulatory pushback.

BJ's Wholesale Club (BJ) posted fourth quarter earnings that beat Street estimates. The company, however, highlighted some of the broader challenges in the space, with CFO Laura Felice saying in the release that the retailer is continuing to "navigate macro-driven uncertainty in the operating environment."

Victoria's Secret (VSCO) shares plunged after providing a weaker-than-expected full-year sales guidance.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video Transcript

BRAD SMITH: Kroger, BJ's and Victoria's Secret-- all reporting results and continuing to show some cracks in the consumer right now. Let's start with Kroger here. Of course, the tastiest-- and BJ would probably say, hold my beer-- but anyway, we'll start with Kroger.

One of the huge things-- and it's actually a through line that I'm kind of drawing between Kroger as you're seeing shares higher by about 4%, and BJ's as well, which we'll get to, is this year of investment that they're talking a little bit more about, both an assortment and associate mix as well. And so that considered, it's going to be interesting to see how they continue to invest in those associates, generate attractive and sustainable shareholder returns as they were talking about.

And this comes after a 5-year period really of some of those historic investments that they talk about, both in wages, benefits, career development opportunities for some of their employees in this labor market environment as well.

SEANA SMITH: Yeah, and Brad, the earnings call is happening right now. And the big focus obviously on this earnings call is any clues as to the Albertsons acquisition, and whether or not they do still plan to pursue the deal despite regulatory pushback.

Now in this earnings release that we got here from Kroger, you're looking at shares on set to open at a 2-year high. They did signal that maybe it's not over when it comes to Albertsons. So any clarity on there is going to certainly be a focal point. And then of course, just more people going into the stores. The same store sales coming in better than expected, a bullish point here for Kroger.

BRAD SMITH: Yeah, absolutely. Let's take a look at BJ's as well here while we got some time. Extended its down by about 2.3% going into the start of today's trade here. And if you look at the past three years, I mean it's been quite the run that this company has been on.

You think about how well BJ's is doing. You think about how well Costco, even over the last stretch of years, has been doing as well. That was our 2022 Yahoo Finance Company of the Year. So all of these things considered, one of the things in addition to the investments and associates, you've got to look at and take out this fuel and gas. Because that's kind of where they're seeing this year-over-year moderation.

And once you strip that out, it's really a focus of where they're continuing to need to drive price in some places. They talk about the increase in both comparative periods, largely primarily driven in terms of the investments by increased labor occupancy, depreciation expenses, result of new club and gas station openings, in addition to other investments to drive strategic priorities right now.

SEANA SMITH: They certainly have momentum on their side. That is clear from these results. More people are becoming BJ members. Just around seven million members here. That's up 6% from a year ago. So that really just highlights the trend that we've been talking about now for the last couple of quarters.

The fact that inflation still an issue for millions of Americans are being forced to be a little bit more discerning in terms of their purchases. They're trading down. A name like BJ's is benefiting here, given the cost and given what the prices that they are able to offer their customers in bulk.

BRAD SMITH: All right, let's go to the sultry trade here. Victoria's Secret-- you're seeing shares down by about 27% here out of the gate this morning. And one of the huge things that caught my attention was even with the extra week, the company underperformed some of the expectations that were out there.

That extra week, they said, added approximately $0.20 to the incremental net income per diluted share of approximately $0.20 as what I mentioned there. That means that strip out that extra week, and it's actually a year-over-year decline that you're looking at in the EPS. And so that, considered plus these new strategies that they're really going to look to explore right now too.

SEANA SMITH: Yeah, this is a stock obviously under a tremendous amount of pressure here in extended trading. You can see the downward trend that we're looking at on the 3-year chart. They have been trying to turn around the business, trying to get some of that lost momentum back.

You can still see that this turnaround story is far from over. Still trying to gain it to the upside. But again, people are not making those discretionary purchases-- I guess you can argue whether or not it's a staple versus discretionary-- but those discretionary purchases-- and because of that, names like Victoria's Secret continue to be under pressure here.

BRAD SMITH: Well, that argument will continue, especially when you continue to juxtapose Victoria's Secret and the move that we're seeing their pre-market down versus this up move that we're seeing in American Eagle Outfitters, a brand that is the parent company of Aerie as well. So, direct competition, difference into the type of consumer perhaps in the, at least, generational age range as well.

SEANA SMITH: Yeah, it's been amazing what they've been able to do just in terms of appealing to the younger generation, Gen Z, Millennials with their Aerie brand really obviously boosting sales here in the most recent quarters.