Auxier Focus Fund on Kroger
Thesis
Kroger has been weak because inflation, high interest rates and elevated fuel costs have pressured consumer spending, but Auxier sees the depressed valuation as attractive. The fund is encouraged by new CEO Greg Foran, pointing to his record at Walmart U.S. and his early actions at Kroger. Since joining, Foran has reduced prices and accelerated growth in private-label and organic products. At approximately 12 times earnings in the letter, Kroger traded at a large discount to Costco and Walmart, giving the fund a combination of turnaround potential and valuation support.
“The stock trades at a mere 12 times earnings which is a significant discount to both Costco and Walmart.”
Key risks
- Persistent inflation, high interest rates and elevated fuel costs could continue to pressure consumer spending.
- The investment depends on Greg Foran's operational initiatives producing sustained improvement.