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Grocery stocks outperformed market in 2022

Inflation, other economic concerns weigh shares down after fast start

The stock prices of publicly traded food retailers had mixed performances in 2022, but most fared better than the market overall.

Many grocery stocks started the year strong, but as inflation ramped up quickly in the first half of the year — and the economic outlook became gloomier amid rising interest rates and the fear of a possible recession — several companies’ stock prices faltered. 

In a year that saw the Dow Jones Industrial Average fall 8.9%, the S&P 500 lose 19.4% and the NASDAQ tumble 33.1%, even a flat performance by Kroger Co. could be considered a win for investors, however.

Kroger’s shares dipped 1.5% for the year, closing at $44.58 per share, following a surge to about $61 earlier in the year before the pressures of inflation and rising interest rates became apparent, and before the company announced its planned merger with Albertsons in October. The stock fell about 7% to its lowest price of the year following the merger announcement but has since gained slightly.

Some analysts believe the company is well-positioned for the year ahead, however, given its strong private label offering, its focus on fresh foods and its data analytics capabilities, among other attributes.

"We believe Kroger is taking the right steps to defend and increase its market share,” said Chris Graja, an analyst with Argus, in a report on Seeking Alpha. “The company has a track record of using technology to stock its shelves with the right merchandise and offer the right promotions. While we think Kroger can compete effectively against Amazon, competition is likely to remain high as Walmart fights against Amazon and as Target and others invest more in their digital businesses.”

Albertsons’ stock followed a similar trajectory, although its share price is down about 31.3% for the year, after falling by more than 20% following the merger announcement. Analysts linked the October share price decline to the company’s decision to pay a $4 billion dividend to shareholders, which is still being held up by a lawsuit in the State of Washington Supreme Court.

An analysis on Motley Fool noted that while Kroger agreed to pay $34.10 per share for Albertsons, the value of the special dividend is subtracted from that, making the offer now valued at $27.25 per share. That is 20% higher than the company’s year-end closing price, which, indicates “some skepticism that the deal will go through as negotiated,” Motley Fool analyst Jeremy Bowman wrote in October.

Other stocks that slid in 2022 included:

  • Ahold Delhaize, down 16.6%, to $28.70, after the company reported revenues for 2021 that were below expectations
  • Costco, down 19.6%, to $456.50, after the company reported mixed earnings and sales results, although many analysts are bullish on the stock for the year ahead

Among natural and organic specialists, Sprouts Farmers Markets and Natural Grocers by Vitamin Cottage saw their stocks head in opposite directions. Sprouts was up 9.1%, to close the year at $32.37, while Natural Grocers slid 35.6% for the year, closing at $9.14.

Retailer-wholesalers SpartanNash and United Natural Foods Inc. also went in opposite directions in 2022, with SpartanNash up 17.4% and UNFI down 21.1%.

Many other grocery companies were more or less flat for the year, including:

  • BJ’s Wholesaler, down 1.2%
  • Grocery Outlet, up 3.2%
  • Village Super Markets, down 0.4%

Closely held regional operators Ingles Markets and Weis Markets were both up in double digits for the year, with Ingles gaining 11.7% and Weis up 24.9%.

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