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What else should Kroger do with their $2.6B net income from $147B of revenue? Buybacks are just a more tax efficient form of distributing profits compared to d

What else should Kroger do with their $2.6B net income from $147B of revenue? Buybacks are just a more tax efficient form of distributing profits compared to dividends, which is the reason people invest in stable businesses that are not going to experience growth. Otherwise, it would be a charity.

ceejayoz 1y ago
I mean, this line hints at at least one alternative they've in fact done a little in the past. > Kroger said it would repurchase $7.5 billion of its shares after a more than two-year pause, with $5 billion of that to be repurchased in an accelerated fashion — the same sum that Kroger estimated Wednesday it has spent to lowering prices over the past 21 years.
- lotsofpulp 1y ago
  That alternative is so that they can compete with Walmart and Costco and Aldi and Winco and survive. How anyone can complain about a 2% profit margin, especially on a forum where workers earn high salaries because they work for businesses with 20%+ profit margins, is beyond me. Expecting every organization to be a charity seems a bit immature.
  - ceejayoz 1y ago
    > How anyone can complain about a 2% profit margin, especially on a forum where workers earn high salaries because they work for businesses with 20%+ profit margins, is beyond me. I'd very much rather be in the business of selling $100B at 2% profit margin than selling $100k at 50% profit margin. Same for health insurers - they have enormous volume. Low-margin isn't a great defense, especially as it's a gameable metric; you can reduce margins in all sorts of ways. Like, say, spending some on private jets. https://nbaa.org/membership/member-profiles/the-kroger-co/ https://nbaa.org/membership/member-profiles/the-kroger-co/
    - lotsofpulp 1y ago
      > I'd very much rather be in the business of selling $100B at 2% profit margin than selling $100k at 50% profit margin. How is this relevant? A business’s goal is to earn a return for shareholders. A business also needs sufficient profit margin to weather volatility. It is quite evident that with current technology, the business of retailing groceries, and retail in general needs about a 2% profit margin to survive long term, and earn a sufficient return to be worth investing in. Same for insurance. Obviously, this is an objectively low amount of profit margin, given that 0% is a charity. So again, how can one complain about a business earning too much money when there exists no competitor that can deliver these goods at a lower profit margin? The argument is in the same vein of there is no labor shortage, just a shortage of buyers able and willing to pay enough.

ceejayoz 1y ago

I mean, this line hints at at least one alternative they've in fact done a little in the past. > Kroger said it would repurchase $7.5 billion of its shares after a more than two-year pause, with $5 billion of that to be repurchased in an accelerated fashion — the same sum that Kroger estimated Wednesday it has spent to lowering prices over the past 21 years.

lotsofpulp 1y ago
That alternative is so that they can compete with Walmart and Costco and Aldi and Winco and survive. How anyone can complain about a 2% profit margin, especially on a forum where workers earn high salaries because they work for businesses with 20%+ profit margins, is beyond me. Expecting every organization to be a charity seems a bit immature.
- ceejayoz 1y ago
  > How anyone can complain about a 2% profit margin, especially on a forum where workers earn high salaries because they work for businesses with 20%+ profit margins, is beyond me. I'd very much rather be in the business of selling $100B at 2% profit margin than selling $100k at 50% profit margin. Same for health insurers - they have enormous volume. Low-margin isn't a great defense, especially as it's a gameable metric; you can reduce margins in all sorts of ways. Like, say, spending some on private jets. https://nbaa.org/membership/member-profiles/the-kroger-co/ https://nbaa.org/membership/member-profiles/the-kroger-co/
  - lotsofpulp 1y ago
    > I'd very much rather be in the business of selling $100B at 2% profit margin than selling $100k at 50% profit margin. How is this relevant? A business’s goal is to earn a return for shareholders. A business also needs sufficient profit margin to weather volatility. It is quite evident that with current technology, the business of retailing groceries, and retail in general needs about a 2% profit margin to survive long term, and earn a sufficient return to be worth investing in. Same for insurance. Obviously, this is an objectively low amount of profit margin, given that 0% is a charity. So again, how can one complain about a business earning too much money when there exists no competitor that can deliver these goods at a lower profit margin? The argument is in the same vein of there is no labor shortage, just a shortage of buyers able and willing to pay enough.