Shares of the company, which also lowered its capital investment plans, were down about 1% in premarket trading on Friday. They have fallen about 25% this year.
Kroger cut its full-year profit forecast to a range of $2.03 to $2.13 per share from the $2.19 to $2.28 it expected earlier. Excluding a charge, the company expects to earn $2.10 to $2.20 per share.
The company now sees full-year sales, excluding fuel, growing 1.4% to 1.8%, down from its previous range of 2.5% to 3.5%.
Kroger now expects capital investments, excluding some items, to be $3.6 billion to $3.9 billion, down from $4.1 billion to $4.4 billion estimated earlier.
“We expect food deflation to persist at least through fiscal Q3,” JP Morgan analyst Ken Goldman wrote in pre-earnings note.
Kroger’s second-quarter sales, excluding fuel, rose 1.7% at stores open for more than a year without expansion or relocation, missing the average analyst estimate of a 2.6% rise, according to research firm Consensus Metrix.
Net earnings attributable to Kroger fell to $383 million, or 40 cents per share, in the three months ended Aug. 13 from $433 million, or 44 cents, a year earlier.
Excluding items, the company earned 47 cents per share.
Sales rose to $26.57 billion from $25.54 billion.
Analysts on average had expected the company to earn 45 cents per share and revenue of $26.74 billion.