Kroger Blames Low Food Prices for Decrease in Sales
Kroger (KR), the biggest U.S. supermarket chain, cut its full-year sales and profit forecasts as it struggles with low food prices and stiff competition.
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.
Rival grocers such as Sprouts (SFM) and Whole Foods (WFM) also blamed the prolonged food deflationary environment and increased competition for their quarterly results.
“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.