Kroger Beats Expectations but Cuts Its Outlook
September 09 2016 - 9:50AM
Dow Jones News
Kroger Co. posted earnings above expectations in the latest
quarter but slashed its guidance for the year, the latest grocer to
cite food-price deflation for weakness.
Shares in the supermarket chain, which have slipped 25% so far
this year, lost another 1% premarket to $31 apiece.
Kroger, which said its core business remains strong despite a
"transition to a deflationary environment," now anticipates 2016
earnings of $2.10 to $2.20 a share, down sharply from its previous
guidance for $2.19 to $2.28 a share. The new guidance includes a
7-cent charge from restructuring some pension obligations.
A persistent slide in food prices is putting pressure on more
U.S. grocers and distributors, weighing down their stocks and
prompting some to revise full-year earnings outlooks.
Kroger, the second-largest retail food seller in the U.S. after
Wal-Mart Stores Inc., has been investing to attract customers for
its organic products from rivals such as Whole Foods Market Inc. It
has also cut its prices on staples like bread and milk.
Excluding fuel sales, identical-supermarket sales increased 1.7%
in the latest quarter, compared with a 5.3% rise a year
earlier.
In all, Kroger reported a profit of $383 million, or 40 cents
share, down from $433 million, or 44 cents a share, a year earlier.
Excluding charges related to the pension obligation restructuring,
adjusted earnings rose to 47 cents a share.
Revenue climbed 4% to $26.57 billion. The Cincinnati-based
company has integrating the stores it added with its Roundy's Inc.
acquisition last year. Excluding fuel sales and the addition of
Roundy's, total sales improved by 2.9%.
Analysts polled by Thomson Reuters had expected adjusted
per-share earnings of 45 cents on $26.74 billion in revenue.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
September 09, 2016 09:35 ET (13:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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