Kroger cuts full-year profit forecast on higher costs, shares dip

The company, which operates Fred Meyer, Ralphs and Fry's, on Thursday reported its second straight quarter of declining sales after more than seven years of uninterrupted growth. The Cincinnati company stressed that it does not plan to "lose on price".

June 15 USA supermarket operator Kroger Co's on Thursday reported a 56.5 percent decline in quarterly profit, hurt by costs related to pension plans and as it offered voluntary retirement to some employees.

The company's forecast overshadowed a better-than-expected first-quarter comparable sales result. "We are running the business with an eye toward where the customer is going", claimed Rodney McMullen, who is both chairman and chief executive officer of Kroger. Discounter Aldi is opening more stores in the USA, and its German rival Lidl is opening its first US stores this week. Grocery giant Walmart has also been working on lowering prices.

Kroger owns Ruler Foods in the St. Louis area.

Excluding fuel, sales from Kroger's stores open for at least a year fell 0.2 percent in the first quarter ended May 20. Meanwhile, Kroger reiterated its expectations for identical-supermarket sales growth excluding fuel of flat to 1%.

Kroger's profit is expected to remain pressured this year as pricing gets more competitive, Moody's Vice President Mickey Chadha said.

In addition to keeping prices down, Kroger said it is raising starting wages in some markets and adding more staffing in certain departments. The company said that it had $0.58 in earnings per share (EPS) and $36.28 billion in revenue, compared with consensus estimates from Thomson Reuters that called for $0.58 in EPS and revenue of $35.77 billion. Net income totaled $303.0 million, or 32 cents per share, down from $696.0 million, or 72 cents per share, for the same period a year ago.

Kroger's stock price fell 13 percent to $26.25 in pre-market trades after the company reduced its full-year earnings guidance to between $2 and $2.05 per share.

Its shares were down 18 percent at $24.74 in midday trading.

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