Kroger Quarterly Earnings Help Push Stock Down
Kroger Co. stocks was slammed by investors during Thursday pre-market trading after the supermarket chain lowered its guidance for earnings significantly and started a new sales streak for same stores that is not nearly as positive as its previous one.
Kroger, based in Cincinnati, Ohio, is the largest traditional supermarket operator in the country. On Thursday, it slashed its guidance for earnings by a full 9% for fiscal year 2017.
The supermarket giant said that it cut its outlook for adjusted earnings per share for the full year to between $2.00 and $2.05 from its previous forecast of between $2.21 and $2.25 a share. Kroger did not elaborate on any reasons for lowering its outlook.
The biggest culprit has been a drop in food prices with fierce competition from the likes of Walmart dragging down prices.
Investors did not like the announcement, selling off stock early Thursday that pushed shares down by $2.71 or over 9% by as early as 8:25 a.m. ET.
CFO at Kroger Mike Schlotman said that the supermarket chain had 0.2% deflation that excluded fuel during the just ended quarter. That was slightly less than the same period one year ago.
Kroger posted a second consecutive quarter of declines in same store sales posting a decrease of 0.2% excluding its sales of fuel.
Kroger had a run of 52 straight quarters that led the industry for sales growth in same stores prior to posting a drop last quarter and then repeating it during this reporting period.
However, signs point to Kroger returning to sales growth in same stores for its ongoing quarter. CEO at Kroger Rodney McMullen said that Kroger generated sales growth in same stores during its past nine months of the just ended quarter and thus far the first four weeks of the ongoing quarter have also seen growth in same stores sales.
Kroger profit was 58 cents a share, which beat estimates by analysts of 57 cents. Earnings were in line with analyst estimates, but down by 18% compared to the 71 cents a share from one year ago.
Kroger sales were up 5% to end the quarter with $36.2 billion, which topped estimates of over $35.8 billion by analysts.
CEO McMullen said the company remained focused on its strategy which will make a big difference for customers and add value for shareholders.
The strategy is to lower costs to reinvest in ways that will provide value for customers.