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Kroger Shares Fall 3% On Tepid Q4, 2017 Outlook

Thursday, December 1, 2016 6:49
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Supermarket operator Kroger Co (NYSE:KR) early Thursday posted mixed third quarter earnings and offered a tepid outlook, sending its shares lower in morning trading.

The Cincinnati-based company reported Q3 EPS of $0.41, which matched Wall Street’s consensus estimate. Revenues rose 6% from last year to $26.6 billion, beating expectations of $26.33 billion.

When excluding gasoline, total sales rose 7.1% in the latest period, while total supermarket sales, excluding fuel and Roundy’s, gained 1.6%. Meanwhile, same-store sales, a key indicator of a retailer’s health, rose 0.1% excluding fuel. That growth rate was well below estimates for a 0.5% gain.

Kroger also cut the high end of its full-year EPS outlook. The company now expects full-year EPS of $2.10 to $2.15, down from $2.10 to $2.20 previously. On average, Wall Street analysts are looking for $2.13 per share for the year.

KR didn’t provide guidance for 2017, and noted it wouldn’t do so until March. However, it did say it expects net earnings growth to be below its previous 8% to 11% forecast. It also sees the second half of 2017 performing better than the first half.

CEO Rodney McMullen commented via press release:

“I am proud of our associates for continuing to connect with our customers in a difficult operating environment. Deflation persisted as we expected during the quarter. We are firmly focused on our long-term strategy of improving our connection with customers and associates, and continue working on process changes to lower costs. We don’t change our strategy based on quarterly swings in results. We remain committed to delivering on our long-term earnings per share growth rate guidance.”

Kroger shares fell $1.00 (-3.10%) to $31.30 in premarket trading Thursday. Prior to today’s report, KR had plunged -22.78% year-to-date, versus an +8.09% rise in the benchmark S&P 500 during the same period.


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