Kroger Co plunges after dip in same store sales

Retailer Kroger Co (NYSE:KR) saw a tenth of its value wiped off in pre-market trading after a disappointing earnings report.

The supermarkets, convenience stores and jewelry stores operator lowered full-year guidance after reporting a slide in like-for-like (LFL) sales in the three months to 20 May.

LFL sales were down 0.2% year-on-year in the first quarter of the company’s financial year, though total sales, excluding fuel, rose 2.9%, helped by the inclusion of recently acquired ModernHEALTH’s sales this time round.

Adjusted net earnings of US$546mln, or 58 cents per share, were well down on the previous year’s US$696mln, equivalent to 71 cents per share.

On the plus side, the earnings per share (EPS) figure was in line with market expectations.

The shares shed more than 10% in screen-based trading, however, as the company lowered its earnings guidance range for fiscal 2017/18 to US$1.74 – US$1.79 using generally accepted accounting principles (GAAP).

On the company’s own preferred adjusted earnings basis, the EPS range was lowered to US$2.00 – US$2.05 from its previous guidance of US$2.21 – US$2.25.

The group continues to expect LFL sales to be flat, year-on-year.

“We remain focused on our strategy. This will make a difference for our customers and create value for our shareholders. 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.

Unfortunately for Kroger, where the customer is going appears to be cut-price rivals.

German hard discounter Lidl is opening its first US stores – 10 of them – in Virginia and Carolina today, while fellow German grocery giant Aldi unveiled plans earlier this week to open close to 900 stores in the US over the next five years and give a facelift to its existing US portfolio.

“Customers tell us they want to connect with us in multiple ways with the help of friendly associates to easily provide meals to their families at prices that enable them to stretch their budgets. We are committed to providing that experience, and we will not lose on price,” declared McMullen.

Story by ProactiveInvestors