Kroger Co (ticker: KR) shares declined more than 16 percent Thursday after the company reported disappointing same-supermarket sales numbers for the first quarter of 2017 and lowered its full-year earnings guidance. Kroger reported quarterly earnings per share of 58 cents on revenue of $36.3 billion. Wall Street analysts were expecting EPS of $0.58 on revenue of $35.6 billion for the quarter.
Despite in-line earnings and a revenue beat, Kroger cut its full-year EPS guidance from a previous range of $2.21 to $2.25 down to a new range of $2 to $2.05.
[See: The 25 Best Blue-Chip Stocks to Buy for 2017.]
In addition, same-supermarket sales, excluding fuel, were down 0.2 percent on the quarter.
CEO Rodney McMullen says sales began to pick up toward the end of the quarter.
“We are driving our strategy of lowering costs to reinvest in ways that provide the right value to our customers,” McMullan says. “We’re pleased that identical supermarket sales in the last nine weeks of the first quarter were positive, and that has continued in the second quarter to date.”
Investors aren’t the only ones concerned about Kroger’s stagnant sales. Last week, Macquarie Research said Kroger’s struggles will likely continue as it deals with challenges from Wal-Mart Stores ( WMT), Whole Foods Market ( WFM), Sprouts Farmers Market ( SFM) and other grocery store chains. German supermarket chain Lidl opened 10 locations in Virgina and the Carolinas just this week, while Aldi is investing $5 billion to open 900 new U.S. locations.
McMullen says Kroger “will not lose” a pricing war, a commitment that clearly seems to be impacting Kroger’s bottom line.
“Risks still exist to earnings, in our view, and include sustained weak identical-store sales growth that is well below historical leverage points and the prospect it will persist for much longer than expected,” Macquarie analysts wrote.
[See: 7 of the Best Stocks to Buy for 2017.]
In addition to Kroger’s sell-off, stocks of other leading grocery stores were down Thursday as investors consider the implications of more intense competition in the space. Sprouts shares dropped 7.8 percent in early trading, while Whole Food’s stock fell 4.4 percent.
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Grocery Store Stocks Fall on Kroger Co (KR) Guidance Cut originally appeared on usnews.com
