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Kroger Q2 net income fell 7.8 percent

Staff Writer |
Kroger reported a quarterly profit drop after an intensifying grocery price war hit its bottom line.

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The company warned that same-store sales and operating margins would be lower than expected for the remainder of the year.

The biggest U.S. supermarket owner also said it would stop providing longer-term earnings growth forecasts due to the "dynamic operating environment."

Kroger's long-term target for 8 to 11 percent earning per share growth had been a "key selling point" for investors, Pivotal Research analyst Ajay Jain said.

Kroger's net income fell 7.8 percent to $353 million, or 39 cents per share, for the second quarter ended August 12.

Closely watched sales at stores open at least 12 months rose 0.7 percent, excluding fuel.

Kroger now sees those sales rising 0.5 percent to 1 percent, excluding fuel, for the remainder of the year. Analysts expected them to increase 1.2 percent for the third quarter and 1.7 percent for the fourth quarter, according to Consensus Metrix.

Kroger also forecast a 30 to 40 basis point decline in its full-year operating margin, excluding items, versus 2016.

The forecasts exclude any hit from hurricane damage. Kroger's insurance caps losses at $26 million per event.

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