Supermarket giant Kroger Co. posted a second straight quarter of same-store sales declines, as the company continues to feel the pressure of a price fight to attract customers.
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Shares of the company, which had fallen 12% so far this year through Wednesday's close, dropped another 16% in midday trading as the grocer also cut its forecast. The drop is pacing to be the biggest for Kroger in more than 15 years.
Kroger had posted a 13-year streak of growing quarterly sales before the trend downward began.
Same-store sales, excluding fuel, fell 0.2% in Kroger's first quarter, the Cincinnati-based company said on Thursday, compared with a 2.4% rise in the same quarter a year earlier. Analysts polled by Consensus Metrix had expected a 0.7% decrease for the closely watched metric. Kroger said it continues to expect same-store sales growth of up to 1% this year.
Chief Executive Rodney McMullen said in prepared remarks that Kroger customers seek "prices that enable them to stretch their budgets" in addition to good customer service. He also noted that "we will not lose on price."
Lower prices, though, cut into companies' profit margins, and in the latest quarter, Kroger's gross margin fell to 22.1% of sales from 23% in the first quarter last year.
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Kroger has faced competition not only from Wal-Mart Stores Inc. and other mass merchants who have lowered prices, but also from discount chains like Aldi, which is remodeling and expanding stores. Kroger is the nation's second-largest food seller after Wal-Mart.
Still, Kroger noted that same-store sales in the last nine weeks of the first quarter were positive and remain so this quarter to date.
For 2017, Kroger now expects annual adjusted earnings of between $2 to $2.05 a diluted share compared with its previous estimate of $2.21 to $2.25. Analysts polled by Thomson Reuters expected $2.19 a share.
In all for the quarter, Kroger reported a first-quarter profit of $303 million, or 32 cents a share, down from $696 million, or 71 cents a share, a year earlier. Earnings on an adjusted basis were 58 cents a share.
Revenue climbed 4.9% to $36.29 billion.
Analysts polled by Thomson Reuters had expected $35.77 billion in revenue and earnings per share of 58 cents.
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(END) Dow Jones Newswires
June 15, 2017 10:57 ET (14:57 GMT)