Kroger's profit dips on aggressive price cuts, shares slide

Industries Reuters

(REUTERS)

Kroger Co, the biggest U.S. supermarket company, reported a 7.8 percent fall in quarterly profit on Friday as it discounted aggressively to fend off competition from Wal-Mart Stores Inc and other retailers.

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Shares of Kroger, which operates about 2,800 stores across the United States, fell 9 percent to $20.72 before the bell.

The stock has fallen about 25 percent since mid-June as Kroger cut its yearly earnings forecast and following Amazon.com Inc's deal to buy upscale grocer Whole Foods Market, which added to concerns about an intensifying price war stoked by discounters such as Lidl and Aldi.

Amazon marked its purchase of Whole Foods last month by cutting prices on items such as avocados, bananas and beef, contributing to price declines ranging from just over 1 percent to as much as 9 percent, according to analysts.

Kroger has also slashed prices, in particular on staples such milk and eggs, analysts have said.

Kroger's net earnings fell 7.8 percent to $353 million or 39 cents per share in the second quarter ended August 12, matching analysts' average expectation on a per-share basis, according to Thomson Reuters I/B/E/S.

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Excluding fuel, sales at Kroger stores open for at least a year rose 0.7 percent, beating analysts' estimates of a 0.4 percent increase, according to Consensus Metrix.

Kroger said it expects same-store sales to rise 0.5 percent to 1 percent, excluding fuel, for the remainder of the year.

Sales in the second quarter climbed 3.9 percent to $27.60 billion. Analysts had expected $27.49 billion. (Reporting by Vibhuti Sharma in Bengaluru; Editing by Sai Sachin Ravikumar)

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