Kroger Cuts Guidance as Shoppers Get Choosy About Spending
Results Add to Mixed Signals About the Health of the US Economy
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Kroger Co. lowered the top end of its full-year sales forecast, suggesting that competition is intensifying among food sellers for discerning consumers. Ìý
The nation’s largest supermarket operator said in a statement it now expects comparable sales to grow between 2.8% to 3%, minus fuel, versus the previous guidance of a 2.7% to 3.4% increase.Ìý
Even for essentials like food, consumers are searching for ways to stretch their budgets by buying more store brands and items on sale. They’ve curtailed spending on other products and services and are still being choosy about what to buy due to the uncertain economic environment.Ìý
Kroger’s results add to mixed signals about the health of the U.S. economy as consumers navigate persistent woes about inflation and the cooling labor market. Kroger said its comparable sales grew 2.6% in the latest quarter, below what Wall Street analysts were expecting.
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The company’s shares fell 2.9% at 8:47 a.m. in Dec. 4 premarket trading in New York. The stock has gained about 8% for the year to date, behind the 16% increase of the S&P 500 index.Ìý
The grocer is emphasizing value byÌýreintroducingÌýpaper coupons, improving its assortment of fresh groceries and expanding private-label items. Food inflation has remained in the low-single-digit range for most of the year, though some products like beef and coffee have become much more expensive.Ìý
The company said it’s also investing to keep prices competitive. Other retailers are doing the same, such as Walmart Inc. pointing outÌýlast monthÌýthat over half of its rollbacks — or discounts — are in the grocery category. Target Corp. isÌýlowering pricesÌýon thousands of food, beverage and household items.
Kroger announced last month that it wouldÌýcloseÌýsome e-commerce fulfillment centers, which would result in impairment and related charges of $2.6 billion in the most recent quarter. The facilities, built in partnership with U.K. company Ocado Group PLC, are set to close in January, and Kroger will instead deepen deals with delivery service providers such as Instacart.Ìý
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The company said it has completed its strategic review and it expects its online business to be profitable in 2026.
The Cincinnati-based company is in the midst ofÌýresettingÌýits priorities under interim CEO Ron Sargent after its proposed mega deal with Albertsons Cos. fell apart and the former boss, Rodney McMullen, abruptly resigned.Ìý
Kroger ranks No. 31 on theÌýTransport Topics Top 100 list of the largest private carriersÌýin North America, and No. 3 on theÌýTT grocery list.
