Kroger: Falling food prices will take bite out of earnings
CINCINNATI - Kroger’s (KR) profit in its second quarter fell nearly 12 percent as it made changes to its employee pensions. The supermarket operator also said Friday that it was hurt by falling prices of eggs, meats and other products, forcing it to lower its earnings guidance for the year.
Shares of Kroger Co. slipped almost 2 percent before the stock market opened Friday.
Kroger Chief Financial Officer Mike Schlotman told business news channel CNBC Friday that the drop in prices for eggs, meats and milk have affected the price of ice cream and other products that use those ingredients.
The company, based in Cincinnati, has nearly 2,800 grocery stores around the country, including its namesake Kroger, Ralphs and Dillons.
Kroger reported second-quarter net income of $383 million, or 40 cents per share, in the second quarter, compared with $433 million, or 44 cents per share, in the same quarter a year ago.
Earnings, adjusted for non-recurring costs, were 47 cents per share, beating Wall Street expectations. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of 45 cents per share.
Revenue rose 4 percent to $26.57 billion in the period, which missed Street forecasts. Five analysts surveyed by Zacks expected $26.78 billion.
Excluding fuel sales, the company said revenue rose 7.3 percent.
Kroger said it now expects earnings for the year between $2.10 per share and $2.20 per share, compared with its previous forecast between $2.19 per share and $2.28 per share. Analysts expected earnings of $2.20 per share, according to FactSet.
Kroger shares fell 61 cents to $30.70 in premarket trading Friday about 30 minutes ahead of the market open.