The largest U.S. supermarket chain's quarterly profit was more than halved, and Kroger sharply cut its outlook. Fred Katayama reports.
Kroger's quarterly profit slid, and the U.S.' largest grocery chain doesn't see things getting much better. Kroger sharply chopped its full year earnings forecast, and that sent its shares plummeting at the market open. The retailer blamed higher product costs. Supermarket operators like Kroger's are facing severe pricing pressure as customers focus on price. Bernstein wealth and investment strategies head Kathleen Fisher: SOUNDBITE: KATHLEEN FISHER, WEALTH AND INVESTMENT STRATEGIES HEAD, BERNSTEIN "Grocery stores are having to work harder to define their strategies to consumers because consumers are seeing many choices, whether it's organics, whether it's cheap, they have many more choices than they had before. So it's incumbent upon each franchise to figure out how to create a value proposition." What's more, Kroger's quarterly profit fell by more than half. And its same store sales excluding fuel declined for the second straight quarter. All this comes as American grocers face competition from dollar stores. And that pricing competition could get even more fierce as German chain Aldi expands and compatriot Lidl opens its first U.S. store this Thursday.