The U.S.' largest supermarket chain issued a weak outlook for existing store sales and said it would no longer provide longer-term forecasts. Fred Katayama reprots.
Price wars hammering Kroger and its stock. Quarterly profit dropped nearly eight percent as the U.S.' largest supermarket chain cut prices aggressively to battle competitors like Wal-Mart. The company issued a weak fiscal second half outlook for existing store sales, and added it will no longer issue longer-term guidance in light of what it calls a "dynamic operating environment". That move hammered Kroger's already beleaguered shares at the market open Friday. Pivotal Research analyst Ajay Jain said, "We are very surprised by the decision to no longer provide longer-term guidance. The long-term framework for 8 to 11 percent EPS growth has been the cornerstone of Kroger's strategy and a key selling point with investors." Kroger's shares have lost about a quarter of their value since mid-June. That's when Kroger cut its annual earnings forecast. The stock lost further ground after Amazon moved to buy Whole Foods and cut prices on staple items. Kroger faces more pricing pressure ahead as German retailers Aldi and Lidl expand their presence in the U.S. and Wal-Mart and Amazon further slash prices. Kroger's report card wasn't all sour. Overall sales as well as sales at existing stores climbed and beat expectations. And the retailer said it gained market share as more customers visited its stores.