Kroger Co. fell as much as 8.2 per cent after the grocer predicted slower growth this year, hurt by pressure on prices and its merger with the Roundy’s chain.
Excluding fuel, same-store sales will rise 2.5 per cent to 3.5 per cent this year, the Cincinnati-based company said in a statement Thursday. The increase was 3.9 per cent on that basis in the fourth quarter. Analysts had predicted a gain of 4.5 per cent in the period, according to Consensus Metrix.
Record production of food has brought lower prices to US supermarkets – good news for consumers, but a challenging situation for retailers. Beef, pork, chicken and milk output is expected to rise this year, according to data from the US Department of Agriculture. Digesting the Roundy’s business also is a hurdle for Kroger. That chain, which Kroger bought in December, pulled down its sales growth last quarter.
Kroger fell as low as $37.32 in New York trading after releasing the report, marking the biggest intraday drop since September. The shares were already down 2.8 per cent this year through Wednesday’s close.
Earnings in the current fiscal year will be $2.19 to $2.28 a share, Kroger said. That compares with an average analyst estimate of $2.23, according to data compiled by Bloomberg.
Kroger, the largest U.S. supermarket chain, has been growing by scooping up smaller retailers across the country. The company spent about $800 million, including debt, for Roundy’s, a Midwestern chain. In 2014, Kroger bought Harris Teeter, giving it more locations in the Southeast. There’s also been speculation that the company is interested in buying Fresh Market Inc.
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