Kroger Co (NYSE:KR) early Thursday posted solid first quarter earnings results, but it cut its full-year outlook, sending its shares plunging in premarket trading.
Kroger's first-quarter earnings report is a sign that price competition is intensifying in the grocery industry, as online rivals like Amazon and WalMart battle each other for digital market share as European rivals Aldi and Lidl embark on USA expansion plans.
Even so, those higher sales are coming at the expense of margins; Kroger now expects full-year 2017 GAAP net earnings per share of $1.74 to $1.79, and adjusted net earnings per share of $2.00 to $2.05 (down from $2.21 to $2.25 per share previously).
Excluding items, the company earned 58 cents per share, in line with the average analyst estimate, according to Thomson Reuters I/B/E/S. Consensus estimates are $2.19 in EPS and $121.24 billion in revenue for the fiscal year.More news: Chelsea first opponents for Spurs at new 'home' Wembley
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Investors did not like the announcement, selling off stock early Thursday that pushed shares down by $2.71 or over 9% by as early as 8:25 a.m. ET. In the same period of a year ago, the retailer posted EPS of $0.70 and $34.6 billion in revenue. One of its most closely watched metrics, identical-store sales, declined 0.2 percent.
"We remain focused on our strategy".
The company, which operates Fred Meyer, Ralphs and Fry's, today reported its second straight quarter of declining sales after more than seven years of uninterrupted growth. Meanwhile, Kroger reiterated its expectations for identical-supermarket sales growth excluding fuel of flat to 1%.
The strategy is to lower costs to reinvest in ways that will provide value for customers. "We are committed to providing that experience, and we will not lose on price", declared McMullen. Online leader Amazon is expected to continue expanding its grocery business, and meal-kit delivery companies like Blue Apron are aggressively trying to enlist new customers.