Grocers Continue To Struggle As Kroger Delivers Gloomy Outlook

Grocers have been plagued by food price deflation these days, with all and sundry in the industry warning of hits to their top lines. Of particular note, prices of food such as egg, dairy and beef have seen sharp declines in recent months.

The Labor Department's consumer price inflation report for October showed that food prices were unchanged for the fourth straight month, with food at home remaining in negative terrain for six straight months.

Kroger's Results

Kroger Co KR reported before the market open Thursday in-line third-quarter earnings of $0.41 per share on net sales growth of 5.9 percent to $26.6 billion, ahead of the consensus estimate of $26.34 billion. Identical supermarket sales rose 0.1 percent.

Kroger lowered the upper end of its adjusted earnings per share guidance for fiscal year 2016 to $2.15 from $2.20 but retained the lower end at $2.10. Analysts estimate earnings of $2.13 per share for the year.

Peers In The Grocer Space

This could be termed as a relatively strong showing when compared to its peer group in the grocery space:

• Sprouts Farmers Market Inc SFM reported below-consensus earnings per share but better-than-expected revenues for the third quarter. Same-store sales rose a better-than-expected 1.3 percent. The company maintains its 2016 earnings per share guidance, which it cut sharply in September, citing food price deflation, competitive landscape and industry dynamics.
• SUPERVALU INC. SVU reported in mid-October fiscal year second-quarter earnings $0.10 per share, in line with estimates. Sales fell 4.8 percent to $3.86 billion, missing the consensus estimate, as identical store sales fell.
• Whole Foods Market, Inc. WFM reported fiscal fourth-quarter earnings per share of $0.28, ahead of the consensus estimate. Sales of $3.50 billion were in line. However, identical store sales declined 2.6 percent.

At Time Of Writing

• Kroger was gaining 1.89 percent to $32.91.
• Sprouts Farmers was moving up 1.30 percent to $20.27.
• SUPERVALU was slipping 2.48 percent to $4.53.
• Whole Foods was rallying 2.14 percent to $31.04.