Kroger CFO's Comments Not Enough To Stop The Bleeding

Shares of Kroger Co KR plummeted nearly 20 percent Thursday morning and hit a new 52-week low of $24.55 after the company reported an in-line first quarter report but lowered its full-year earnings outlook.

During the first quarter, Kroger realized about 20 basis points of deflation (excluding fuel), the company's chief financial officer, Michael Schlotman, said during CNBC's "Squawk Box" segment. While deflation was lower on a year-over-year and sequential basis, it still is nevertheless "deflation on top of deflation," the executive added.

Grocery inflation did show signs of inflation "creeping back in there" at the end of the quarter but based on the stock's reaction investors aren't necessarily convinced.

"In the end a little bit of inflation in our business is good for us, ultimately it finds its way to the shelf, it will help the top line grow a little bit faster," he explained. "But any time you are in that transition period whether you are going from inflation to deflation or deflation back to inflation it just takes a while for all those nuances to find your way to the shelf. So it makes it a little bit choppy in the short run."

Online Category

During the quarter, Kroger more than doubled its digital sales, Schlotman added. The grocery chain also has a "very robust" order online and pick up in store option for consumers in nearly 700 stores.

Online ordering also yields transactions that are on average bigger than consumers who spend time in stores which bodes well in the growing online grocery market. The company is looking to add online delivery options with third parties.

At time of publication, shares of Kroger were down 17.71 percent on the day at $24.90.

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