September 18, 2003

Kroger's Earnings Drop

Kroger's Earnings Drop | NACS Daily

Kroger's Earnings Drop
September 18, 2003

CINCINNATI -- Kroger Co. said its second-quarter earnings dropped 28 percent compared with last year. The grocery-store chain attributed the drop to competition from discount grocers and last month's power blackout. The company also lowered its earnings outlook for the year.

Kroger earned $190.4 million in the three months ended August 16 compared with $264 million a year ago. Sales for the quarter increased to $12.4 billion from $11.9 billion a year ago.

Analysts said that the company is battling competition from grocers, including Safeway, Albertson's, Meijer and Publix, and general retailers that sell groceries, such as Wal-Mart.

"There's a lot of good competition out there," Jack Russo, an analyst with A.G. Edwards & Sons Inc., told the Associated Press. "I don't think it's anything Kroger is doing wrong....It's very tough out there."

The company said that it lost $9 million for food and beverages that spoiled without refrigeration during the blackout and had to be thrown out.

Kroger lowered its 2003 earnings projection to $1.50 to $1.58 per share and said earnings could be as low as $1.45 because of energy contract settlements, the blackout and accounting expenses, the sluggish economy and competition that may require additional investment.

Kroger operates 2,519 supermarkets and multidepartment stores in 32 states under the names Kroger, Ralphs, Fred Meyer, Food 4 Less, King Soopers, Smith's, Fry's and Fry's Marketplace, Dillons, QFC and City market. The company also operates 794 convenience stores, 444 jewelry outlets, 412 supermarket fuel centers and 41 food-processing plants

Posted by Craig at September 18, 2003 06:08 PM