By Savyata Mishra
Dec 4 (Reuters) – Kroger narrowed its annual sales forecast on Thursday on signs of shoppers turning more selective on their groceries and fresh produce purchases, while leaning more on promotions.
The supermarket chain also missed third-quarter sales expectations and its shares fell nearly 6% after interim CEO Ron Sargent said middle-income shoppers are now feeling the same strain as lower-income families.
“They’re making smaller, more frequent trips to manage budgets, and cutting back on discretionary purchases,” he said in a post-earnings call, against the backdrop of cuts in food-stamp benefits.
SNAP benefits, which provide food assistance to those with tighter budgets, briefly lapsed for the first time ever on November 1 during the federal shutdown, squeezing household finances.
“It does seem that consumers are looking for the most value for their dollars when shopping,” said Brian Mulberry, portfolio manager at Zacks Investment Management.
Competition has also intensified, with bigger rivals such as Walmart and Target slashing prices to win customers. Kroger also stepped up price cuts late in the reported quarter to retain budget-conscious shoppers.
The company has shut plants and cut jobs to lower costs while revamping its e-commerce strategy following the ouster of CEO Rodney McMullen in March.
It will close three of eight automated fulfillment centers built with British partner Ocado and take a $2.6 billion charge as it shifts to a hybrid network and deepens ties with Instacart, DoorDash and Uber Eats.
Kroger’s identical sales, excluding fuel, rose 2.6% in the third quarter, compared with expectations of 2.91%, according to data from LSEG. It earned $1.05 per share on an adjusted basis, beating expectations of $1.03.
The retailer expects 2025 identical sales, excluding fuel, to grow in the range of 2.8% to 3%, whose midpoint is below expectations of a 3.14% rise. In September, it had expected sales growth in the range of 2.7% to 3.4%.
(Reporting by Savyata Mishra in Bengaluru; Editing by Arun Koyyur)
