Kroger’s Groceries Portrayed Negative Food Inflation Impact in its Fresh Q3 Release

Kroger (KR) dipped almost full percent in early NY trading after failing to reliably beat the consensus estimates by its Q3 earnings report figures. The grocery store operator said same-store sales excluding fixed costs such as fuel were down 0.6% in Q3 to just miss the estimate for a drop of 0.5%. The company pointed to tightened consumer spending trends because of food inflation. Gross margin was 22% of sales during the quarter vs. 21.9% projected according to consensus.

In numbers, Kroger’ Q3 Non-GAAP EPS of $0.95 beat by a mere $0.03. Revenue of $33.96B (-0.7% YoY) also beat by $60 million, but was apparently weaker than a year ago. Identical sales without fuel decreased 0.6%; underlying Identical sales without fuel increased just 1%, i.e. much less than inflation.

Looking ahead, Kroger sees full-year EPS of $4.50 to $4.60 vs. $4.51 consensus and the prior outlook for $4.45 to $4.60. Full-year identical-store sales ex-fuel growth of +0.6% to +1.0% are anticipated.