Hurricane Ike battered Kroger's third-quarter profit, and the grocery chain offered a cautious forecast Tuesday amid the churning U.S. economic storm.
CINCINNATI — Hurricane Ike battered Kroger’s third-quarter profit, and the grocery chain offered a cautious forecast Tuesday amid the churning U.S. economic storm.
The nation’s largest traditional grocer said its profit fell 6 percent in the quarter, mainly because of far-reaching damage from Hurricane Ike, even as its sales rose 9 percent. But Kroger expects lower holiday spending to hurt fourth-quarter results, and projects slower same-store sales growth for next year.
“Times are such that it’s a little less predictable than you might want,” Chairman and CEO David B. Dillon said in a conference call with investors.
Kroger shares dropped $1.84, or 6.7 percent, to $25.47 Tuesday
Most Read Business Stories
- Seattle artists worry potential sale of historic INS building could spell the end for their studios
- Fired after organizing, Starbucks baristas turned down a payout and took their bosses to court
- 6 Dr. Seuss books won't be published for racist images
- Frontier cancels flight, citing maskless passengers
- The penthouse atop Smith Tower is on the rental market for the first time
“Clearly, as an economy, things have gotten a little worse across the country, and I think you can see that in some elements of our business, too,” Dillon said. “Bottom line for us is that when the economy is bad, people are still going to eat, and somebody is going to do well, and we’re really committed to it being us.”
Third-quarter revenue rose 9 percent to $17.6 billion, and identical-supermarket sales rose 5.6 percent in the quarter without fuel sales and 7.8 percent with them. Those sales, for stores open at least five quarters, are considered a key gauge of retail strength.
Kroger said sales were strong for its deli, bakery and other store-prepared foods as Americans cut down on restaurant meals, and that its corporate brand sales continue to rise, accounting for more than a fourth of grocery sales.
The Cincinnati-based company operates 2,477 supermarkets and multidepartment stores in 31 states, under local banners that include Ralphs, Fred Meyer, QFC, Food 4 Less, Fry’s, King Soopers, Smith’s, Dillons and City Market.
Kroger said it earned $237.7 million, or 36 cents a share, in the quarter, down from $253.8 million, or 37 cents a share, a year earlier.
The company said results were hurt by an after-tax charge of $15.9 million, or 3 cents a share, related to its $25 million insurance deductible for Ike. The storm damaged stores, forced some to shut down temporarily and caused outage-spoiled food in September, particularly in Texas.
Otherwise, Kroger said earnings would have been $253.6 million, or 39 cents a share.
Analysts polled by Thomson Reuters had predicted earnings of 38 cents a share on revenue of $17.4 billion.
The company said it expects full-year earnings of $1.88 to $1.91 a share, excluding the 3-cent share charge from Ike. The previous guidance was for $1.85 to $1.90, excluding Ike effects. Analysts projected $1.91 a share.
Kroger expects fourth-quarter earnings of 49 cents to 52 cents a share, saying that range “considers the cautious mind-set of many consumers this holiday season.” Analysts were projecting 53 cents for the quarter.