Dive Brief:
- Kroger reported an 8.6% decline in profits to $391 million, or $0.41 per share for the third quarter, according to the company's earnings report released Thursday.
- Quarterly net sales increased 5.9% to $26.56 billion.
- Total supermarket sales, excluding fuel and Roundy's, saw a 1.6% uptick.
Dive Insight:
Kroger has long been a bright spot among struggling grocery retailers, with growth that has bucked the trends other retailers have reported recently. But even Kroger is not entirely immune to retailers' challenges, as it also lowered its full-year same-store sales growth forecast from 5% to a range of 1.4% to 1.8%.
One major challenge for retailers, which has consequently been a boon for manufacturers, is lower commodity prices. When prices fall, manufacturers may have less ingredient costs, but the consumer doesn't always realize that. Retailers, however, feel the brunt of those lower costs and have to adjust their prices to reflect them, which can reduce their quarterly sales.
Kroger maintained a notable increase in sales for the most recent quarter, with profit as the key metric to decline. The alternative grocery category has put pressure on major retailers like Kroger, but the company continues to innovate with private label and in-store departmental innovations that provide additional convenience for shoppers.
Kroger's share price tumbled 4% during pre-market trading Thursday.