* Q4 same-store sales, excl. fuel, fall 0.7 pct vs. est.
* Same-store sales fall first time since 2003
* Expects FY17 same-store sales flat to +1 pct
* Shares slide as much as 5.6 pct
(Adds CEO comment, updates shares)
By Richa Naidu
March 2 Supermarket operator Kroger Co
surprised analysts with its first quarterly same-store sales
decline in 13 years, as competition intensified in the U.S.
grocery industry, sending its shares down as much as 5.6 percent
Kroger, like other grocers, has been struggling with
lackluster U.S. economic growth and a cut-throat price war with
Wal-Mart Stores Inc and Amazon Inc.
Cincinnati-based Kroger said, excluding fuel, sales from
stores open for at least a year fell 0.7 percent, widely missing
analysts' average estimate of a 0.1 percent rise, according to
Consensus Metrix. Kroger blamed the decline on deflation.
This was Kroger's first quarterly same-store sales drop
since the first quarter of 2003, raising concerns it is losing
customers to rivals.
"With peers Ahold Delhaize, Walmart and Publix
reporting better comparable sales than Kroger, it is
becoming increasingly likely that the company is losing overall
market share," J.P. Morgan analyst Ken Goldman said.
Price competition in the industry has been increasing, with
Wal-Mart reportedly running a new price-comparison test to knock
out competition from German discount grocery chain Aldi Inc
Target Corp said on Tuesday it would sacrifice
full-year margins to keep its prices competitive.
Kroger has become more promotional and aggressive on some
pricing as sales were softer, CEO Rodney McMullen told analysts
on a call.
"There is no doubt several competitors are improving and
running better stores ... it's much broader than just Walmart,"
Kroger, whose chains include Ralphs and Fred Meyer, forecast
full-year earnings of $2.21-$2.25 per share, the midpoint of
which meets analysts' average estimate of $2.23, according to
Thomson Reuters I/B/E/S.
"We are disappointed in the comparable number and are
starting to wonder how Kroger will get anywhere near its
long-term outlook for 8-11 percent earnings per share growth in
today's environment," Goldman added.
The No. 1 U.S. supermarket chain said it expects full-year
same-store sales excluding fuel to either remain flat or rise as
much as 1 percent, short of the 1.2 percent rise analysts had
Kroger's shares, which had already taken a 4 percent hit
this week after news of Wal-Mart and Target's pricing
strategies, were down 3.2 percent at $31.01 in morning trading.
The company earned 53 cents per share, in the fourth quarter
ended Jan. 28, beating the average analyst estimate by one cent.
Net sales rose 5.5 percent to $27.61 billion, beating
analysts' average estimate of $27.31 billion.
(Reporting by Richa Naidu in Bengaluru; Editing by Martina