McMullen flagged a widening split between lower-income customers, who are spending less and buying smaller pack sizes, and middle-income and wealthier shoppers, who he said are turning to Kroger in search of lower prices. “There’s nothing wrong with the print, but investors have grown used to seeing more upside out of this company,” Adam Crisafulli, an analyst at Vital Knowledge, said in a note to clients. The decline pared the stock’s year-to-date gain to less than 2%, versus the S&P 500 Index’s 15% advance over the same period. in New York, paring a loss that earlier stood as the biggest intraday drop in eight months. “The near-term outlook is now trickier,” Rupesh Parikh, an analyst at Oppenheimer & Co., said in a note to clients, citing increased promotions and uncertainty surrounding the proposed merger. The transaction is currently undergoing a comprehensive antitrust review. Buoyed by those gains, the Cincinnati-based company agreed last year to buy Albertsons Cos. The slowdown contrasts with the windfall Kroger reaped during the pandemic as shoppers rediscovered home cooking and fueled a surge in grocery demand. While food-price increases are slowing, budget-conscious consumers are pulling back and the company is dangling more promotions, adding to the headwinds on sales and profit.
Shoppers are increasingly pinching pennies as they contend with inflation and economic uncertainty, Chief Executive Officer Rodney McMullen told analysts Thursday after Kroger reported earnings. dropped as revenue growth slowed, signaling the end of a long sales boom spurred by the pandemic.
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