KR

Kroger cuts annual sales forecast on choppy grocery demand

Credit: REUTERS/LISA BAERTLEIN

Adds background in paragraphs 2-4, details on forecast

Nov 30 (Reuters) - Kroger KR.N on Thursday cut its annual sales forecast, pinched by moderating food and grocery prices at a time when volumes have come under pressure from consumers keeping a tight lid on spending.

Food prices are now moderating, with grocery inflation continuing to trend lower throughout the quarter as fresh food products go into deflation mode while packaged food items hit the ceiling on price hikes.

That has started to limit some of the revenue benefits enjoyed by food retailers over the past year, while consumers become increasingly thrifty and pick cheaper alternatives even in groceries.

Competition has also heated up in the grocery space with retailers looking to rein in prices and offer more low-cost food items to attract inflation-hit consumers. That could lead to a ramp-up in promotions in the coming months, potentially limiting profit margin growth at companies.

Kroger now expects fiscal 2023 identical sales, excluding fuel, to grow 0.6% to 1%, compared with its prior forecast toward the low end of a 1% to 2% rise. Analysts on average expect a 0.9% increase, according to LSEG IBES data.

The company lifted the lower end of its annual profit forecast by 5 cents, now projecting adjusted earnings per share between $4.50 and $4.60 for fiscal 2023. Analysts on average expect a per-share profit of $4.53.

(Reporting by Deborah Sophia in Bengaluru; Editing by Devika Syamnath)

((DeborahMary.Sophia@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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