By Patrick Thomas

Shares of Kroger fell in premarket trading Thursday after the grocery giant gave a disappointing profit forecast for the year just days after the resignation of its longtime chief executive.

The details

Kroger said its quarterly sales fell about 7% to $34 billion, below what Wall Street analysts were expecting. It posted a profit of $634 million for the three months ended Feb. 1, down from $736 million the same period a year ago.

Kroger said its identical sales, excluding fuel and the effects of store openings and closings, rose 2.4% for the period.

This year, the company said it expects adjusted earnings between $4.60 and $4.80 a share, a range below what analysts had projected. In the recently completed fiscal year its profit was $4.47 a share.

Shares fell more than 1% in premarket trading.

The context

Kroger, the largest supermarket operator in the U.S. by sales, is working to fill the void left by Rodney McMullen, who resigned abruptly earlier this week after a board investigation into his conduct. Ron Sargent, who had been lead independent director, is serving as interim CEO.

The company shared limited details on McMullen's resignation, saying that his conduct didn't impact Kroger's financial performance and operations and didn't involve a Kroger associate. McMullen hasn't commented.

McMullen led Kroger since 2014, overseeing the expansion of the company's online and advertising presence in stores as well as its attempted $20 billion takeover of rival Albertsons. A federal judge blocked the deal in December, siding with Biden administration antitrust enforcers.

Industry analysts said they don't expect Kroger to immediately change its strategy, which has involved building up its private-label, or store-brand, products to cater to consumers looking for ways to lower their grocery bills.

Keeping prices low is critical to Kroger's effort to maintain its market share and fend off bigger competitors like Walmart and Amazon.com. Consumers feeling the effects of years of persistent food inflation -- from eggs to beef -- have been flocking to Walmart and Aldi, the fast-growing grocery discounter.

Kroger is also defending itself from a lawsuit filed by Albertsons, which alleged that its former merger partner didn't do enough to secure regulatory approval for the deal. Kroger has rejected the allegations and said that Albertsons breached the merger agreement.

Write to Patrick Thomas at patrick.thomas@wsj.com

(END) Dow Jones Newswires

March 06, 2025 09:03 ET (14:03 GMT)

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