CINCINNATI — The Kroger Co., in appealing to budget-conscious consumers, has expanded its assortment of everyday staples at lower price points, said William Rodney McMullen, chief executive officer. In one example in-store displays promote items costing less than $3.
“These customers are buying smaller pack sizes and, at times, prioritizing the lowest shelf price,” Mr. McMullen said in a Sept. 8 earnings call to discuss second-quarter results. “These customers are building smaller baskets and switching to lower-priced items to stretch their budgets. They are also exhibiting spending patterns that ebb and flow with payroll periods and SNAP benefit distributions. We expect these broader economic headwinds to continue pressuring customer spending in the second half of the year.”
Inflation is occurring at a greater rate in 2023 than Kroger executives originally anticipated, and customers continue to feel the effects, he said.
“For these reasons, we believe the remainder of the year will continue to present challenges to navigate, and we expect identical sales without fuel will now be at the low end of our full-year guidance range of 1% to 2%,” Mr. McMullen said.
In the second quarter ended Aug. 12, a net loss attributable to Cincinnati-based Kroger was $180 million, which compared with net earnings of $731 million, or $1.01 per share on the common stock, in the previous year’s second quarter. This year’s quarter included a $1.4 billion charge related to a nationwide opioid settlement framework. Sales of $33.85 billion were down 2.3% from $34.64 billion in the previous year’s second quarter.Through the first half of the year, net earnings of $782 million, or $1.08 per share on the common stock, were down 44% from $1.39 billion, or $1.92 per share, in the same time of the previous year. First-half sales of $79.02 billion were down 0.3% from $79.24 billion.