Kroger trims outlook for profit, sales amid uncertain economy

Kroger Co. narrowed its annual outlook and reiterated confidence in its acquisition of rival Albertsons Cos. being approved by regulators.

The company pointed to an uncertain economic environment in saying adjusted earnings for this fiscal year will be as much as $4.45 a share, a cut of 5 cents from previous guidance. The grocery chain also trimmed its outlook for a key sales metric.

Kroger’s shares fell less than 1% Thursday morning and were up 1% early in the afternoon, to $60.48 each. The stock gained 31% this year through Wednesday, outpacing the 28% gain for the S&P 500 index.

The largest U.S. supermarket operator had posted sales growth this year, but revenue fell 1% last quarter, to $33.6 billion, trailing estimates. Meanwhile, adjusted profit met expectations.

Kroger closed the sale of its specialty pharmacy business in early October for $464 million. The transaction reduced total company revenue last quarter by about $340 million.

A decline in sales of fuel, primarily from a lower average price per gallon, also hurt revenue, the company said.

Retailers selling groceries have benefited from shoppers prioritizing food and other essentials amid high prices and interest rates, but buying cheaper cuts of meat or lower-cost store brands to stick to their budgets.

Elsewhere, shoppers are spending less on discretionary items and are more mindful about what they buy and when. In response, Kroger and other food sellers are offering discounts, personalized deals and various rewards.

Despite that environment, Kroger was able to maintain its profitability last quarter with a gross margin of 22.9%, topping estimates.

Kroger is waiting for a federal judge to rule on its proposed acquisition of Albertsons for about $24.6 billion, a deal it announced more than two years ago. The Federal Trade Commission blocked the acquisition, and the parties presented their case in September.