Kroger Co.’s shares fell after the supermarket chain missed analysts’ sales estimates and margins continued to narrow in the company’s fiscal second quarter.
Kroger’s lackluster results contrast with rivals Walmart Inc. and Target Corp., who raised their 2018 expectations.
Comparable-store sales rose 1.6 percent when excluding gasoline sales. That’s below the estimate of 1.8 percent from Consensus Metrix.
A strong consumer environment has put wind at retailers’ backs, with Target and Dollar General CEOs both saying conditions are the best they’ve seen in more than a decade. As a result, investors have punished companies that haven’t been able to take advantage of the favorable climate.
All temporary workers hired by Target after this Sunday will start with an hourly wage of $12, and also receive benefits like a 10 percent discount on Target.com and 20 percent off wellness merchandise like fruits, vegetables and workout gear, the company said in a press release. Target also will set aside $2 million for rewards to seasonal workers through its worker appreciation program.
Target said Thursday it plans to double the number of temporary roles dedicated to fulfilling online orders during the holidays. This means it plans to hire 120,000 seasonal workers for the holiday season, a 20 percent increase from last year.
Kroger’s online sales rose more than 50 percent. The company has expanded home-delivery and curbside pickup options, while also inking deals with meal-kit maker Home Chef and U.K. online grocer Ocado. The idea is to bolster its defenses against Amazon.com Inc. and other rivals.
Kroger’s investments have weighed on profitability, and its gross margins continued to contract.
Grocery chains have been pressured by relentless competition — especially as German discounters Aldi and Lidl expand in the U.S.
Kroger shares fell as much as 11 percent to $28.22 in early trading after the release of results. The stock had gained almost 16 percent this year through Wednesday’s close.
If the current share decline maintains after shares open, it will be the biggest drop for the company’s stock in six months.
Associated Press contributed to this report.
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