Kroger quarterly same-store sales missed market expectations in a sign that reduced spending by budget-conscious consumers and stiff competition due to higher discounts from rivals hurt volumes.
The Cincinnati, Ohio-based company posted a 1% rise in same-store sales for the second quarter. Analysts on average had expected a 1.26% rise, as per LSEG IBES estimates.
The quarterly results include a $1.4 billion charge related to a nationwide opioid settlement framework, Kroger said.
The company added that the settlement and the payment terms will not affect Kroger's ability to complete its proposed merger with Albertsons.
It also expects to reduce its net total debt to adjusted EBITDA ratio to 2.50 within 18 – 24 months post the closure of the deal.
Deal With C&S Wholesale Grocers
Separately, the company said it would sell 413 grocery stores to C&S Wholesale Grocers to secure clearance from US regulators for their proposed $24.6-billion (€22.9 billion) merger.
Kroger said it may need C&S to purchase up to an additional 237 stores in certain geographies to get the regulatory nod for the deal, which is expected to close in early 2024.
Rodney McMullen, chairman and CEO of Kroger said in statement, "C&S is led by an experienced management team with an extensive background in food retail and distribution and has the financial strength to continue investing in associates and the business for the long run.
"Importantly in our agreement, C&S commits to honouring all collective bargaining agreements which include industry-leading benefits, retaining frontline associates and further investing for growth."
Founded in 1918 as a supplier to independent grocery stores, C&S services customers of all sizes, supplying more than 7,500 independent supermarkets, retail chain stores and military bases.
Article by Reuters, additional reporting by ESM