Kroger has reported weaker-than-expected results for its fiscal year, which it attributed largely to food price deflation.
For the year ending 28 January 2017, net profit grew by just 3.1% to $2bn, while sales were up 5% to $115.3bn (helped by the acquisition of Roundy’s), even as like-for-like sales rose by 1% (excl. fuel).
CFO Mike Schlotman said sales were impacted by lower food prices as well as its spending on revamping stores. CEO Rodney McMullen added: “Some times are just more challenging than others, and last year certainly did not end the way we expected at the start.”
McMullen said Kroger will lower costs to improve its profits, and will also invest only $3.2bn-$3.5bn this year, down from $3.6bn in fiscal 2016. However, the chain warned that it expects trading conditions to only improve in the second half of 2017. It expects full-year LFL sales to be flat to up 1% (excl. fuel).