Kroger rides out a storm competitive and meteorological

Associated Press

NEW YORK

Intense competition forcing price cuts at all grocers dragged on profits for Cincinnati-based Kroger during the second quarter and investors appeared nervous about the company’s outlook, which did not account for hurricanes pounding states along the U.S. coastline.

Shares, already down nearly 30 percent over the past 12 months, slumped 6 percent at one time Friday.

The company, which operates Fred Meyer, Ralphs and Fry’s, has been slashing prices to compete with Target and Walmart, and the situation recently grew potentially more precarious. Amazon.com Inc., a major disruptor in any sector it enters, acquired Whole Foods in June and cut prices on a number of items, such as avocados, almost immediately.

Kroger has the advantage of scale and revenue rose 3.8 percent to $27.6 billion, edging out Wall Street expectations, according to a survey by Zacks Investment Research.

But because of competitive pressures, margins are being squeezed.

Profit fell 7.8 percent to $353 million, or 39 cents per share, a penny short of analyst projections.

“While we see continued price pressure as unfortunate, we believe that Kroger is in a much better position to weather this storm than many other players,” wrote Neil Saunders, the managing director of GlobalData Retail.