Kroger supermarket chain says profits up but slowed by unrest

first_imgAnalysts surveyed by Thomson Financial predicted earnings of 48 cents per share on sales of $20.4 billion. Analysts typically exclude one-time items in their forecasts. Sales at Kroger stores open at least a year, considered a key indicator of a retailer’s success, were up 6 percent in the quarter. Not counting fuel sales, same-store sales rose 5.2 percent. The company said profit margins in the quarter also were hurt by about a 2 percent rise in product costs and that consumers can expect some higher prices. Prices for milk, cheese, corn, wheat and oranges and some other fruit have been rising nationally for reasons including bad weather, higher costs for livestock feed and for transportation. Some pizza chains have raised the prices of cheese pizzas because of the dairy increase and consumers face price increases in a variety of other areas. Some industry analysts have said price increases could benefit grocers by boosting revenue. The reduced margins, labor uncertainty and a recent run-up in shares made for an off-day for Kroger stock with shares sliding 6.7 percent, or $2, to $27.66. Kroger stock recently reached a 52-week high of $31.94, after trading as low as $20.10 nearly one year ago. Kroger, which competes for grocery sales against nonunion Wal-Mart Stores Inc. supercenters, also is negotiating new contracts with union workers in Seattle and Toledo, Ohio, as well as in Southern California. Workers there have voted to authorize a strike by their union if stalled negotiations with Kroger’s Ralphs and two other chains fail. A work stoppage in Southern California four years ago disrupted business for several months at Ralphs stores. 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! CINCINNATI – Kroger Co., the nation’s largest traditional supermarket chain, said Tuesday that first-quarter profit jumped 10 percent but was slowed by labor unrest and rising costs for dairy and some produce items. Its shares sank nearly 7 percent. For the three months ended May 26, Kroger made $336.6 million, or 47 cents per share, compared with $306.4 million, or 42 cents per share, a year earlier. Sales rose 7 percent, to $20.73 billion from $19.42 billion. Kroger, with a tense labor situation in Southern California, said its first-quarter earnings included charges of about 2 cents per share stemming from a two-day walkout by some 700 workers at a distribution center near Louisville, Ky., that two companies operate for Kroger. First-quarter 2006 results included a one-time legal expense of 3 cents per share. last_img read more