Shares of Cincinnati-based Kroger Co. (NYSE: KR), the nation's largest traditional grocery chain, fell 74 cents to $24.90 in morning trading as the company reported that its fourth-quarter profit slumped 16%. Though overall sales rose 2%, results were dragged down by a large inventory charge.
Kroger posted earnings of $322.9 million, or 48 cents per share, for the quarter that ended February 2, compared with a profit of $384.8 million, or 54 cents per share, a year earlier. Revenue in the quarter rose to $17.23 billion from $16.86 billion a year ago. Analysts surveyed by Thomson Financial had expected earnings of 47 cents per share on revenue of $16.81 billion.
Kroger blamed the higher-than-expected inventory charge of five cents per share on inflation, and also said that the previous year's quarterly earnings were boosted by a tax benefit.
For the quarter, same-store sales, or sales at supermarkets open more than a year, increased 8.2% with fuel sales at its stations and 5.3% without fuel sales.
Profits for the full-year were $1.18 billion, or $1.69 per share, up from $1.11 billion, or $1.54 per share, in the previous year. Revenue increased 6.2% percent to $70.2 billion from $66.1 billion, but sales rose 8.2% when adjusted for an extra week in 2006. Same-store sales rose 6.9% with fuel and 5.3% without it.
Kroger forecast earnings of $1.83 to $1.90 per share for this fiscal year, below the analysts' forecast of $1.91. The company expects same-store sales growth of 3% to 5%, excluding fuel sales.
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