CINCINNATI — Kroger Co. stock took a beating yesterday — falling nearly 12% to just over $20 — as the company reported a net loss of $874.9 million, or $1.35 per share, for the third quarter, due primarily to a write-down of $1.05 billion at its Ralphs division in Southern California. It also lowered guidance on sales and earnings for the year.
The company said it took the noncash charge because of the weak Southern California economy, high unemployment levels, population declines and lower business valuations, prompting Kroger to revise its near-term profit projections for Ralphs.
Sales for the quarter, which ended Nov. 7, fell 0.3% to $17.7 billion, including fuel, while identical-store sales, excluding fuel, rose 1.3% — "a solid quarter," David B. Dillon, chairman and chief executive officer, said, "based solely on our tonnage," which was up more than 8.5%.
However, the difficult operating environment "was more challenging than we anticipated," he added, which obscured the company's strong fundamentals, which he said included the tonnage growth, market-share gains, increases in loyal household count and good cost controls. Near-term results are being pressured, he added, "by persistent deflation [of minus-0.8%], unusually intense competition and the cautious mindset of customers."
For the year to date the company had a net loss of $185.4 million, with sales falling 1.1% to $58.2 billion and ID sales, excluding fuel, up 2.4%.
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