Slowing inflation may be good for grocery shoppers, but it’s not great news for Kroger.
The company says sales rose just 1.1% in the second quarter, excluding fuel. Total company sales were $33.9 billion in the second quarter, compared to $34.6 billion for the same period last year.
Gains came from improved sales of its growing portfolio of private label brands, offset by shrink and stepped-up promotional pricing.
Kroger’s digital sales gained 12%, and the Cincinnati-based company reaffirmed its forecast for the full year, predicting a sales gain of between 1% and 2%, excluding fuel.
The Wall Street Journal reports that these results mark the third quarter in a row that Kroger missed sales expectations. And the WSJ says that in the year ending June 30, Kroger’s share of the grocery market slipped to 10.7%, citing Numerator data. That’s down from 12.1% two years ago. Rivals Walmart and Costco gained market share in that time frame.
Kroger posted a loss of $479 million, as it agreed to pay $1.4 billion in damages related to its role in prescribing opioids.
The national opioid settlement framework will extend equal payments over 11 years. Kroger will pay up to $1.2 billion to states and subdivisions, $36 million to Native American tribes, and $177 million to cover legal costs.
Like pharmacy rivals Walmart, CVS and Walgreens, which have already reached similar settlements, Kroger maintains it did nothing wrong.
“Kroger has long served as a leader in combatting opioid abuse and remains committed to patient safety,” it says in a statement. “This settlement is not an admission of wrongdoing or liability by Kroger, and Kroger will continue to vigorously defend against any other claims and lawsuits relating to opioids.”
And as its long-running quest to merge with Albertsons continues, Kroger also announced the sale of 413 stores, allaying antitrust concerns about the merger. The comprehensive divestiture plan is the latest development in a saga that started in October 2022. The two companies call the sale a “key step in the merger process.”
The buyer is C&S Wholesale Grocers, which owns Grand Union and Piggly Wiggly. In addition to the stores, the $1.9 billion deal also includes eight distribution centers, two offices and five private label brands across 17 states and the District of Columbia.
Kroger says the deal means no stores will need to be closed because of the merger.