June 18 (Reuters) - U.S. grocer Kroger kept its annual forecasts unchanged on Thursday, underscoring cautious consumer spending amid growing inflationary pressures.
The Cincinnati, Ohio-based company joined key rivals like Walmart in maintaining its forecast as consumers turn picky even while making daily purchases, trading down to cheaper alternatives on a rising cost of living.
U.S. consumer inflation increased in May at its fastest pace in three years, with grocery prices edging higher, led by increases
in nonalcoholic beverages, cereals and bakery products as well as fruit and vegetables.
Kroger continues to expect fiscal 2026 identical sales, without fuel, to rise 1% to 2%, and earnings to be in the range of $5.10 to $5.30 per share.
"We are pleased with our first quarter results, but we know there is more work to do," CEO Greg Foran, who took the helm earlier this year, said in a statement.
To cater to value-seeking shoppers and regain market share from rivals like Walmart and Costco that provide groceries at lower price points, Kroger has been slashing product prices.
In May, Kroger said it is preparing to cut prices on thousands of items, which would be partly funded by cost reductions such as direct imports and effective use of technology, before reinvesting savings into lower-shelf prices.
The company has also been investing in private-label brands, promotions, new store openings and digital capabilities to boost customer traffic. However, increased expenses from these investments coupled with the impact of higher fuel sales and transportation costs weighed on its margins.
Its quarterly gross margin came in at 22.7% of sales compared with 23% a year ago.
Kroger posted quarterly adjusted profit of $1.58 per share versus an estimate of $1.59 per share, according to data compiled by LSEG.
Shares of the company fell about 3% in volatile premarket trading.
Its quarterly sales of $46.12 billion beat an estimate of $45.47 billion.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Pooja Desai)
