Kroger lowered its full-year same-store sales outlook, as shoppers' budget constraints and concerns about cyclospora resulted in lower spending.
The grocery-store chain now expects annual same-store sales to increase by 0.2% to 0.8%, compared with its previous projection of 1% to 2% growth. It reaffirmed the rest of its outlook.
The lower guidance accounts for consumers spending less at Kroger's stores. While traffic increased in the quarter, shoppers were buying fewer items on their trips, Chief Executive Greg Foran told analysts on a call Friday.
"Reductions in SNAP benefits, higher fuel prices and softer consumer confidence are all putting pressure on household budgets," Foran said. "Customers are buying more on need."
Same-store sales in the second quarter increased 0.2%, below Wall Street's estimates of 0.8% growth. Total revenue for the quarter rose 2% to $34.62 billion, missing analysts' forecast of $34.64 billion.
Kroger's stock declined 3% to $55.50 in premarket trading.
Along with budget constraints, the cyclospora outbreak also deterred shoppers. The parasite, which made headlines for contaminating fresh produce, shaved about 0.35 percentage points off of Kroger's same-store sales growth in the quarter.
The impacts from cyclospora have improved, but are still lingering into the current third quarter. Lower drug prices at Kroger's pharmacies due to policies in the Inflation Reduction Act are also dampening sales, and egg prices have fallen from their highs last year.
Kroger has been implementing a series of cost-cutting measures to try to lower prices. However, Foran said inflation continues to be a problem and risks masking the price efforts Kroger has made so far.
"It is something that weighs on my mind," Foran said. "I would expect that the pressure is actually going to mount."
Profit in the quarter was $641 million, or $1.05 a share, compared with $609 million, or 91 cents a share, a year earlier.
Stripping out certain one-time items, adjusted per-share earnings were $1.09, ahead of the $1.06 anticipated by analysts.