Kroger results disappoint; shares fall, especially compared to rivals

Kroger Co.’s shares fell after the supermarket chain missed analysts’ sales estimates and margins continued to narrow in the company’s fiscal second quarter.

Kroger’s lackluster results contrast with rivals Walmart Inc. and Target Corp., who raised their 2018 expectations.

Comparable-store sales rose 1.6 percent when excluding gasoline sales. That’s below the estimate of 1.8 percent from Consensus Metrix.

A strong consumer environment has put wind at retailers’ backs, with Target and Dollar General CEOs both saying conditions are the best they’ve seen in more than a decade. As a result, investors have punished companies that haven’t been able to take advantage of the favorable climate.

Kroger’s online sales rose more than 50 percent. The company has expanded home-delivery and curbside pickup options, while also inking deals with mealkit maker Home Chef and U.K. online grocer Ocado.

The idea is to bolster its defenses against Amazon. com Inc. and other rivals.

Kroger’s investments have weighed on profitability, and its gross margins continued to contract.

Grocery chains have been pressured by relentless competition — especially as German discounters Aldi and Lidl expand in the U.S.

Kroger shares fell 9.9 percent to $28.58 Thursday after the release of the results. The stock had gained almost 16 percent this year through Wednesday’s close.