Shipping woes bite into Kroger’s margins

US supermarket chain Kroger Co reported a slide in a main measure of profitability yesterday, blaming discounts, wastage and this year’s squeeze on global supply chains for a dip that sent its shares tumbling 6.4 per cent.

US retailers have spent more on shipping and labour this year, as pandemic-driven port congestions and a shortage of drivers increase the cost of stocking up their shelves. Kroger’s gross margin — the revenue left after deducting the costs of goods sold — fell to 21.4 per cent in the second quarter, from 22.8 per cent a year earlier.

Packaged food makers and grocers have also reeled under higher costs of ingredients forcing them to raise prices. “The messaging (from Kroger) was that labour and logistics were challenges but that some inflation “notably on meat “was not fully passed on to consumers,” J.P. Morgan analysts wrote in a note.