Kroger (KR 26.90, -3.38) has slid 11.2% in pre-market after reporting in-line earnings and lowering its guidance for the fiscal year.
The grocery store chain reported in-line first quarter earnings of $0.58 per share on a 4.9% year-over-year increase in revenue to $36.28 billion, which was ahead of market expectations. However, the company has a cautious outlook for the remainder of its fiscal year, evidenced by guidance, which now calls for earnings between $2.00 per share and $2.05 per share, down from previous expectations for earnings between $2.21 per share and $2.25 per share.
Although the company lowered its earnings guidance, it still expects that identical supermarket sales growth, excluding fuel, will be between 0.0% and 1.0%. Capital investments, excluding mergers, acquisitions, and purchases of leased facilities are expected between $3.20 billion and $3.50 billion for the fiscal year.
For the first quarter, total sales, excluding fuel, increased 2.9% year-over-year. This was partially owed to Kroger's recent combination of Axium Pharmacy with ModernHEALTH. Gross margin, excluding fuel, ModernHEALTH, and LIFO charges, declined 45 basis points year-over-year to 22.1%.
Kroger's merger of ModernHEALTH with Axium Pharmacy and share repurchases resulted in an uptick in net total debt to adjusted EBITDA, which rose to 2.33 from 2.12 one year ago.