Kroger Won't Have It Easy Over The Next Few Years, But Others May Struggle More

After many strong years, Barclays analyst Karen Short believes Kroger Co (NYSE: KR) “tailwinds have all run their course.” Short has an Equal-Weight rating on the grocery retailer.

In the past, Kroger had been capitalizing “the population in excess of square foot growth, the rollout of fuel centers, expansion of natural and organic, and Wal-Mart Stores Inc (NYSE: WMT) struggles."

Short noted Thursday’s guidance offered a glimpse of this reality and does not know if there are any clear solutions to Kroger’s problems. While inflation has been noted as a possible plus for Kroger by management, it could actually be very problematic if Walmart chooses not to raise prices.

Barclays ending up lowering its fiscal year 2017 to $1.90 (consensus at $2.19) versus guidance of $2.00–$2.05. The report also stated that Kroger will now be focused on investing more in price, adding more labor to stores and increasing wages.

Kroger fell again over 12 percent on Friday after news of Amazon.com, Inc. (NASDAQ: AMZN) acquiring Whole Foods Market, Inc. (NASDAQ: WFM) for $13.7 billion.

"As we've done in the past, we will evolve our business to deliver what our customers want and need today and into the future," a Kroger spokesperson told Benzinga. "We expect to continue to gain share and deliver value for our customers and shareholders."

At time of publication, shares of Kroger were down 13.44 percent at $21.26.

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