Kroger, one of the biggest grocery chains in the US, warned of weak sales in the second half of the year as it expects inflation to decelerate and consumer spending to remain tight.
Gary Millerchip, chief financial officer, said on a call with analysts on Friday he now expects inflation to be between 1 to 2 per cent by the end of the year, compared to previous estimates of it being in the 3 to 4 per cent range. Bigger rival Walmart also acknowledged food price disinflation during an analyst call last month.
Kroger expects to continue to contend with softer consumer spending, specifically from low-income consumers. Millerchip said he expects full-year same-store sales, excluding fuel, to be at the low-end of the guidance range and “slightly negative” in the second half of the year.
Alongside its results, the company also reported it is taking a $1.4bn charge to settle nationwide opioid lawsuits. Kroger and Albertsons announced they will sell more than 400 stores for about $1.9bn to help assuage regulatory concerns as they seek to complete their planned merger.
Read More: Live news: US grocer Kroger warns of weak sales in ‘tougher’ consumer