[Sixstrings]

Kroger Stock Plunges After CEO Discloses Recovery "Slower And Weaker"; Americans "Cautious" In Buying Food

Another day passes, proving that you have economic propaganda (is the Dow at 36,000 yet, solely on ponzi hot potato passing between 3 computers and 2 primary dealer), and then you have reality. A quick look at KR stock indicates that not all is good with the largest US supermarket chain. Sure enough, earlier today, the company announced it was lowering the top end of its full-year profit forecast. Kroger projected per-share earnings of $1.65 to $1.78, compared with its previous forecast of $1.60 to $1.80, according to a statement today by the Cincinnati-based retailer.

The consensus is $1.78. It was, however, the commentary from the conference call is most telling: The slow economic recovery is hurting grocery sales and consumers are “cautious in their spending,” Chief Executive Officer David Dillon told analysts on a conference call. The recovery is slower and weaker than Kroger had expected and competition remains “intense,” he said. Hear that: the economy is "slower and weaker"...Although that only pertains to such irrelevant items as food and drink. And who needs those when you have Kindles to keep you fed and warm at night.

America is now officially insane.
http://www.zerohedge.com/article/kroger-stock-plunges-after-ceo-discloses-recovery-slower-and-weaker-americans-cautious-buyin

Food is the LAST thing folks cut back on. A lot of folks must be out of work and dirt poor if they need to be “cautious in their spending” at Kroger (which is already a discount grocer, this is cheap food to begin with not organic arugula and brie from Whole Foods).

[vision-master]

BS, Oily say's thing are getting better, new car sales are up and unemployment is down.

FYI: Three day's ago around here gas could be had for $2.79 gal, now it's up to $3.04 gal.
Will we see $4 gal by spring or maybe even $5 gal?

[Cid_Yama]

My wife worked at the homeless shelter this Thanksgiving. When she got there that morning she found dozens of people standing around the lobby in tee-shirts shivering. (temperatures had dropped 40 degrees to near freezing overnight.) The shelter only had a couple coats and a couple flannel shirts on hand so she picked up the phone and called the local TV and radio stations. The reponse was over-whelming. (I am very proud of her, and wanted this chance to give her her due.)

Later in the day while delivering Thanksgiving dinners to elderly in a small apt complex she found an older woman sitting in the cold eating a can of cat food.(Also taken care of immediately.)

You don't see it on TV. All the sitcoms make it look like the average American has a 6 figure salary. The reality is quite different.

Those pictures of the Great Depression are being lived out right now in the United States. It's time for it to stop being our dirty little secret.

Next time you see a homeless person, hand them 5 dollars. It's nothing to you, but will be a fortune to those who have none, and will ensure that that person eats that day.

[Xenophobe]

They aren't struggling. Millions of Americans have gone out and started growing their own. Obviously this reduction in store bought demand is having completely predictable side effects.

[Cid_Yama]

That's the most idiotic (and heartless) statement I've seen anyone post on here.

[Crazy_Dad]

That's the most idiotic (and heartless) statement I've seen anyone post on here.

It must be sarcasm, surely.

[Cid_Yama]

OK, there have been a lot of idiotic and heartless statements made, but that one is right up there.

[Crazy_Dad]

OK, there have been a lot of idiotic and heartless statements made, but that one is right up there.

I can see how someone who genuinely gives a hoot about the welfare of his countrymen and women might get upset by that statement. Especially whilst the elites live it up.

[americandream]

They aren't struggling. Millions of Americans have gone out and started growing their own. Obviously this reduction in store bought demand is having completely predictable side effects.

Sounds about right seeing as millions of working class Americans (and workers worldwide) have their quarter acre plot tucked away out of sight for these troubled times.

[Sixstrings]

OK, there have been a lot of idiotic and heartless statements made, but that one is right up there.

Maybe he was being serious. Growing some food isn't a bad idea, but as several people on this forum have said before it's actually pretty darn difficult to meet much of one's dietary needs from small plot gardening.

Now add in the fact that the poor usually live in trailers or apartments so there's no land for them to have a permaculture "edible forest" anyhow.

So no, I don't think America's jobless has suddenly become food self-sufficient. Most aren't exactly starving either, but the fact remains -- if the economy has recovered "much sooner than expected" then why is the nation's largest grocer talking about how unexpectedly weak the economy is, and how folks have stopped buying the same amount of food as before?

[rangerone314]

I got an idea since the rich (and republicans) are so worried about class warfare.

Lets encourage the poor to rise up when they are hungry and become cannibals and eat the rich! (preferable old rich people, even though they me be a little tough)

Actually kind of sorry about the Kroger thing, they seemed to be a pretty decent operation... surprising... and... alarming.

[gollum]

My wife worked at the homeless shelter this Thanksgiving. When she got there that morning she found dozens of people standing around the lobby in tee-shirts shivering. (temperatures had dropped 40 degrees to near freezing overnight.) The shelter only had a couple coats and a couple flannel shirts on hand so she picked up the phone and called the local TV and radio stations. The reponse was over-whelming. (I am very proud of her, and wanted this chance to give her her due.)

Later in the day while delivering Thanksgiving dinners to elderly in a small apt complex she found an older woman sitting in the cold eating a can of cat food.(Also taken care of immediately.)

You don't see it on TV. All the sitcoms make it look like the average American has a 6 figure salary. The reality is quite different.

Those pictures of the Great Depression are being lived out right now in the United States. It's time for it to stop being our dirty little secret.

Next time you see a homeless person, hand them 5 dollars. It's nothing to you, but will be a fortune to those who have none, and will ensure that that person eats that day.

I had a conversation with a life long friend who believes things are good, his reasoning being that some video game made 350 million on the day it was released, people just don't have a clue and probably won't until the pitchforks come out I guess.

[sparky]

.
Russia , 1995 ..Collapse of the state institution
no wages being paid , people were going to work because they had a meal at the cantine
war veterans selling their medals , teachers begging in the streets
everybody had their smallplot to grow potatoes , growing tomatoes on inside window
often no electricity ,or gas
the only bright lights were the alcohol vending stand
and the jeep cherokee of the thugs .

[copious.abundance]

This is what happens when you get your financial news from ZeroHedge.

Just the facts, ma'am

US grocery retailer Kroger saw its shares plummet today (2 December) even after the company reported rising third-quarter sales and underlying earnings.

Shares in the retailer were fell more than 9% despite the retailer recording a 3.1% increase in sales, excluding fuel, and a 14% increase in underlying earnings for the quarter to 6 November.

Kroger's identical-store sales, excluding fuel, were up 2.4% against the same period last year, while operating margin increased six basis points.

The retailer's net earnings reached US$202.2m against a $874.9m loss in the same period last year. Kroger said the 2009 result included a $1.05bn write down. Excluding the 2009 impairment charges, net earnings would have been $176.7m, which would have meant a 14.4% net earnings increase.

Food is the LAST thing folks cut back on. A lot of folks must be out of work and dirt poor if they need to be “cautious in their spending” at Kroger (which is already a discount grocer, this is cheap food to begin with not organic arugula and brie from Whole Foods).

1. How is a 2.4% same-store increase in non-fuel sales "folks cut[ting] back on" food?
2. I presume you don't have Krogers in your area. Kroger is NOT a discount grocer - at least not exclusively. They operate 2 chains in my area - QFC, which is definitely a high-end supermarket, and Fred Meyer, which is sort-of like a Target or WalMart but has more of a focus on food sales and is also definitely NOT a discount place. In fact, they own such a huge list of local chains I don't think you could categorize them as anything in particular at all:
http://en.wikipedia.org/wiki/Kroger
3. I also used to work at a Kroger when I lived in Charlotte, and it was the fanciest supermarket around.

[vtsnowedin]

I don't want to take the heartless side of this and Kudos to your wife for her efforts Cid but I have a slightly different take on the original story.
The store management didn't say that people were buying less food just that they were being careful about how they spent their money.
To me that brings to mind buying a twenty pound bag of rice instead of buying it in one meal prepackaged boxes (Rice a Ronnie). Or a five pound canned ham for twelve bucks vs. sliced deli ham at $7.50/lb. All those prepackaged meals that pop into the microwave including the popcorn are probably staying on the shelves but the bulk commodities are probably doing all right.
The stores problem is that the mark up on the prepackaged preprepared stuff is much higher then for bulk items like sugar and flour so people may well be still eating as many calories as before but the stores bottom line is on a diet.
If you have two adults working in a family then no one has the time or the energy to cook so you eat a lot of pre made/prepackaged stuff as well as buy take out or eat out quite frequently. Let one or the other get laid off and the one that is home Should start cooking as he or she has the time and their efforts can go a long way towards making up for the lost income. They should have time to tend to a garden too. Of course some will not realize the importance of this and keep ordering delivery pizza as long as the money lasts but many will take up the challenge and keep their household on an even keel as long as there is one decent income.
It can be said that many in America today have no idea how to get along as a poor person as they have no experience with it. Imagine a Woman from Haiti dropped into your local supermarket with two twenties in her pocket. She is going to come out of there with a much different bag of groceries then you or I will.

[Maddog78]

zerohedge can be entertaining but you lower your credibility when you quote it as a source.

[the48thronin]

hatcheries and tree farms are doing OK.. Baby chicks sold out, fruit trees at the nursery sold out.. maybe Americans are spending their money more carefully!

[Sixstrings]

This is what happens when you get your financial news from ZeroHedge.

...

1. How is a 2.4% same-store increase in non-fuel sales "folks cutting back on" food?

Well OIlfinder, investors sure heard *something* on that conference call they didn't like. Kroger shares fell 9.35% of the the new. Profits are technically up:

Kroger, whose store brands include Kroger, Ralphs, King Soopers, Fry’s and Food 4 Less, said it earned $202.2 million, or 32 cents a share, in the period, matching what analysts had expected. ... But its forecast unsettled investors and its stock fell 9 percent.
http://www.nytimes.com/2010/12/03/business/03kroger.html?src=busln

But that's comparing it to the deep hole they were in a year ago:

A year earlier, Kroger reported a net loss of $874.9 million, or $1.35 a share, primarily because of one-time charges.

Sales in the period, which ended Nov. 6 and was the third quarter of Kroger’s fiscal year, rose 5.9 percent, to $18.7 billion, ahead of the $18.5 billion analysts had expected.
http://www.nytimes.com/2010/12/03/business/03kroger.html?src=busln

The point is, if the recession is really over and we're into recovery then their numbers should be a lot better than this. What rattled investors was the CEO lowering forecasts and his statements on the weaker than expected "recovery" and consumers trimming their food budgets:

Kroger’s chief executive, David B. Dillon, said weak employment and higher gas prices were affecting consumer confidence and grocery budgets.

Executives said Kroger had been passing on higher costs for select name-brand grocery items and fresh foods like meat and produce. Nevertheless, they said that overall prices for packaged food and other items in the center of the store had been falling.

“Their margins were not as good as in the past. This is one of the factors that contributed to the sharp drop in the stock,” said TD Ameritrade’s chief derivatives strategist, Joe Kinahan.
http://www.nytimes.com/2010/12/03/business/03kroger.html?src=busln

2. I presume you don't have Krogers in your area. Kroger is NOT a discount grocer - at least not exclusively. They operate 2 chains in my area - QFC, which is definitely a high-end supermarket, and Fred Meyer, which is sort-of like a Target or WalMart but has more of a focus on food sales and is also definitely NOT a discount place. In fact, they own such a huge list of local chains I don't think you could categorize them as anything in particular at all..

No we don't have Kroger down here. I've been to Kroger in Ohio and it seemed like a lower end store to me. But fair point, my impression of Kroger is anecdotal.

I don't want to get too far in the weeds arguing about Kroger, the bottom line is the CEO of the largest supermarket chain the country has a negative outlook on the economy, says that the "recovery" has turned out to be "weaker and slower" than it was supposed to be, and that Americans are being more "cautious" with their food spending.

Kroger's margins have suffered; they need to pass on higher food costs but can't seem to manage it -- consumers are resisting higher prices, and are more inclined to cut back instead.

[Crazy_Dad]

zerohedge can be entertaining but you lower your credibility when you quote it as a source.

Hey I like zerohedge man!
They may say 'bitchez' alot, but there are some nuggets in there you will not find anywhere else.