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Kroger Warns of Weak Sales in Second Half of the Year

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 ÔÇ£slightly negativeÔÇØ 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.

Kroger, one of the largest grocery chains in the United States, has issued a warning about anticipated weak sales in the second half of the year. The company attributes this outlook to the expected deceleration of inflation and persistently tight consumer spending. Gary Millerchip, the chief financial officer, recently communicated in an analyst call that he now expects inflation to range between 1% to 2% by the end of the year, a significant decrease from the previous estimation of 3% to 4%. This observation aligns with the acknowledgment made by Kroger’s bigger competitor, Walmart, during their previous analyst call regarding food price disinflation.

Low-income consumers are anticipated to contribute to Kroger’s continued struggles with diminished consumer spending. Millerchip further mentioned that full-year same-store sales, excluding fuel, are projected to be towards the lower end of the guidance range and may even be “slightly negative” in the second half of the year.

In addition to the concerning sales outlook, Kroger announced that it will be incurring a charge of $1.4 billion to settle nationwide opioid lawsuits. As part of their efforts to address regulatory concerns surrounding their planned merger, Kroger and Albertsons have also disclosed plans to sell over 400 stores for approximately $1.9 billion.

Amidst these complex circumstances, the AI legalese decoder can assist Kroger in navigating the legal aspects of settling nationwide opioid lawsuits. By leveraging advanced AI algorithms, the Decoder can effectively interpret and translate complex legal language into plain English, providing Kroger’s legal team with valuable insights and empowering them to make more informed decisions. Furthermore, the Decoder’s analytical capabilities can aid Kroger’s financial officers and analysts in comprehending the potential implications of the projected inflation rates, helping them develop proactive strategies to mitigate any adverse impacts on the company’s performance.

Overall, the AI legalese decoder serves as a powerful tool for Kroger to overcome the challenges posed by legal complexities and dynamic economic conditions, enabling them to effectively anticipate, adapt, and make well-informed decisions in the face of evolving circumstances.

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