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Kroger Stock Plummets As Shipping Problems Persist

Kroger profits shrink due to shipping issues and price discounts

US supermarket chain Kroger reported a drop in one of its most important earnings metrics, blaming discounts, waste and stress on global supply chains, sending its shares down 9.1%.

This year, US retailers spent more money on shopping and labor after pandemic congestion at ports and a shortage of drivers made it more expensive to restock in-store shelves, as reflected in a decrease in Kroger’s gross profit margin, which represents the value of remaining revenue after deducting costs of goods sold, to about 21.4% during the second quarter, compared to 22.6% during the first quarter.

Canned food companies and grocers that sell their own brands have suffered from the high costs of food ingredients such as flour, meat, and edible oils, forcing them to raise prices and warn of future hikes as well.

However, the concept of cooking at home during the health crisis helped supermarket operators Ralph, Dillons and Fred Meyer raise their annual adjusted earnings expectations to between $3.25-3.35 per share, beating analysts’ expectations, knowing that Kroger beat expectations for first-quarter sales and earnings.

The supermarket chain launched its “Kroger Delivery Savings Pass” to attract new customers and make existing customers more loyal, as its new service offers unlimited deliveries for $79 a year.

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