Supermarket operator Kroger reported a surprise decline in holiday-quarter same-store sales on Thursday as competition in the grocery industry in the United States intensified.
Kroger, like other grocers, has been struggling amid pressure from falling food prices, dull U.S. economic growth, and a cut-throat price war with Wal-Mart Stores and Amazon.
Cincinnati, Ohio-based Kroger's shares, which have lost more than a fifth of their value in the past year, fell 3.3 percent to $31.00 in premarket trading.
The company said, excluding fuel, sales from stores open for at least a year fell 0.7 percent, widely missing analysts' average estimate of a 0.1 percent rise, according to Consensus Metrix.
The No. 1 U.S. supermarket chain said it expected full-year same-store sales excluding fuel to either remain flat or rise as much as 1 percent.
The company, whose chains include Ralphs and Fred Meyer, forecast full-year earnings of $2.21-$2.25 per share. The midpoint of this range meets analysts' average estimate of $2.23 per share.
Kroger said it expected the operating environment in the first half of this year to be similar to the second half of 2016, but that second-half 2017 results would likely improve.
Arguably, however, pricing competition in the industry is set to intensify this year, with Wal-Mart reportedly running a new price-comparison test to knock out competition from German discount grocery chain Aldi and Kroger.
Target, keen to stay relevant in the fray, said on Tuesday it would sacrifice full-year margins to keep its prices competitive. Kroger's shares had already fallen about 4 percent this week after news of Wal-Mart and Target's new pricing strategies.
Net income fell to $506 million, or 53 cents per share, in the fourth quarter ended Jan. 28, from $559 million, or 57 cents per share, a year earlier.
Analysts on average expected earnings of 52 cents per share.
Kroger said net sales rose 5.5 percent to $27.61 billion, beating analysts' average estimate of $27.31 billion, according to Thomson Reuters I/B/E/S.