Supermarket giant cuts guidance on falling food prices

Kroger Co. posted second quarter earnings that topped expectations but the chain cut its guidance for the year citing ongoing price deflation.



"If you look at the price of milk, eggs and commodities like that, they're historically low. Meat continues to be deflationary and produce is on a deflationary trend," Kroger CFO Michael Schlotman said on CNBC on Friday.



The company posted better-than-expected net income of $383 million, or 40 cents per share, down from $433 million, or 44 cents per share, in the year-ago period. Changes in Kroger employee pensions contributed to the drop in profit.



Total sales in the quarter rose 4% to $26.6 billion, from $25.5 billion last year, but below expectations.



Kroger lowered its adjusted earnings outlook for 2016 to $2.10 to $2.20 from the earlier consensus of $2.20. The company also lowered expected capital investments – excluding mergers, acquisitions and purchases of leased facilities – to $3.6 to $3.9 billion for the year. The previous expectation was $4.1 to $4.4 billion.