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Kroger Co. is not having the strongest week. In addition to announcing earnings that missed analyst estimates and weak same-store sales Thursday, the grocer's stocks took a dive Friday following the announcement of Amazon's acquisition of Whole Foods Market.
Kroger’s shares plummeted 19% Wednesday after reporting a 0.2% decline in Q1 same-store sales, marking the grocer’s largest one-day drop in over 17 years, the Wall Street Journal reports. The chain is the largest traditional grocery chain in the country, and CEO Rodney McMullen said it will lower prices and boost customer service, partly by increasing wages, to compete in a tightening market.
Market research firm Nielson said discount grocers and online orders are taking a growing chunk of sales away from traditional grocery stores. That pressure is not expected to subside soon, with German discount chains Aldi and Lidl both expanding deeper into U.S. markets. Lidl opened its first U.S. locations this week, and Aldi announced plans to invest $5B into its U.S. stores over the next five years to open an additional 900 locations.
Amazon is also pressuring the grocery sector. The company agreed to acquire Whole Foods for $13.7B Friday and recently launched its grocery pickup business in Seattle.
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