Kroger raising the bar on low prices

Kroger raising the bar on low prices - WSJ

NEW YORK (Dow Jones)--Kroger Co. (KR), touted as the lowest-priced traditional supermarket chain, is raising the bar on low prices as it battles retail titan Wal-Mart Stores Inc. (WMT) for food dollars. Further price cuts at Kroger caused the second-largest food retailer behind Wal-Mart to post worse-than-expected third-quarter results Tuesday and cut guidance for the year. Shares of other grocery-store operators plunged as well on fears that price competition will deepen in 2010.

Kroger shares were off 11.9% in recent trading, at $20.14. Safeway Inc. (SWY) was down 6.6% to $20.96 and Supervalu Inc. (SVU) shed 8.4% to $13.23. Wal-Mart shares, meanwhile, slid 0.6% to $54.62.Kroger also cited cautious consumer spending and food deflation as hurting sales in an environment that Chairman and Chief Executive David Dillon said was "more challenging than we anticipated."

"Some are choosing to be more disciplined in their spending and are buying down, while others are holding back altogether on purchases because they simply don't have the money to spend," Dillon said during a call with analysts.

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