Kroger (ticker: KR) experienced a decline in stock prices on Friday as the company revealed a $1.4 billion charge in its second-quarter earnings. This charge was allocated to settle the majority of opioid claims brought against the grocery giant.
Despite this setback, Kroger’s fiscal second-quarter adjusted earnings showed positive growth, coming in at 96 cents per share. This surpassed analysts’ expectations of 91 cents per share, as reported by FactSet. However, the company fell just short of sales expectations, generating $33.9 billion instead of the anticipated $34.1 billion. Same-store sales also rose by 1%, slightly lower than the expected gain of 1.3%. Nevertheless, Kroger reaffirmed its fiscal-year guidance.
As part of their effort to address the opioid crisis, Kroger agreed to pay up to $1.2 billion to states and subdivisions. They also committed $36 million to Native American tribes for abatement initiatives. Additionally, the company has set aside about $177 million to cover attorneys’ fees and costs associated with settling the majority of opioid claims.
In a strategic move towards finalizing their proposed merger, Kroger and Albertsons Cos. (ACI) announced an agreement to sell hundreds of stores to C&S Wholesale Grocers. This transaction involves C&S acquiring 413 stores, eight distribution centers, two offices, and five private label brands from Kroger for approximately $1.9 billion.
Currently, shares of Kroger are experiencing a 1.4% decline in premarket trading, settling at $44.90.
