According to this morning's Q2 earnings release, Kroger Co (NYSE: KR) swung to a net loss in its second financial quarter as sales failed to meet expectations. Its shares are still trading up this morning.  Three items worth noting:

Kroger to settle opioid claims

On Friday, the supermarket chain agreed to pay $1.40 billion to settle opioid claims but said that charge does not hurt its ability to close the pending merger with Albertsons.

The stock kept resilient today primarily because the retail giant said it still sees its adjusted earnings to fall between $4.45 a share to $4.60 a share this year on up to 2.0% same-store sales growth. According to its CEO Rodney McMullen:

While we expect environment to remain challenged, we’re committed to delivering exceptional value for our customers, and investing in our associates … to generate attractive returns for shareholders.

Kroger shares are still down some 5.0% versus their year-to-date high.

Kroger’s second-quarter financial highlights

• Lost $180 million that translates to 25 cents per share
• Had $732 million ($1 per share) of net income a year ago
• Adjusted EPS printed at 96 cents as per the press release
• Net sales declined 2.3% year-over-year to $33.85 billion
• Consensus was 91 cents a share on $34.12 billion sales

A 1.0% annualised growth in same-store sales also came in shy of Street estimates. CEO McMullen added in a press release this morning:

By investing in price and providing more personalised offers, we’re helping customers stretch their budgets and manage ongoing effects of reduced government benefits, inflation, and higher rates.

Kroger inks a deal with C&S Wholesale Grocers

C&S Wholesale Grocers also said today that it will buy select stores as well as other assets from Kroger for about $1.9 billion – a deal that will enable the latter to complete its merger with Albertsons.

Other assets in the said agreement refer to private label brands, distributions centres and offices.

According to Kroger, it may have to unload another 237 stores to C&S in pursuit of regulatory clearance to acquire Albertsons. The wholesale grocery supply company will pay more for the additional stores, as per the press release.

Agreement includes sale of the QFC Mariano’s and Carrs brand names and exclusive licensing rights to Albertsons brand name in Arizona, California, Colorado and Wyoming.

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