CINCINNATI – Kroger Co. disclosed plans Tuesday to cut 1,500 jobs as the nation's largest supermarket operator reported its third-quarter earnings fell 33 percent due to the sluggish economy and one-time expenses. It forecast lower earnings than expected for the fourth quarter.
In early trading on the New York Stock Exchange, Kroger shares tumbled 12 percent, or $2.79 a share, to $20.51.
The job reduction affects mostly management and clerical jobs and is to be done over 12 months during 2002, the company said. The cutback amounts to less than 0.5 percent of the company's total work force of 312,000 people.
Earnings for the quarter ended Nov. 10 totaled $133.1 million, or 16 cents per share, down from $200.9 million, or 24 cents a year ago. That included third-quarter expenses of $10 million for systems conversions, $110 million for store closings and related costs, and $81 million for energy contracts in California.
Without those expenses, Kroger would have earned $258.6 million, or 32 cents per share, for the quarter.
That matched the consensus forecast of analysts surveyed by Thomson Financial/First Call.
Sales in the quarter rose 3.8 percent to $11.38 billion from $10.96 billion last year.
``We were not satisfied with Kroger's sales, which were softer than expected because of the weak economy and challenging competitive conditions in certain markets,'' said Joseph A. Pichler, Kroger chairman and chief executive officer.
Pichler said the company continues to experience softer-than-expected sales in jewelry, floral and general merchandise categories because of the recession.
As a result, Kroger expects to report earnings per share in the range of 46 cents to 48 cents for the fourth quarter, excluding costs related to a merger and certain charges.
The Thomson Financial/First Call survey showed analysts expect earnings of 50 cents a share for the fourth quarter.
For the first nine months of its fiscal year, Kroger earned $692 million, or 84 cents a share, up from $509 million, or 60 cents a share, a year ago.
Nine-month revenue rose to $37.97 billion from $36.31 billion a year ago.
As part of the work force reduction, the company plans to merge one existing division into two adjacent marketing areas. That will add 75 to 100 jobs at Kroger's Cincinnati headquarters as merchandising and purchasing functions are centralized.
Some employees affected by the cutback may be able to transfer within Kroger, while the others will receive severance benefits based on years of service.
The Cincinnati-based company became a nationwide grocer by absorbing West Coast competitor Fred Meyer Inc., of Portland, Ore., in 1999. Kroger operates 2,401 supermarkets and department stores in 32 states under approximately two dozen names, including Kroger, Ralphs, Fred Meyer, Food 4 Less, King Soopers, Smith's, Fry's and Fry's Marketplace, Dillon, QFC and City Market.
Kroger also operates 790 convenience stores, 426 jewelry stores, 177 supermarket fuel centers and 41 food processing plants.