New York (AFP)
Shares of US retailers were under renewed pressure Thursday after US supermarket giant Kroger cut its profit forecast, citing higher labor and e-commerce costs and dogged pricing competition.
The company's share price plunged 17.8 percent in midday trading to $24.89 after it cut its 2017 profit forecast by about 20 cents to $2.00 to $2.05 per share.
Kroger, one of the biggest US retailers by revenue after Wal-Mart Stores bringing in $115.4 billion in 2016, has introduced higher starting wages in key markets, elevated spending on digital technology and lowed prices to stay competitive with other grocers.
"We are making very deliberate and targeted investments in line with our Customer First Strategy," Kroger chief financial officer Mike Schlotman said.
"These investments enable us to connect with our customers in a deeper way and increase our market share over time."
In addition to technology investments, Kroger, like Wal-Mart, is investing in stores to improve the shopping experience, including 175 major remodels in 2017.
Kroger projected $3.2 to $3.5 billion in capital spending this year, in the same range as the last two years.
The news spread to other retailers that sell groceries, with shares of Wal-Mart down 1.6 percent, Target 3.6 percent and Costco Wholesale 1.3 percent.
And the already battered retail sector suffered smaller declines, with Macy's shedding 0.4 percent and Gap 1.0 percent.
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