Kroger Profit Leaps but Its Stock Slides

CINCINNATI —  Kroger Co.’s fiscal third-quarter earnings rose 19%, but the departure of two top executives and worries about fourth-quarter results sent shares of the largest U.S. supermarket company down 26% to a two-year low on Monday.

Robert Miller, 55, Kroger’s chief operating officer, left to take the top post at drugstore retailer Rite Aid Corp. Miller had been chief executive of Fred Meyer Inc. before it was acquired by Kroger.

Three other officials also joined Rite Aid, including Mary Sammons, 53, who had been running the business for Kroger. Kenneth Thrasher was named to succeed Sammons.

“The departures are being viewed as a loss to Kroger and the grocery industry,” said Charles Cerankosky, an analyst with McDonald Investments Inc.

Kroger shares plunged $5.25 to close at $15.31 on the New York Stock Exchange. That may have helped pull rival Safeway’s shares down $3.31 to $32.50.

By contrast, Rite Aid surged $3.38 to $11.63 on the NYSE.

Some analysts also said they were disappointed with Kroger’s forecast that fourth-quarter earnings would be 37 cents to 40 cents a share. Kroger was expected to earn 40 cents, according to earnings-estimate tracker First Call Corp.

Kroger’s third-quarter profit was in line with First Call estimates. Profit from operations in the quarter ended Nov. 6 rose to $202 million, or 24 cents a share, from $170 million, or 20 cents, a year earlier. Sales fell 10% to $10.3 billion from $11.5 billion.

Adjusting for a change in Kroger’s fiscal calendar and excluding results from stores sold during the year, sales rose 6.6%.

Kroger, which bought Fred Meyer in May for $13.5 billion, has used its increased size to get better prices from suppliers. It is also introducing new store-brand products, which give it more profit than the brand-name food and general merchandise it sells from other companies.

But sales at stores open at least a year rose just 1.6% in the third quarter.