Kroger Meets Estimates, Concerned by Food Stamp Cut

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Dec. 5 (Bloomberg) -- Michael Schlotman, CFO at Kroger discusses third-quarter results on Bloomberg Television’s “In The Loop.”

Your same-store sales came in at 3.5%, better than what wall street estimated.

Your forecast on the fourth quarter is between three percent and 3.5%. not much change here.

Why?

It is fairly wide range.

There are a few things going on with reduction in snap benefits.

It is early to tell how double effect us and we would definitely expect to be near the high end of that range, not the low end.

You mentioned that, cutting food stamps, about $5 billion, i believe, in this last quarter.

You are still assessing the impact, but do you expect it could have a possible big impact?

It is fairly early.

The cuts just began in november and with the holiday selling season, people obviously shop a little bit more during that time . it is difficult to assess how that consumer is going to react.

For a family of 4, -- early indications are that most of the families and households are making up reduction in snap benefits with other cash that they have -- mike, when might you know for sure what the impact is going to be?

I think it will be a little while.

When you think about the holiday season, it is a big sales time.

When you get into the holidays with business and new year's eve and the super bowl, those are days when people are more liberal with their spending and it will be difficult to assess the exact effect until we get into the first quarter.

As we look at that consumer, they have always spent a lot of cash in our stores in addition to the snap benefits.

The lower gas prices, that will help the consumer have a few more dollars in their pocket to supplement the reduction in the benefits.

What did you see during the holiday season, or have been seeing?

So far we have had a great holiday season.

We started thinking about the holiday season around halloween.

If you look at our holiday sales and merchandising candy during that timeframe, we were extremely pleased with it.

That will ride into november with a great thanksgiving season.

We saw products that we expected to sell in the quantities fly off the shelves during that time , and we are stocked and ready for gray -- well, i -- i imagine the basics -- you are selling the turkeys and the potatoes and all the basics.

What about the more discretionary items in?

Are you seeing that robust?

The group in portland have a lot of general merchandise in their stores, a lot of apparel, consumer electronics, things like that.

They had a great black friday could that they started out slow for them but if you look at black friday, the full-day, they had a nice increase in their sales and a lot of the general merchandise categories year on year.

From the start of the holiday selling season, the division that has a large amount of merchandise in their stores, 220,000-square-foot kinds of stores with general merchandise, we are pleased with how they started the season.

I didn't know this but i am told that wine enthusiasts names you wine retailer of the year.

You have had over $1 billion in wine sales, a lot of that in premium wine.

That is interesting.

You don't think of kroger as a premium wine cellar.

A lot of people don't. it is a very important category for us for a very long time.

A lot of stores with wine cellars.

. you have your scotch tasting this morning and if i was there it would have been a wine tasting if i was there.

I am pleased on multiple fronts that wine enthusiasts -- do you take any of the wine sold in kroger?

I am the cfo.

They won't let me get into the merchandising world.

They are a little smarter than that.

Mike, thank you so much.

Great to have you.

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