Kroger Co. will likely show some bruises from an ongoing price war with Wal-Mart Stores Inc. when the supermarket operator reports fiscal first-quarter earnings Thursday.
The key question will be how deep and lasting the bumps will be in order for Kroger to defend its market share. Analysts expect Kroger to continue to face pressure on gross margins this quarter, the result of a round of price cuts over the last year that it has yet to cycle.
The back-half of the year, however, looks better for Kroger as efforts to hold onto loyal customers through previous price cuts pay off.
The wild card comes from the shadow of the world's largest retailer, Wal-Mart. Kroger and other grocers are facing renewed heat from Wal-Mart's latest "Rollback" campaign, which focuses on cutting prices on grocery items. Leading up to Memorial Day, for instance, Wal-Mart heavily advertised a deal for 40-ounce bottles of H.J. Heinz Co. ketchup for $1, down from $2.42.
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