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CINCINNATI -- Kroger Co., which operates more than 800 convenience stores, said it would slash 1,500 jobs as 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.
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.
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.
Sales in the quarter rose 3.8 percent to $11.38 billion from $10.96 billion last year. Earnings for the quarter ended Nov. 10 totaled $133.1 million, down from $200.9 million. 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.
"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 Pichler, Kroger chairman and CEO.
Pichler said the company continues to experience softer-than-expected sales in floral and general merchandise categories because of the recession. For the first nine months of its fiscal year, Kroger earned $692 million, up from $509 million a year ago. Nine-month revenue rose to $37.97 billion from $36.31 billion a year ago.
Kroger, whose convenience brands include Kwik Shop, Quik Stop, Tom Thumb and Mini-Mart, also operates 2,400 supermarkets and 177 supermarket fuel centers.