SFM - Margin concerns continue to pressure grocery store stocks

Grocery store stocks fell again on Friday after inflation concerns hit the sector after Kroger’s (NYSE:KR) earnings report on Thursday. Shares of prominent sector constituents Albertsons Companies (ACI), Weis Markets (WMK), Sprouts Farmers Market (SFM), Ingles Markets (IMKTA), and Grocery Outlet Holding Corp (GO) among others all fell by more than 3%. Kroger (KR) itself led declines, dropping nearly 7% at intraday lows, adding to the prior day’s declines.  The impetus for the crash among the typically defensive names is, as it is in many industries, inflation. In short, analysts are uncertain about the prospects of consumers continuing to eat cost increases without significantly augmenting spending habits. “Grocers have been operating in arguably the best environment in history, but these days seem numbered,” Wells Fargo analyst Edward Kelly told clients. “We fear that rising elasticity/channel shift as consumers become stretched starts to yield margin pressure just as inflation decelerates.” Overall,

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Margin concerns continue to pressure grocery store stocks