National supermarket chain

Kroger

(KR) - Get Report

reported a drop in first-quarter earnings, and said results were reduced by 10 cents a share due to the Southern California grocery workers' strike.

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The company still sees results for full-year 2004 coming in below those of 2003, excluding strike effects.

In the quarter ended May 22, the company earned $262.8 million, or 35 cents a share. That included a $71.6 million negative impact from the grocery workers' strike, which began in late 2003 at the company's Ralph's and Food 4 Less grocery stores and continued until February. A year ago, Kroger earned $351.5 million, or 46 cents a share, including certain items.

The Wall Street consensus was for earnings of 34 cents a share.

Sales in the first quarter rose 3.9% to $16.9 billion vs. analysts' expectations for $17.1 billion, according to Thomson First Call. Identical food-store sales rose 1.3%, including fuel sales; they were up 0.3%, excluding fuel sales.

Excluding the stores affected by the strike, Kroger said identical food-store sales in the quarter rose 1.6%, including fuel, and 0.5%, excluding fuel.

"We are pleased that Kroger continues to grow our identical food-store sales in a challenging operating environment," said CEO David B. Dillon in a statement. "But there is more to be done. We plan to continue making investments in pricing, customer service and product variety to deliver strong, sustainable sales growth."

Kroger estimates that product cost inflation, including fuel, was 2.3%, and 1.6%, excluding fuel.