Kroger's Rotten Quarter = Doom for Grocers

CINCINNATI ( TheStreet) -- Kroger's ( KR) earnings report, released today, provides more proof that the supermarket sector is in for a rough second half of the year.

The grocery chain cut its full-year guidance on Tuesday after missing analysts' expectations in the second quarter.

The news sent shares tumbling 7.6% to $20.49 just after the opening bell Tuesday.

During the quarter, the company earned $254.4 million, or 39 cents per share, down from $276.5 million, or 42 cents per share. Analysts expected the company to earn 44 cents a share.

Sales slipped 2% to $17.74 billion from $18.09 billion.

Kroger cut its full-year earnings guidance to $1.90 to $2 per share from a prior forecast of $2 to $2.05.

The company has been viewed by analysts as the best of one of the worst economic sectors. If that is the case, it doesn't bode well for rivals like Safeway ( SWY) or Supervalu ( SVU).

Traditional grocers have been struggling to retain customers who are looking to trade down to discounters like Wal-Mart Stores ( WMT), Costco Wholesale ( COST) and BJ's Wholesale ( BJ).

-- Reported by Jeanine Poggi in New York

Follow TheStreet.com on Twitter and become a fan on Facebook.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

More from Earnings

Tiffany & Co. Sees a Strong Market in Asia

Tiffany & Co. Sees a Strong Market in Asia

Ackman Targets Lowe's After Q1 Miss

Ackman Targets Lowe's After Q1 Miss

Walmart Snags Top Spot on Fortune 500 List for Sixth-Straight Year

Walmart Snags Top Spot on Fortune 500 List for Sixth-Straight Year

Listen: Should You Buy Cisco Now?

Listen: Should You Buy Cisco Now?

Week Ahead: Investors Keep Economy in Check as Trade, North Korea Talks in Limbo

Week Ahead: Investors Keep Economy in Check as Trade, North Korea Talks in Limbo