Price wars hurt Ralphs

Parent company Kroger took a $1.05 billion asset writedown in the third quarter, most of that directed at the Socal-based supermarket chain. The sour economy - and with it, the intense price wars with other chains - have taken a toll. From the LAT:

"The economy in California is as weak as any in the country," said Mike Schlotman, Kroger's chief financial officer. "Unemployment in California is at record levels at 12.5%, well above the national average. Over two-thirds of those who are unemployed live in Southern California, where Ralphs operates."

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Changes in the local economy since then prompted Kroger to take another look at how it valued the chain on its books. Many companies have written down the value of such tangible assets as real estate, reflecting declines in the value of a business' trade because of the recession.

Kroger reported a third-quarter loss of $874.9 million, compared with a profit of $237.7 million a year earlier. Sales inched higher. One revealing sidelight of today's conference call with analysts: CEO David Dillon says the use of food stamps is as high as he's ever seen.

It affects the sales cycle in every state differently because each state has a different process to how they pay out the food stamps. Sometimes it's the first of the month, sometimes it's scattered between the first and the 10th and sometimes it's stretched all through the whole month. But on the whole, we have seen an exaggeration of what's happened at the beginning of the month and the end of the month. The end of the month for us has been poorer than we are used to seeing; the beginning of the month a little bit stronger than we have been used to seeing.

By the way, shoppers spent less on the Thanksgiving holiday than had been expected.