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Kroger said yesterday that its third quarter net sales were up 5.9 percent to $26.56 billion, with net income falling to $391 million from $428 million during the same period a year earlier.

Same store sales, excluding fuel, were up 0.1 percent.

Forbes reports that "company executives attributed the quarter's results to the widespread deflation in food commodity costs, which has seen the price of beef, pork and chicken drop as much as 18% compared to year-ago levels. The USDA's economic research arm recently said that by the end of the year, beef and veal prices will have declined by 6.75% to 5.75% percent for 2016 and will decrease another 1% to 2% percent in 2017. Given this environment, the USDA has warned that 2016 could be the first year since 1967 that retail food prices reflect annual deflation -- which is good news for consumer wallets, but something that is squeezing sales at companies like Kroger."

Kroger CEO Rodney McMullen put it this way: "We’re in the middle of the cycle right now and it’s not fun."
KC's View:
"Middle of the cycle" means that the deflationary run, which usually lasts for five quarters or so, probably has another six months or so to go. Companies just have to do their best, understanding that there is a light at the end of the tunnel, and that they have to see the bright side and take advantage of the opportunity that deflation offers.

McMullen's take: "A silver lining is that it reveals to us how we can run our business better. It is really tough when you're in it, but we'll be in a position to benefit from the changes we're making today once we're out of this cycle."