The news: Three months after raising its full-year guidance, Kroger trimmed the top end of its sales forecast in response to growing consumer price sensitivity. The retailer now expects comparable sales excluding fuel to rise 2.8% to 3%, down from 2.7% to 3.4%.

• Kroger noted that while spending among higher-income households remains strong, lower- and middle-income shoppers are feeling pinched, leading them to make smaller, more frequent trips and cut back on discretionary purchases.
• Customers are also looking for ways to stretch their budgets by turning to promotions and private-label products.

The numbers:

• Adjusted earnings per share came to $1.05, up 7.1% YoY, and ahead of the $1.03 analysts expected.
• Revenues were $33.86 billion, up slightly from $33.63 billion but short of the $34.18 billion analysts expected.
• Same-store sales, excluding fuel, rose 2.6%, trailing the expected 2.9% gain.
• Ecommerce sales rose 17% YoY in Q3, marking a sixth straight quarter of double-digit growth. The grocer said the overhaul of its ecommerce strategy—which includes shuttering three Ocado-run automated fulfillment centers and leaning more on stores and third-party delivery partners—will help its online business reach profitability next year.

Our take: Kroger is facing many of the same headwinds as other retailers.

• Inflation has outpaced after-tax wages for middle- and lower-income households since January, per the Bank of America Institute, prompting consumers to look for ways to save.
• That’s why it’s important for grocers like Kroger to emphasize value. For example, Kroger cut prices on about 1,000 items in Q3 and plans to step up promotions during the holidays to drive traffic and boost basket sizes. These efforts are critical to prevent shoppers from trading down to lower-priced options—a risk that’s even higher online, where competitors are just a click away.