Dec 10, 2003 By Jennifer Bundy Associated Press Writer 2 min read

CHARLESTON, W.Va. (AP) – Kroger Co. and a grocery labor union have tentatively agreed to a contract, setting up a Thursday vote in which 3,300 workers in West Virginia, Ohio and Kentucky will decide whether to end a two-month strike. The labor troubles have hurt the supermarket giant, which reported Tuesday that third quarter earnings fell 57 percent, primarily because of the strike. The company also reduced its forecast for the rest of the year.

Negotiators worked out an agreement Sunday and Monday, said Jim Lowthers, president of United Food and Commercial Workers Local 400.

The sides came together at a federal mediator’s request.

Lowthers would not discuss details of the agreement but acknowledged that health care concerns – the primary sticking point – had been addressed.

Kroger spokesman Archie Fralin also declined to provide contract details, but said it could take up to 10 days to reopen grocery stores if union members ratify a new contract this week. The chain has closed 44 supermarkets in the three states.

Union workers have been off the job since Oct. 13, when contract talks with the Cincinnati company fell apart.

Shares of Kroger were down 84 cents, nearly 5 percent, at $17.05 in trading on the New York Stock Exchange, after the company posted the sharply lower profits.

For the three months ending Nov. 8, Kroger earned $110.2 million, or 15 cents per share, with the labor disputes reducing earnings by 12 cents per share.

The figure was well below the 29 cents per share analysts surveyed by Thomson First Call had forecast. A year earlier, the company earned $254.6 million, or 33 cents per share.

Sales for the third quarter increased 3.8 percent to $12.1 billion, compared with $11.7 billion in 2002.

The company also noted that full-year earnings, excluding labor disputes, would be less than $1.45 per share. Analysts surveyed by Thomson First Call had been expecting $1.53.

Earnings for the first nine months were $652 million, or 86 cents per share, compared with $823.9 million, or $1.03 per share, in 2002. Nine-month sales rose to $40.8 billion from $39.3 billion.

Kroger operates 2,519 supermarkets and multi-department stores in 32 states under the names Kroger, Ralphs, Fred Meyer, Food 4 Less, King Soopers, Smith’s, Fry’s and Fry’s Marketplace, Dillons, QFC and City market. The company also operated 794 convenience stores, 444 jewelry outlets, 412 supermarket fuel centers and 41 food processing plants.

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On the Net:

http://www.kroger.com

AP-ES-12-09-03 1048EST