Mess in Aisle Four

The Kroger Co. (Cincinnati), the nation's largest grocery retail chain, has said it must restate its earnings for the past two years after discovering irregularities in the way its Ralphs Grocery subsidiary had managed some of its finances. The deceptive practices – including spreading revenue among smaller bank accounts to evade audits, ensuring that it could meet budget targets in future quarters – took place before Kroger had purchased Ralphs in 1999 (through the purchase of the Fred Meyer Co.).

The revisions will add two cents a share to original 1998 earnings, but will take two cents a share off of 1999 earnings and one cent a share from each of the first two quarters of fiscal year 2000 earnings. The recently reported profits for the fiscal fourth quarter ending Feb. 3, 2001, will match analysts'expectations.

In unrelated hews, the retailer has tapped James W. Hallsey to be the new president of its Smith's Food & Drug Stores subsidiary (Salt Lake City). Hallsey was formerly Smith's executive vp of sales and marketing. He replaces Russ Dispense, who was named president of Kroger's King Soopers chain (Denver).