Kroger shares tumbled on Friday after the nation’s largest supermarket chain reported an 8% decline in quarterly profit as intense price competition cut into its margins.

As of Thursday’s close, the stock, once a Wall Street darling, had fallen nearly 35% this year and it slid another 7.5% to $21.06 in Friday’s session even though Kroger’s second-quarter report showed some positive signs, including a larger-than-expected 0.7% gain in same-store sales.

The increase came after two straight quarters with same-store sales declines. Analysts had expected a 0.4% gain.

Kroger’s earnings of 39 cents a share matched expectations while revenue of $27.6 billion just beat the consensus estimate of $27.5 billion. But net income fell to $353 million from $383 million, or 40 cents per share a year ago.

“We returned to positive identical supermarket sales growth in the second quarter,” CEO Rodney McMullen said in a news release. “We had strong growth in both loyal and total households. Traffic is up, unit movement is up, market share is up, and our customers’ price perception is excellent and continues to improve.”

Kroger has been hit by a discounting war on staples like milk and eggs and, according to CNBC, “has taken the worst beating of any supermarket chain since Amazon announced its plans to acquire Whole Foods on June 16.” Analysts have also been watching the effects of Walmart’s price cuts and the entry of German deep discounter Lidl in the U.S. this summer.

Kroger’s operating margin of 2.46% in the second quarter was down from 2.5% in the year-ago period.

However, Food Dive noted that Kroger’s price cuts, while painful, “have helped the grocer grow its market share in a very competitive environment, and are seen by analysts as a necessary step.”

“Kroger is in a much better position to weather this storm than many other players,” Neil Saunders, managing director of GlobalData, wrote in a client note. “Its size and scale afford the company much more flexibility on pricing and provide more scope for cost savings elsewhere in the business to offset such reductions.”

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