Shares of Kroger are falling sharply after the grocer's costly modernization plan dragged down profits during the fourth quarter.

The Cincinnati chain posted net income of $259 million, or 48 cents per share. That's down from last year's $854 million and per-share earnings were four cents short of Wall Street expectations, according to a survey by FactSet.

Kroger shares fell more than 12 percent Thursday in the worst day of trading this year.

In 2018, Kroger initiated a three-year plan to increase digital sales, redesign stores and invest in popular store brands.

Kroger invested $3 billion last year and expects to at least match that this year.

But sales dropped 9.5 percent in the final three months of the year to $28.1 billion, which was also short of analyst projections.