Kroger's Supermarkets Perform Well in 1Q, Lifts Fiscal Forecast

By Retail FOXBusiness

Supermarket operator Kroger (KR) revealed a better-than-expected first-quarter profit and lifted its fiscal 2012 forecast, sending its shares 4% higher Thursday morning.

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The Cincinnati-based retail chain said it earned $439.4 million in its latest period, or 78 cents a share, compared with a year-earlier $432.3 million, or 70 cents a share.

The results topped average analyst estimates of 72 cents, according to a Thomson Reuters poll.

Revenue for the three months ended May 19 was up 5.8% to $29.1 billion compared with $27.5 billion a year ago, narrowly below the Street’s view of $29.13 billion.

Identical supermarket sales, a key growth metric for retailers that represents sales at stores open longer than a year, jumped 4.2% in the first quarter, marking the 34th consecutive quarter of positive same-store sales growth for Kroger.

The company’s board of directors on Thursday authorized a new share buyback plan of $1 billion. The new repurchase program replaces an earlier one that was exhausted on Tuesday.

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“Our core business is growing, and we are rewarding shareholders through earnings growth, increasing dividends over time and share buybacks,” Kroger CEO David Dillon said in a statement.

The grocery giant has returned more than $1.6 billion to shareholders through buybacks and dividends over the last four quarters.

Kroger lifted its fiscal 2012 earnings forecast to a range of $2.33 to $2.40 a share, up from an earlier view of $2.28 to $2.38 a share. The company continues to anticipate identical supermarket sales growth of 3% to 3.5%.

"We were very pleased with the results of the first quarter,” Dillon said. “We exceeded our expectations, and as a result raised our earnings per share guidance for the year.”

Analysts on average are expecting Kroger to report softer full-year earnings of $2.32.