Harris Teeter Buy Helps Kroger Post 1Q Beat

Kroger (NYSE:KR) beat Wall Street forecasts with a first-quarter profit that rose 4.2%, thanks in part to the addition of Harris Teeter Supermarkets.

The company also raised its guidance to per-share earnings of $3.19 to $3.27 for the full year. Kroger previously expected $3.08 to $3.16. It anticipates identical-store sales, excluding fuel, to rise 3% to 4%, up half a percentage point from prior guidance.

Shares jumped 5.1% to $49.70 in recent trading. Through Wednesday’s close, Kroger was up 19.6% since the start of the year.

Kroger reported earnings of $501 million, or 98 cents a share, for the period ended May 24, compared to $481 million, or 92 cents a share, in the year-ago quarter. Excluding pension charges and other one-time items, adjusted earnings checked in at $1.09 a share.

Revenue improved 9.9% to $32.96 billion, or 11% when excluding fuel sales. Identical-store sales were up 4.6%.

Analysts were looking for an adjusted profit of $1.05 a share and revenue of $32.64.

Kroger also announced it reached agreements to exit two multi-employer pension funds. The $56 million needed to restructure the obligations was included in the company’s first-quarter charge.

Kroger has maintained strong sales amid tepid consumer spending, given its portfolio of value-oriented grocery stores. The nation’s largest supermarket company operates its namesake Kroger stores as well as Ralphs, Food 4 Less and others.

In January, Kroger completed its $2.4 billion deal for Harris Teeter, a higher-end grocery chain with 200 stores. The Cincinnati-based company was also said to be considering a bid for Safeway (NYSE:SWY), which agreed in March to sell itself to an investment group led by Cerberus Capital Management.