Kroger 4Q Tops Street on Sales Growth

Kroger's (NYSE:KR) fourth-quarter profit beat expectations on improved sales at its older supermarkets, leading the company to forecast better-than-expected growth in 2012 and sending its shares 2.3% higher Thursday morning.

The Cincinnati-based grocery store operator reported a net loss of $306.9 million, or 54 cents a share, compared with a year-earlier profit of $278.8 million, or 44 cents.

But excluding the effect of the UFCW pension plan consolidation, the company earned 50 cents, which is just ahead of average analyst estimates of 49 cents in a Thomson Reuters poll.

Revenue for the three months ended Jan. 28 was up 7.7% to $21.4 billion from $19.9 billion a year ago, virtually matching the Street’s view of 21.43 billion.

Sales at stores open more than a year – a key revenue metric for retailers – rose 4.9%.

“We are very pleased with Kroger's outstanding performance in fiscal year 2011 and strong fourth quarter financial results," CEO David Dillon said in a statement, attributing the gains to customer loyalty.

As the company looks farther into 2012, it anticipates same-store supermarket growth in the range of 3% to 3.5%.

It expects to grow earnings by 6% to 8% to between $2.28 and $2.38 a share, ahead of expectations. Analysts on average are looking for a full-year profit of $2.26.

Kroger projects a boost in cash flow, and says it will use the extra proceeds to fund a 1.5% to 2% increase in dividend and share repurchase programs.

In 2011, the company returned more than $1.8 billion to shareholders through buybacks and dividends, repurchasing 11.7 million shares valued at $272.4 million in the fourth quarter.