Kroger Co. on Thursday posted better-than-expected earnings in its first quarter as the grocer also lifted a key sales target for the year.
Shares of Kroger, up 13.6% this year, added 1.5% in premarket trading.
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For the year ending in January, Kroger now expects to post same-store supermarket sales growth of 3.5% to 4.5%, excluding fuel. It had previously forecast 3% to 4% growth in the metric. The company backed its earnings outlook.
"We are managing through a volatile operating environment, with fuel margins normalizing compared with last year's record highs, inflation in some commodities and deflation in others," said Chief Executive Rodney McMullen in a news release.
Cincinnati-based Kroger has been taking a bigger share of the food-retail market, which has broadened in recent years to encompass big-box giants like Wal-Mart Stores Inc. and dollar stores. The company also has been buoyed by acquisitions, such as its deals for Harris Teeter, a higher-end supermarket chain, and Vitacost.com, which provided access to online ordering and delivery.
For the period ended May 23, sales at locations open at least 15 months, excluding fuel, rose 5.7%. Consensus Metrix had forecast same-store sales growth at 4.4%.
Overall, Kroger reported a profit of $619 million, or $1.25 a share, up from $501 million, or 98 cents a share, a year earlier.
The prior year period's results included some charges to restructure pension obligations.
Revenue edged up 0.3% to $33.1 billion.