Kroger Ups Revenue Target, Profit Tops Views

Dow Jones Newswires

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, 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.