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

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

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.

“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.