Kroger raises 2020 profit forecast despite sales miss

Digital sales more than doubled, but was down compared with last quarter's 127% growth

Kroger Co raised its annual profit forecast on Thursday, although the U.S. supermarket chain missed expectations for quarterly sales as the pace of its coronavirus-driven online growth eased.

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The company like many grocers benefited during the peak of coronavirus-led lockdowns due to a surge in online shopping for cooking and household essentials, but that demand has waned as restrictions eased in the second half of the year.

Although its online sales more than doubled in the third quarter ended Nov. 7, they still fell short of a 127% rise it recorded in the preceding quarter.

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A spike in coronavirus cases, however, has led to a pick up in sales, prompting the retailer to reimpose a purchase limit on essential products like paper towels, disinfecting wipes and hand soap ahead of the busy holiday season.

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KRKROGER33.70+0.56+1.69%

Kroger now expects adjusted per-share profit for 2020 of $3.30 to $3.35, compared with its prior range of $3.20 to $3.30 and Refinitiv IBES estimate of $3.30.

It also expects same-store sales, excluding fuel, to rise around 14%, compared with its prior forecast of a more than 13% growth. Analysts on average were expecting a 13.08% rise.

"Looking toward 2021, we believe that our performance will be stronger than we would have expected prior to the pandemic," Chief Financial Officer Gary Millerchip said.

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Excluding items, the company earned 71 cents per share in the reported quarter, beating expectation of 67 cents.

The company's quarterly sales rose to $29.72 billion from $27.97 billion a year earlier, but still missed analysts' average estimate of $29.97 billion.

Shares of the company were down about 4% in premarket trading. They have risen about 11% so far this year.

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Arun Koyyur and Anil D'Silva)

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