Kroger profit beats estimates, raises outlook
Kroger (KR) reported second-quarter earnings Thursday that beat Wall Street expectations and raised its profit and sales outlook for the year.
The Cincinnati-based supermarket chain said profit rose 9.5% from a year ago to $347 million, or 70 cents a share.
Sales rose 11.6% to $25.3 billion.
That beat Wall Street estimates of 69 cents a share and sales of $24.9 billion, according to Bloomberg.
Identical store sales excluding fuel – a key measure of the retailer's health – rose 4.8%. Kroger has grown the closely-watched metric for a jaw-dropping 43 quarters – almost 11 years of improving market share.
While rivals have struggled to grow, Kroger CEO Rodney McMullen said customers are spending more.
"Kroger's data suggests some greater confidence in the economy and less caution in spending, consistent with what we saw in the first quarter," McMullen told analysts in a conference call with Wall Street analysts. "Even so, confidence in the economy and the economic recovery is not pervasive across the board. Many of our customers are still struggling, and we continue to pursue our strategy of connecting meaningfully with all customers."
In recent weeks, rival Walmart reported mostly flat sales growth at U.S. stores during their quarter ended July 31 – results were up 0.2% at namesake discount stores, while Sam's Club stores grew 0.1%, excluding fuel impact.
Last year, the grocer reported a $317 million profit on sales of $22.7 billion. The surge in results also reflect Kroger's January acquisition of North Carolina-based Harris Teeter that added more than 200 stores in the Southeast.
Looking ahead, Kroger raised its annual earnings guidance to a range of $3.22 to $3.28 per diluted share from a previous range of $3.19 to $3.27. With 491 million shares outstanding, the company is effectively saying the annual profit will be $5 million to $15 million higher. The latest guidance suggests an annual profit of about $1.6 billion.
The company also raised its guidance for identical store sales without fuel growth to a range of 3.5 to 4.25% from a previous range of 3 to 4%. The figure is a measure of average growth at stores, excluding new stores purchased, built, closed or sold.
The company last week announced it would hire another 20,000 workers – including 1,200 in Greater Cincinnati – for stores nationwide. Kroger employs more than 15,000 workers in the region.
Kroger's stock was up 0.3% to $52.03 in late afternoon trading. Shares of the nation's largest supermarket chain are up about 30% in 2014.