Kroger raises underlying sales outlook

(Sharecast News) - American supermarket group Kroger delivered a mixed set of result on Thursday, raising its underlying sales outlook despite missing revenue estimates for the second quarter. The company, which operates more than 2,700 stores under a variety of banner names as well as 35 food production and manufacturing facilities, reported that identical sales excluding fuel increased 3.4% over the second quarter, well ahead of the 2.8% increase expected.

However, total company sales were flat on last year at $33.9bn, missing the $34.1bn consensus forecast.

Operating profit increased to $863m from $815m, with adjusted earnings per share rising to $1.04 from $0.93, beating the $0.99 estimate. The bottom line was helped by an improvement in the gross margin to 22.5% from 22.1%, attributable to the sale of Kroger Specialty Pharmacy, and lower costs.

Looking ahead, Kroger now expects identical sales excluding fuel to rise by 2.7-3.4% this year, up from June's guidance of 2.25-3.25%, while operating profit guidance has been narrowed to $4.8bn-4.9bn, from $4.7bn-4.9bn.

"Kroger's second quarter results reflect continued momentum in our business. Sales growth has been strong, led by pharmacy, eCommerce and Fresh, and we are encouraged by the improvement in grocery volumes," said chief financial officer David Kennerley.

Shares were up 0.3% at $67.23 by 1009 in New York.