Kroger Co., the biggest U.S. supermarket operator, reported a better-than-expected quarterly profit on Friday and slightly raised its forecast for the full year, buoyed by loyal customers and its ability to keep costs in check.
The Cincinnati-based operator of Ralphs, Fred Meyer, Smith's, Food 4 Less and other stores earned $279.1 million, or 51 cents per share, in the second quarter through Aug. 11. There were fewer outstanding shares in the latest quarter.
That beat analysts' average estimate for the company to earn 49 cents a share, according to Thomson Reuters I/B/E/S. A year earlier, its net profit was $280.8 million, or 46 cents a share.
Shares of Kroger, which has outpaced rivals like Safeway Inc. and Supervalu Inc., rose 40 cents to $23.50 in premarket trading.
Kroger has a sophisticated loyalty program and is known for holding down prices, even as food costs rise. That has helped the company steal market share from supermarket rivals like Safeway and Supervalu and to hold its own against Wal-Mart Stores Inc., which sells more groceries than any other U.S. retailer.
Kroger's sales, including fuel, rose 3.9 percent to $21.73 billion, missing analysts' average estimate for sales of $21.9 billion.
Identical-supermarket sales, excluding fuel, rose 3.6 percent. Some analysts had expected a gain of around 3 percent.
Identical supermarket sales are a closely watched measure of sales at stores that have remained open without expansion or relocation for five full quarters.
Kroger said it now expects to earn $2.35 per share to $2.42 per share this fiscal year, slightly higher than its previous forecast of $2.33 to $2.40 a share. Analysts, on average, expect it to earn $2.37 per share.
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