Kroger Climbs on Earnings Beat

The grocer lifts full-year profit targets.
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Kroger (KR) - Get Report shares jumped 7% Tuesday after the grocer posted stronger-than-expected second-quarter earnings and lifted its full-year profit outlook.

The Cincinnati-based company said its second-quarter income rose to $267.3 million, or 38 cents a share, from $209 million, or 29 cents a share, a year earlier. Analysts surveyed by Thomson Financial expected Kroger to post earnings of 34 cents a share.

Sales rose to $16.14 billion from $15.14 billion the prior year. Wall Street expected sales of $16.02 billion.

Kroger's identical-store sales, or sales at stores open at least a year, climbed 5.8%, including the sale of fuel. Without fuel, identical-store sales rose 5.1%.

"Kroger's earnings-per-share growth in fiscal 2007 will be driven by strong identical sales growth, a slightly improved operating margin, and fewer shares outstanding," said David B. Dillon, Kroger's chairman and CEO. "The performance of Kroger's business through the first half of 2007 exceeded our expectations, and our momentum heading into the second half of the year causes us to raise our identical sales and earnings guidance for fiscal 2007."

Kroger now sees identical-supermarket sales growth of 4% to 5% for the year. The company expects earnings of $1.64 to $1.67 a share, up from its prior projection of $1.60 to $1.65.

Analysts, on average, expect fiscal-year earnings of $1.67 a share.

Shares of Kroger recently were trading up $1.89 to $28.91.

The supermarket's rivals also got a boost from the stronger-than-anticipated results.

Safeway

(SWY)

was adding $1.11, or 3.4%, to $33.40.

Supervalu

(SVU)

was rising 62 cents, or 1.6%, to $40.32.