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Kroger Stock Leads S&P 500 On Q3 Earnings Beat, Profit Guidance Lift As Grocery Demand Booms

Kroger is forecasting stronger full-year profits as sales get a boost from the highest levels of food price inflation in more than a decade and the ongoing boom in pandemic-era grocery demand.

Kroger  (KR) - Get Kroger Co. Report shares surged to the top of the S&P 500 Thursday after the biggest U.S. grocery chain posted stronger-than-expected third quarter earnings and boosted its full-year profit guidance as food price inflation keeps demand for in-home meals elevated heading into the final months of the year.

Kroger said adjusted earnings for the three months ending in October, the group's fiscal third quarter, were pegged at 78 cents per share, up 9.9% from the same period last year and firmly ahead of the Street consensus forecast of 66 cents per share. Group revenues, Kroger said, rose 7.4% to $31.9 billion, again topping analysts' estimates of a $31.23 billion tally, while Digital sales rose 103% from 2019 levels.

Looking into the final half of its financial year, Kroger said it sees adjusted earnings in the range of $3.40 to $3.50 per share, up from its prior forecast of $3.25 to $3.35 per share, with same-store sales rising between 13.7% and 13.9% on a two-year basis.

"Kroger's strategy to lead with fresh and accelerate with digital continues to connect with our customers," said CEO Rodney McMullen. "Our agility, and the commitment from our amazing associates, is allowing us to navigate current labor and supply chain conditions and provide the freshest food at affordable prices across our store and digital ecosystem."  

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"Kroger is in a position of strength. We are committed to delivering for our associates, customers, and communities, and we remain confident in our ability to deliver total shareholder returns of 8% to 11% over time," he added.

Kroger shares were marked 12.5% higher in early Thursday trading following the earnings release to change hands at $45.25 each. 

October retail sales rose 1.7% from the previous month to a collective $638.2 billion, the Commerce Department said on November 16, well ahead of the Street consensus forecast of a 1.2% gain, and 16.3% higher from the COVID-hit period in the fall of last year.

U.S. consumer price inflation accelerated to the fastest pace in three decades last month, data from the Bureau of Labor Statistics indicated last week, as record-high energy prices and supply chain disruptions lifted the heading reading to 6.2%.

So-called core inflation, which strips-out volatile components such as food and energy prices, rose 0.6% on the month, and 4.6% on the year, the report noted, with both readings topping the Street consensus forecast.