More Store Brands, Shorter Lines Help Boost Kroger Earnings

Inside A Grocery Co. Grocery Store Ahead Of Earns Figures
Daniel Acker/Bloomberg via Getty Images
CINCINNATI -- Kroger said its fiscal second-quarter net income climbed 14 percent, helped by lower charges as revenue increased. The country's largest traditional supermarket operator also lifted the low end of its fiscal 2013 outlook for a key revenue metric.

Shares edged higher in Thursday morning trading.

Kroger Co. (KR), which owns Ralphs, Fry's, its namesake stores and others, earned $317 million, or 60 cents a share, for the quarter ended Aug. 17. That compared with $279 million, or 51 cents a share, in the 2012 second quarter.

The results were just above the 59 cents a share that analysts polled by FactSet expected, on average. The latest quarter included an accounting-related charge of $13 million, compared with a $35 million charge in the prior-year period.

Revenue rose 5 percent to $22.72 billion from $21.73 billion, topping Wall Street's estimate of $22.69 billion.

Kroger and other supermarket companies are trying to adapt to a shifting industry. Shoppers are increasingly getting groceries at big-box retailers such as Walmart Stores (WMT), Target (TGT), drugstores and dollar stores that have expanded their food sections.


Kroger has worked on shortening checkout wait times, expanded its store-brand lineup and invested in making its loyalty program more sophisticated.

Looking ahead, the Cincinnati company now expects fiscal 2013 revenue at supermarkets open at least a year to increase about 3 to 3.5 percent, excluding fuel. Prior guidance was for a 2.5 to 3.5 percent rise. Wall Street was forecasting a 3.3 percent gain.

Kroger still expects full-year earnings in a range of $2.73 to $2.80 a share. Analysts predict earnings of $2.80 a share.

The stock added 65 cents to $38.32 in trading after Thursday's opening bell. Shares have traded between $22.90 and $39.98 in the past 52 weeks, and are up about 45 percent since the start of the year.

Increase your money and finance knowledge from home

Introduction to Preferred Shares

Learn the difference between preferred and common shares.

View Course »

Managing your Portfolio

Keeping your portfolio and financial life fit!

View Course »

Add a Comment

*0 / 3000 Character Maximum