Kroger First-Quarter Profit Tops Estimates; Shares Rise Most in 15 Months

Kroger Co., the largest U.S. grocery-store chain, reported first-quarter profit that exceeded analysts’ projections, sending the shares up the most in 15 months.

Net income declined 14 percent to $373.7 million, or 58 cents a share, the Cincinnati-based company said today in a statement. That compared with the 54-cent average of estimates compiled by Bloomberg. Merchandise costs climbed 11 percent.

Kroger struck a better balance in offering discounts to increase traffic, according to Scott Mushkin, an analyst at New York-based Jefferies & Co. Kroger has faced escalating competition from Wal-Mart Stores Inc., which has slashed prices on grocery items like meats and dairy.

“The environment with Wal-Mart and other stores has gotten very competitive,” Mushkin said in an interview. “Kroger curtailed some of their self-inflicted wounds by pulling back couponing, but not all of it.”

Kroger rose 89 cents, or 4.4 percent, to $20.97 at 10:04 a.m. in New York Stock Exchange composite trading. Earlier they rose as high as $21.44, the biggest gain since March 2009.

Revenue advanced 8.7 percent to $24.8 billion in the period ended May 22, helped by fuel sales. Profit was $435.1 million, or 66 cents, in the year-earlier quarter.

(Kroger began a conference call at 10 a.m. New York time to discuss the results. To access the call, go to http://www.kroger.com.)

To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.