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.”
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.)