Kroger Profit Tops Estimates After New Locations Help Salesby
Kroger Co., the largest U.S. supermarket chain, reported third-quarter profit that topped analysts’ estimates and raised its annual forecast after new locations and organic products fueled sales.
Net income rose 18 percent to $428 million, or 43 cents a share, Cincinnati-based Kroger said in a statement on Thursday. Analysts estimated 39 cents, on average.
The results help validate Kroger’s expansion plan, which involves acquiring smaller grocery chains and adding more organic products. Last month, Kroger agreed to buy Midwestern supermarket chain Roundy’s Inc. for about $800 million, including debt. It previously bought other regional stores and scooped up Harris Teeter Supermarkets Inc. last year. Kroger’s revenue also has been helped by a more aggressive natural-foods business.
The company said profit will be as much as $2.04 a share this fiscal year, excluding some items. Kroger previously estimated as much as $1.98 a share, and analysts project $1.99, on average.
The shares rose 4.7 percent $39.91 on Wednesday in New York. Kroger has gained 24 percent this year, while the Standard & Poor’s 500 Index is little changed.
Comparable-store sales, excluding fuel, increased 5.4 percent in the quarter ended Nov. 7. Analysts estimated a gain of 4.5 percent, according to Consensus Metrix.
Kroger’s Simple Truth line of natural and organic goods has grown to more than $1 billion in annual sales as more Americans attempt to eat healthier. The chain has had success pulling customers from pricier, higher-end chains, such as Whole Foods Market Inc., with its organic cereals, butter and herbs.
Kroger’s third-quarter revenue climbed 0.4 percent to $25.1 billion. Analysts projected $25.2 billion, on average. Lower fuel prices weighed on sales in the quarter, the company said.