Kroger shares pop on Q2 earnings beat, updated guidance

Kroger shares were popping on Thursday, as investors digested the grocer’s updated guidance following a mixed second-quarter performance.

The company - the largest supermarket operator in the US - posted total sales of $33.9bn, consistent with the prior year.

Excluding fuel, sales grew 1.3%, indicating steady progress in its core operations.

Kroger’s identical sales without fuel rose 1.2%, and digital sales saw 11% growth, underscoring the company’s digital transformation efforts.

Its operating profit for the quarter stood at $815m, with earnings per share of 64 cents.

Adjusted earnings per share, excluding one-time items, was higher at 93 cents, surpassing market expectations of 91 cents.

However, Kroger’s revenue slightly missed expectations of $34.08bn, reflecting the impact of competitive market dynamics and shifting consumer spending.

Looking ahead, Kroger updated its full-year guidance, raising its forecast for identical sales growth without fuel to a range of 0.75% to 1.75%.

The company also reaffirmed its expectation for adjusted operating profit to reach between $4.6bn and $4.8bn, with full-year earnings per share projected to range from $4.30 to $4.50.

It said it remained focused on long-term growth, including its pending merger with America’s second-largest grocer Albertsons, which it said would bring additional value to customers and shareholders.

The planned merger was being strongly opposed by regulators, with the Federal Trade Commission calling it bad for both shoppers and employees in a court hearing in late August.

“Kroger achieved solid results in the second quarter demonstrating the strength and resiliency of our model,” said chairman and chief executive officer Rodney McMullen.

“We are growing households and increasing customer visits by offering a compelling combination of affordable prices and personalised promotions on great quality products, all through a unique seamless experience.

“We appreciate our associates for their focus on full, fresh and friendly, which elevates the customer experience.”

McMullen said the company’s long-term model was to consistently invest to lower prices to attract more customers, which in turn fuelled its alternative profit businesses and drove greater efficiencies.

“This flywheel enables Kroger to deliver exceptional value for customers and investing in our associates, and by doing so, we are well-positioned to generate attractive and sustainable returns for shareholders.”

At 1113 EDT (1613 BST), shares in The Kroger Co were up 6.55% in New York at $54.88.

Reporting by Josh White for Sharecast.com.