U.S.’s biggest supermarket operator, Kroger Co. (NYSE: KR) today reported better-than-expected second-quarter earnings and also raised its full-year earnings outlook.
David B. Dillon, Chairman and CEO of Kroger, said that he is pleased with the company’s strong performance in the second quarter. Dillon said that KR shareholders once again benefited from the company’s Customer 1st strategy. He added that increased customer loyalty and solid cost controls allowed the company to grow sales, profitability and shareholder value.
For the second quarter ended August 11, KR reported earnings of $0.51 per share, beating Street estimates of $0.49 per share.
Total sales for the quarter, including fuel, rose 3.7% to $21.7 billion, slightly below Street estimates of $21.9 billion. Excluding fuel, total sales for the second quarter rose 3.8%.
KR’s FIFO gross margin for the quarter was 20.63%. Excluding retail fuel operations, the company’s FIFO gross margin fell 43 basis points in the second quarter.
Kroger said that as a result of strong first half performance and higher-than-expected share repurchase activity, it is raising its fiscal 2012 earnings forecast. The company now expects full-year earnings to be between $2.35 per share and $2.42 per share, compared to previous earnings guidance range of $2.33 per share to $2.40 per share. Analysts expect Kroger’s full-year earnings to come in at $2.37 per share.
Kroger executives noted that they do not expect the U.S. drought to have a significant impact on grocery prices this year. COO Rodney McMullen said in a conference call that if the drought does have any impact, it would be very late in the year.
Despite posting better-than-expected earnings for the second quarter and raising full-year earnings outlook, KR shares fell in trading today. KR shares fell to an intra-day low of $22.26 in trading today before finishing the day 1.60% lower at $22.73. Year-to-date, the stock has fallen 6.15%, underperforming the S&P 500.
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