Kroger has raised its profit forecasts for the full year after reporting better-than-expected figures for its first quarter. The largest supermarket chain in the US also announced a $1bn share buyback plan, further boosting investor cheer.
Kroger said it was helped by lower costs for fresh product, higher pharmacy sales, and a lower tax rate. Those factors helped raise net profit by 1.6% to $439.4m (78 cents a share), and sales by 5.8% to $29.1bn. Like-for-like sales (excl. fuel) were up 4.2%, a slight slowdown from the 4.9% growth it registered in the previous quarter, but still above analysts’ estimates.
Kroger noted that food inflation decreased faster than it had expected and was partially offset by dropping fresh produce costs. It was also helped by an influx of patients of pharmacy benefits manager Express Scripts, following the latter’s split with Walgreen earlier this year.
Kroger raised its full-year profit forecast to a range of $2.33 to $2.40 a share, from its earlier forecast of $2.28 to $2.38 a share. It reiterated that like-for-like growth is expected to grow by 3.0%-3.5%.
NamNews - Friday 15th June 2012