Kroger (NYSE:KR) on Thursday raised its forecast for the year after stronger third-quarter sales topped Wall Street expectations and inflation continued to push up the prices shoppers pay for milk, eggs and other groceries.
Kroger CEO Rodney McMullen said the company is attracting shoppers by offering value. In a news release, he said that is “resonating with shoppers and driving increased customer loyalty” with its private label grocery brands, affordable fresh foods, data-driven promotions and fuel rewards program.
Grocery has been a strong driver of retail sales as inflation hovers near four-decade highs. As some shoppers skip over big-ticket items or pull back on discretionary purchases, retailers that sell food and necessities have attracted a steadier stream of customers.
Earnings per share were 88 cents adjusted vs. 82 cents expected, on revenue of $34.2 billion vs. $33.96 billion expected
At Kroger, identical sales rose 6.9%, excluding fuel, in the third quarter. The industry-specific metric includes sales at supermarkets that have been operating continuously for at least 15 months. That exceeded expectations of 4% growth, according to FactSet.
Net income in the third quarter fell to $398 million, or 55 cents a share, from $483 million, or 64 cents a share a year earlier.
Kroger announced in October that it plans buy its competitor, Albertsons, in a deal valued at $24.6 billion. The acquisition, if approved, would combine the second and fourth largest grocers in the country by revenue, according to data from Numerator, a market researcher.
KR shares dipped, though, $1.11 or 2.3%, to $48.08 to start Thursday.
