Profit up 4%, Kroger raises 2014 forecast

This Tuesday, June 17, 2014 photo shows a Kroger store in Houston. Kroger reports quarterly financial results on Thursday, June 19, 2014. (AP Photo/David J. Phillip)
This Tuesday, June 17, 2014 photo shows a Kroger store in Houston. Kroger reports quarterly financial results on Thursday, June 19, 2014. (AP Photo/David J. Phillip)

Kroger on Thursday reported a 4 percent jump in first-quarter profit and raised its earnings forecast for the year.

Shares of the nation's biggest supermarket operator rose more than 5 percent Thursday.

The Cincinnati company -- which also runs Ralphs, Fry's and other chains -- earned $501 million, or 98 cents per share, for the quarter. That compares with $481 million, or 92 cents per share, a year ago.

Removing nonrecurring charges, The Kroger Co. earned $1.09 per share, 4 cents better than analysts polled by FactSet had been projecting. Analysts for Bloomberg News had estimated $1.05, according to the average of 19 projections.

Revenue jumped 10 percent to $32.96 billion, which also edged out expectations due in part to a new acquisition, the grocer and pharmacy Harris Teeter.

Kroger has also boosted sales by selling more organic food. The company's Simple Truth line of natural fare, which the company has said may be a billion-dollar brand in less than two years, has helped it win customers from Whole Foods Market Inc. and Sprouts Farmers Market Inc.

"They continued to take a lot of market share," Andy Wolf, an analyst at BB&T Capital Markets, said in an interview. "They have very ambitious goals in natural foods."

Sales at established locations climbed 4.6 percent, excluding fuel. Those comparable-store sales can be a key indicator of a retailer's health because they exclude volatility from locations recently opened or closed.

Kroger now foresees fiscal 2014 adjusted earnings of between $3.19 and $3.27 per share. Previously it predicted $3.14 to $3.25 per share. The average of 24 Bloomberg analysts' estimates is $3.22.

The company also increased its full-year guidance for sales at established locations, excluding fuel. It now anticipates 3 percent to 4 percent growth. Its prior outlook was for a 2.5 percent to 3.5 percent increase.

Shares of The Kroger Co. rose $2.39, or 5 percent, to close Thursday at $49.66 after reaching $50.20, a new high, during the trading day. The shares already had gained 20 percent this year through Wednesday, compared with a 5.9 percent advance for the Standard & Poor's 500 index.

Kroger's website lists 34 grocery stores in Arkansas.

Information for this article was contributed by Leslie Patton of Bloomberg News and by The Associated Press.

Business on 06/20/2014

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