Kroger Posts Higher Profit, Stands by Year View

Kroger, the No. 1 U.S. supermarket chain, posted a higher-than-expected quarterly profit on Tuesday, as sales excluding gasoline rose.

Shares of Kroger, which stood by its full-year earnings forecast, slipped about 14 cents in early trading to $21.64.

The Cincinnati-based company, which operates stores under its own name as well as Ralphs and Food 4 Less, has faced concerns that high unemployment forced by the long recession was pressuring sales.

Kroger has been offering lower prices as it competes with retailers such as discounter Wal-Mart Stores, the largest grocery seller in the United States.

Kroger said net income rose to $435.1 million, or 66 cents per share, for the first quarter that ended May 23, from $386 million, or 58 cents per share, a year earlier. The profit topped analysts' average forecast of 61 cents per share, according to Reuters Estimates.

Total sales at Kroger, which also runs the Littman and Barclay jewelry chains, fell to $22.8 billion from $23.1 billion, weighed down by the lower price of the gasoline it sells.

The average retail price for a gallon of gas sold at its fuel pumps was 41 percent lower in the quarter than it was a year earlier. Excluding fuel sales, total sales climbed 3.9 percent.

Identical-supermarket sales, excluding fuel, rose 3.1 percent and Kroger said it still expects fiscal-year, identical-grocery store sales, excluding fuel, to increase 3 percent to 4 percent.

It also stood by its forecast for full-year, per-share earnings of $2.00 to $2.05, in line with analysts' average forecast of $2.03.

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