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Kroger stock leaps after grocer exceeds profit and sales forecasts, raises outlook as food-at-home trend continues – Morningstar

By Tomi Kilgore

Same-store sales jump 5.8% as CEO says more customers are ‘cooking from scratc…….

By Tomi Kilgore

Same-store sales jump 5.8% as CEO says more customers are ‘cooking from scratch and eating out less’

Shares of Kroger Co. jumped toward a three-month high Friday, after the grocery-store chain reported fiscal second-quarter profit and sales that rose above expectations and boosted its full-year outlook, citing continued strength in food-at-home trends.

Net income for the quarter to Aug. 13 rose to $731 million, or $1.00 a share, from $467 million, or 61 cents a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share rose to 90 cents from 80 cents, and beat the FactSet consensus of 82 cents.

Sales grew 9.3% to $34.64 billion, above the FactSet consensus of $34.46 billion, helped by rising fuel prices. Excluding fuel, sales increased 5.2% from last year.

Identical, or same-store sales, excluding fuel, jumped 5.8%, to exceed the FactSet consensus of 4.6% growth. Identical sales got a boost from 10.2% growth in “Our Brands” sales and an 8% rise in digital sales.

The stock (KR) ran up 6.4% in afternoon trading, putting it on track for the highest close since since June 7, and enough to make it the top performer among the SPDR Consumer Staples Select Sector exchange-traded fund’s (XLP) 33 equity components.

“Our second quarter results provide another proof point that Kroger has the right go-to-market strategy,” said Chief Financial Officer Gary Millerchip. “Our consistent execution of this strategy is building momentum in our business which, combined with sustained food-at-home trends, gives us the confidence to raise our full-year guidance.”

For fiscal 2022, the company raised its adjusted EPS guidance range to $3.95 to $4.05 from $3.85 to $3.95, and lifted its same-store sales growth outlook to 4.0% to 4.5% from 2.5% to 3.5%.

MKM Partners analyst Bill Kirk said the results and outlook shows that Kroger “shines” in a rational food retail environment. He reiterated his neutral rating and $55 fair value estimate on Kroger’s stock.

“[W]e believe the combination of fuel rewards and a top-tier private label program (+10.2%) distinguish Kroger in an environment where people are increasingly looking to: 1) limit miles driven; 2) find savings per gallon; 3) lower their food expenditures,” Kirk wrote in a note to clients.

Kroger Chief Executive Rodney McMullen spoke on the post-earnings …….


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