The Kroger Co. (NYSE:KR) reported second-quarter adjusted earnings above analyst expectations on Friday, while revenue came in slightly below consensus and the grocery retailer lowered its full-year identical sales guidance. Shares declined 3.11% in premarket trading following the release.
For the quarter ended August 15, Kroger reported adjusted earnings per share of $1.09, compared with an analyst consensus of $1.06.
Revenue reached $34.6 billion, below the $34.65 billion estimate and up 2.1% year on year from $33.9 billion.
Identical sales excluding fuel increased 0.2%, compared with growth of 3.4% in the prior-year period. Kroger said the latest figure included a 138-basis-point headwind from the Inflation Reduction Act.
Kroger Lowers Identical Sales Forecast
Kroger reduced its full-year identical sales growth forecast excluding fuel to between 0.2% and 0.8%, from its previous guidance of 1.0% to 2.0%.
The company maintained its adjusted earnings per share forecast of $5.10 to $5.30. The midpoint of $5.20 matches the analyst consensus cited in the source.
Kroger also reiterated its full-year adjusted FIFO operating profit guidance of between $5.0 billion and $5.2 billion.
“Kroger delivered a solid second quarter, with adjusted EPS growth of 5%,” CEO Greg Foran said. “Our teams kept driving value for customers, improving execution in our stores, growing eCommerce profitably and managing costs with discipline. Improving sales momentum remains a top priority.”
CFO David Kennerley said: “Given our first half results and the macro environment, we are updating our identical sales without fuel guidance to a new range of 0.2% to 0.8%, which includes an approximately 140 basis point headwind from the Inflation Reduction Act.”
Gross Margin Rate Increases 13 Basis Points
Kroger’s FIFO gross margin rate, excluding fuel as well as rent, depreciation and amortisation, increased by 13 basis points.
The company attributed the increase to improved eCommerce profitability and media, pharmacy mix and sourcing initiatives. These factors were partly offset by higher shrink, transportation costs and increased value provided to customers.
Kroger repurchased $1.0 billion of shares during the quarter, taking year-to-date repurchases to $1.2 billion under its $2 billion authorisation.
The company also increased its dividend by 11%, marking its 20th consecutive year of dividend increases.
Kroger stock price
