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Kroger on Thursday raised its forecast for the year after its third-quarter earnings topped Wall Street expectations, with inflation continuing to push up the prices that shoppers pay for groceries like milk, eggs and other items.
The supermarket operator now anticipates adjusted net earnings to range from $4.05 to $4.15. It had previously expected between $3.95 and $4.05.
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Shares rose about 3% in premarket trading.
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.
Here’s what Kroger reported for the three-month period ended Nov. 5, compared with Refinitiv consensus estimates:
- Earnings per share: 88 cents adjusted vs. 82 cents expected
- Revenue: $34.2 billion vs. $33.96 billion expected
Identical sales grew by 6.9%, excluding fuel. The industry-specific metric includes sales at supermarkets that have been operating continuously for at least 15 months.
The supermarket operator now expects the metric to climb by 5.1% to 5.3% for the year. It previously forecast growth of 4% to 4.5%.
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.
Kroger has faced pushback on the deal from elected officials and even its own employees, who have said it will hurt competition. Earlier this week, McMullen testified before senators who oppose the merger at a congressional hearing. He argued the combined company would lower food prices and improve the experience for customers, as Kroger competes with grocery giant Walmart and newer industry players like Amazon.
As of Wednesday’s close, shares of Kroger are up about 9% so far this year. Shares closed Wednesday at $49.19, down less than 1%. Its market value is $35.21 billion.
This story is developing. Please check back for updates.