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Kroger lifts forecast after stronger third quarter


February 19. 2013 7:39PM
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(AP) Kroger Co. is raising its earnings outlook for the year after the nation's largest traditional supermarket chain reported a third-quarter profit that topped Wall Street expectations.


The company, which also operates Fry's, Food 4 Less and Ralphs, has been working to improve the shopping experience and build customer loyalty as it fends off competition from specialty grocers such as Whole Foods and big-box retailers such as Target, as well as dollar stores and drugstore chains.


As shopping habits change, the Cincinnati-based company has also been experimenting with new formats such as its larger Marketplace stores that have a bigger footprint and sell general merchandise in addition to groceries. It has also opened about a dozen smaller Ruler stores that focus primarily on cheaper, private-label products.


In an interview, CEO Dave Dillon has said that Kroger's supermarket format would continue to evolve to remain relevant. He noted that the boundaries between supermarkets, big-box retailers and dollar stores are also blurring.


For the three months ended Nov. 3, the company said revenue at locations open at least a year rose 3.2 percent. The metric is a key gauge of health because it strips out the impact of newly opened and closed locations.


The company said it earned $316.5 million, or 60 cents per share, for the period. That compares with $195.9 million, or 33 cents per share, a year ago. The most recent quarter included gains from a settlement with Visa and MasterCard and a reduction in the company's pension fund contributions.


Not including special items, the company earned 46 cents per share. Revenue rose 6 percent to $21.81 billion.


Analysts on average expected an adjusted profit of 43 cents per share on revenue of $21.55 billion, according to FactSet.


Kroger now expects to earn between $2.44 and $2.46 for the year, up from the previous range of $2.35 to $2.42.


Its shares were up almost 5 percent at $26.20 in premarket trading. The company operates more than 2,400 supermarkets and multi-department stores in the U.S.


Associated Press


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