Kroger Beats Analyst Predictions in Every Direction

Andrew Klips  |

Kroger Co. (KR) reported Thursday that it notched a profit in the fourth quarter ended February 2, 2013 as it benefited from less expenses and an extra week compared to the year prior quarter to beat analyst expectations.  The Cincinnati, Ohio-based grocery store operator also offered guidance for 2013 that surpassed Wall Street predictions.

For the fourth quarter, Kroger’s total sales were $24.15 billion, up almost 13 percent, including the extra week, compared to $21.41 billion in the year prior quarter.  Factoring-out the extra days, sales were still up by 3.7 percent.  The company earned a profit of $461.5 million, or 88 cents per share, in the latest quarter, compared to a net loss of $306.9 million, or 55 cents per share, in the fourth quarter of fiscal 2011.  The net loss in the year earlier period included a $591 million pension charge.  Less that expense, EPS was 50 cents in that quarter.

Wall Street analysts were expecting Kroger to report earnings per share of 70 cents and revenue of $24.01 billion.

Same-store-sales, comparable sales at stores open more than one year, grew by 3 percent in the fourth quarter over the year earlier quarter.

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"Kroger's unique value offering of better service, great products and an enjoyable shopping experience with low prices continues to resonate with a full range of customers. The result is an industry-leading 37 consecutive quarters of positive identical sales growth," said David B. Dillon, chairman and chief executive officer of Kroger.

Kroger is the U.S.’s largest supermarket chain operator by number of locations.  The company operates its namesake stores as well as discounter Food 4 Less, several other regional brands as well as fine jewelry stores and convenience stores.  It’s Kroger Marketplace brand sells everything from food to furniture, pitting it against rivals such as Wal-Mart Stores, Inc. (WMT).

For the full fiscal year 2012, total sales increased to $96.8 billion.  Adjusting for the extra week, total sales were $94.8 billion, an increase of 4.9 percent of fiscal 2011.  Excluding fuel, total sales increased 6 percent over the same period last year. Further adjusting for the extra week, total sales excluding fuel increased 4 percent.

Looking forward, Kroger foresees full-year earnings in the range of $2.71 to $2.79 per share.  Analysts were only expecting EPS of $2.64.

Shares are trading ahead on Thursday by about 3 percent at $30.29, including hitting a new high of $30.62 in morning action.  Shares are up about 29 percent in the last year.  Since dipping to about $20 per share in August, shares have been on an upward march of about 50 percent.

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