Kroger beat Wall Street estimates for quarterly same-store sales and profit, benefiting from more customers thronging its outlets for lower-priced groceries as sticky inflation stretches household budgets.
Shares of the company, whose $24.6-billion (€22.96 billion) deal with smaller rival Albertsons is under antitrust review, rose 3.2% in premarket trading.
As food prices start to ease faster than restaurant menu prices, American consumers on a tight budget are cooking more of their meals at home rather than going out to dine, helping lift sales at grocery stores.
Data from the US Bureau of Labour Statistics showed that unadjusted food-at-home prices rose by 1% in May compared to last year, while food-away-from home prices climbed 4% versus May 2023.
The company has resorted to offering promotions and lowering grocery prices in a bid to attract more consumers, while also investing in improving its online business and adding products to its private-label portfolio to boost sales.
Customer visits to Kroger were up 5.1% year-over-year on average between February and May this year, according to data from location analytics firm Placer.ai.
Quarterly Highlights
Identical sales, excluding fuel, rose 0.5% at the supermarket chain in the first quarter, compared with analysts' average estimate for 0.13% growth, according to LSEG data.
Excluding items, Kroger posted a quarterly profit of $1.43 per share, topping estimates of $1.35.
The company also reaffirmed its full-year identical sales, without fuel, outlook of growth between 0.25% and 1.75%, as well as adjusted profit outlook between $4.30 and $4.50 per share.
CEO Rodney McMullen stated, "The long-term investments we have made to strengthen and diversify our model enables us to manage economic cycles and gives us the confidence to deliver on our full year outlook.
"By delivering value for customers and investing in our associates, Kroger remains well-positioned to generate attractive and sustainable returns for our shareholders."
Last month, membership-only retailer Costco also saw strong demand for fresh foods and bakery items, while customers also grabbed its low-priced discretionary products.
News by Reuters, additional reporting by ESM.
