Kroger Shines in Q3, Raises Outlook

The Kroger Co. (NYSE: KR) reported third-quarter 2012 results before markets opened this morning. The grocery chain reported adjusted diluted earnings per share (EPS) of $0.46 on revenues of $21.8 billion. In the same period a year ago, Kroger reported EPS of $0.33 on revenue of $20.6 billion. Today’s results also compare to the Thomson Reuters consensus estimates for EPS of $0.43 and $21.65 billion in revenue.

Including one-time items, Kroger’s posted EPS of $0.60. The items included a settlement with two credit card companies and a reduction in Kroger’s obligations to a pension fund.

The company’s CEO sounded pleased:

Kroger achieved our growth objectives for the quarter, including positive identical supermarket sales, operating profit growth and outstanding tonnage growth. This quarter illustrates that the strength of our core business positions Kroger to accelerate our earnings per share growth.

The company raised full-year EPS guidance from a previous range of $2.35 to $2.42 to a new range of $2.44 to $2.46. Excluding fuel sales, the company expects fourth-quarter same-store sales to rise 3% to 3.5% compared to the same period a year ago.

Kroger has had a far better year so far than either of its major competitors, Supervalu Inc. (NYSE: SVU) and Safeway Inc. (NYSE: SWY). Kroger’s shares are up about 3% year-to-date, compared with share price drops of 67% and 21% at Supervalu and Safeway, respectively.

Kroger’s shares are up nearly 5% in premarket trading this morning, at $26.28 and above its 52-week range of $20.98 to $25.44. Thomson Reuters had a consensus analyst price target of around $27.80 before today’s results were announced.

Paul Ausick