Kroger Nears Record Territory Again With Third Raise to Forecast

(Bloomberg) -- Kroger Co. raised its profit forecast for the third straight quarter, propelling shares back near the record heights they attained in September. 

Adjusted earnings in the current fiscal year will be in the range of $3.40 to $3.50 a share, Kroger said in a statement Thursday as it reported earnings. That followed increases to the grocer's outlook in June and September. Kroger had initially said in March that earnings would be no more than $2.95 a share. 

The elevated expectations signal progress for Kroger's campaign to capitalize on a pandemic-era shift in which consumers are cooking more at home. The company will reap the rewards by offering more fresh food and an array of online capabilities, said Chief Executive Officer Rodney McMullen. 

“The food-at-home change is structural and not temporary,” he said on a conference call with analysts. With home-cooked meals giving grocery stores an edge, “it is more important than ever that we provide customers with flexibility on how they choose to shop with us.”

The shares surged 11% to $44.65 at the close in New York, the biggest gain in more than two years. Kroger, the top performer this year on an S&P index of consumer staples companies, needs to gain about 6% more to return to the all-time high it reached three months ago. 

In the third quarter, Kroger reported a gross profit equivalent to 21.7% of sales, slightly below the 21.9% average of analyst estimates compiled by Bloomberg. The Cincinnati-based company has more goods in stock than a year ago, which McMullen called a sign the company is successfuly managing a global supply-chain crunch. 

Adjusted earnings climbed to 78 cents a share, surpassing Wall Street's expectation of 67 cents. Sales rose 7.2% to $31.9 billion. Analysts had predicted $31.2 billion. 

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