Kroger (NYSE:KR) reported better-than-expected second-quarter earnings on Thursday, prompting the grocery chain to raise the low end of its full-year sales forecast. The company's stock rose 1.2% following the announcement.
Kroger posted adjusted earnings per share of $0.93 for the quarter ended August 12, surpassing analysts' estimates of $0.91. Revenue came in at $33.91 billion, slightly below the consensus forecast of $34.08 billion but up 1.3% YoY excluding fuel sales.
The company's identical sales without fuel increased 1.2% compared to the same period last year, driven by growth in digital sales and customer visits. Kroger also reported an 11% increase in digital sales and a 14% rise in e-commerce households.
"Kroger achieved solid results in the second quarter demonstrating the strength and resiliency of our model," said CEO Rodney McMullen. "We are growing households and increasing customer visits by offering a compelling combination of affordable prices and personalized promotions on great quality products."
The grocery chain raised the lower end of its full-year identical sales guidance without fuel to a range of 0.75% to 1.75%. Kroger reaffirmed its fiscal 2025 earnings outlook of $4.30 to $4.50 per share, in line with analysts' expectations of $4.43.
Kroger's gross margin rate, excluding fuel, improved by 42 basis points compared to last year, which the company attributed to favorable product mix and lower shrink. However, operating expenses increased due to investments in associate wages and higher incentive plan costs.
Kroger also said it has paused its share repurchase program to prioritize de-leveraging following its proposed merger with Albertsons.