Beating Wall Street forecasts, Kroger reported a $501 million profit on Thursday for its first quarter ending May 24 – up 4.2 percent.
The nation's largest supermarket chain, which is based in Cincinnati, also reported sales climbed 9.9 percent to $33 billion. Identical store sales excluding fuels, a key measure that excludes stores opened and closed within the last year, rose 4.6 percent.
Results were strong enough that Kroger raised its guidance for the year. It said earnings per share would be $3.19 to $3.27, up from $3.14 to $3.25 – suggesting an extra $10 million to $20 million in annual profits. The guidance suggests Kroger expects a $1.6 billion annual profit. It also said identical store sales excluding fuel would climb 3 to 4 percent, up from 2.5 to 3.5 percent.
"We are pleased to start the year with growth momentum," said Rodney McMullen, Kroger's chief executive officer. "Kroger associates continue to enhance our connection with all customers and achieve our key performance measures."
Kroger stock shot up as high as $50.19 in the first minute of trading Thursday – up $2.92 or 6.2 percent.
Last year, Kroger earned a $481 million profit on sales of $30 billion during the first quarter. Analysts expect Kroger will report a $1.05 earnings per diluted share, according to Bloomberg.
Excluding one-time items, Kroger earned $557 million or $1.09 per diluted share beating analyst estimates. Wall Street forecasters had predicted Kroger would earn a $547 million profit on sales of $32.6 billion in sales, according to Bloomberg.
Kroger announced Wednesday a one-time after-tax charge of $56 million that cut into profits to cover pension changes for workers in Washington State and Denver.
Kroger spent $1.1 billion repurchasing 25.7 million shares during the first quarter.
Kroger's results include sales from the newly added Harris Teeter stores following the company's $2.5 billion acquisition of the North Carolina grocer closed in January. The deal added 227 stores in the Southeast and Mid-Atlantic and will push Kroger's total annual sales above $100 billion this year.
Kroger now operates more than 2,641 supermarkets in 34 states with more than 375,000 workers.
Kroger shares closed Wednesday at $47.27, up 38 cents.