Kroger’s Profits Up, But Outlook Falls Short

Kroger Co. (KR), the nation's third-largest grocery chain, said Tuesday Q3 profits jumped 18%, but its full-year outlook disappointed investors and the stock slipped almost 5%. Kroger's net income was $253.8 million ($0.37/share) compared to $214.7 million ($0.30/share) last year. Sales jumped 9.8% to $16.1 billion. Analysts were expecting $0.35/share on $15.7 billion of revenue. However, the company said it expects to "slightly exceed" its current projections of $1.64-$1.67/share for the full year (full earnings call transcript later today). Analysts had been forecasting an average of $1.70/share. The company has been hurt by higher fuel costs pinching margins at its gas pumps and increased spending to remodel stores. "You can't just simply set retail at whatever you want it to be," CEO Dave Dillon said. "In gas when you do, your volume drops off substantially." Shares of Kroger fell 7% to $26.35.

Sources: Press release, MarketWatch, Reuters, Bloomberg
Earnings call transcript: Kroger F2Q07 (Qtr End 8/18/07) Earnings Call Transcript

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