Kroger profit increases 3.4%

Grocery chain Kroger Co., operator of Ralphs, said its second-quarter profit rose 3.4% as a slowing economy prompted people to eat at home more often and try more store brands. The results sent its stock up more than 5%.

Kroger has added to frequent-customer incentives for store discounts and cheaper gas at its own stations, along with offering more store-brand items and prepared meals for people trading down in price and cutting back on eating out.

The company said sales were strong for its deli, bakery and prepared foods, and that store-label items accounted for a record 26% of its grocery sales.

For the three months ended Aug. 16, Kroger earned $276.5 million, or 42 cents a share, up from $267.3 million, or 38 cents, a year earlier. Kroger reported second-quarter revenue of $18.1 billion, up nearly 12%.

Analysts surveyed by Thomson Reuters had expected earnings of 41 cents a share on revenue of $17.63 billion.

The company said sales at stores open at least five quarters, considered a key indicator of a retailer’s strength, rose 4.7% excluding fuel, and 9.7% including fuel sales for the quarter.

Shares of Cincinnati-based Kroger rose $1.40, or 5.3%, to $27.99.