Kroger raises outlook on strong earnings results; shares climb

Shares of Kroger Co. rose the most in more than three years after the operator of Ralphs and Food 4 Less boosted its annual profit forecast and announced a $1-billion share buyback.

The Cincinnati company’s shares advanced 6.1% to $22.58, the biggest gain since March 2009. The shares have dropped 6.8% this year.

Profit for the fiscal year ending Jan. 31 will be as much as $2.40 a share, up from a prior forecast of as much as $2.38, the company said Thursday. That compared with the $2.32 average that analysts expected in a Bloomberg survey.

The higher forecast follows its first-quarter profit of 78 cents a share, which exceeded analysts’ 73-cent average estimate, as operating, general and administrative expenses fell.

Kroger said it earned $439.4 million, or 78 cents a share, in the period that ended May 19. That compares with $432.3 million, or 70 cents, a year earlier. The higher per-share figure in the latest quarter was the result of a reduced number of outstanding shares. Analysts on average expected a profit of 72 cents a share, according to FactSet.

Revenue for the quarter was $29.06 billion, up from $27.46 billion but shy of Wall Street expectations of $29.16 billion.

Kroger also said its board had approved a $1-billion share buyback program, replacing an authorization that was exhausted June 12. The company said it has returned more than $1.6 billion to shareholders through stock buybacks and dividends in the last four quarters.

“Our core business is growing, and we are rewarding shareholders through earnings growth, increasing dividends over time and share buybacks,” said David Dillon, Kroger’s chairman and chief executive.