By Imani Moise
Kroger Co., one of the nation's largest supermarket chains, reported a higher profit for the most recent quarter despite rising costs outpacing sales growth.
The Cincinnati-based company, like most retailers and food manufacturers, has seen rising commodity prices, freight costs and wages cut into its bottom line recently. Merchandising costs rose 13% and operating costs jumped 33%, while total sales rose 12%.
The company has been investing in prioritizing online orders and cutting food prices to win market share from competitors such as Amazon.com Inc. and Walmart Inc. Kroger said Thursday that it will use savings from recent U.S. tax-law changes to accelerate its digital efforts and invest in its employees.
Same-store sales excluding fuel grew 1.5% during the fourth quarter, slightly ahead of the consensus forecast from analysts of 1.4% growth.
For the current year, Kroger expects per-share earnings of $1.95 to $2.15 on same-store-sales growth of 1.5% to 2%. Analysts had forecast per-share earnings of $2.15.
Overall for the fourth quarter, the grocer reported a profit of $854 million, or 96 cents a share, up from $506 million, or 53 cents a share, a year earlier.
Excluding the impact of the recently enacted tax overhaul and other items, earnings rose 19% to 63 cents a share. An extra week in the most recent fiscal year added 9 cents to per-share earnings.
Revenue grew to $31.03 billion.
Analysts polled by Thomson Reuters expected earnings per share of 63 cents on $30.8 billion in revenue.
Shares fell 5% to $24.93 during premarket trading. The stock had fallen 9% over the past year through Wednesday's close while the S&P 500 has gained 15%.
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