UPDATE 1-Kroger Q2 profit up on cost controls, stronger sales

Thu Sep 12, 2013 10:19am EDT

Sept 12 (Reuters) - Kroger Co, the biggest U.S.
supermarket operator, on Thursday reported a 14 percent jump in
second-quarter profit as it capped costs and drove sales higher
with programs for loyal shoppers, sending shares up almost 2
percent.    
    Executives at the Cincinnati-based company that owns 
Ralphs, Smith's and Food 4 Less chains, recently vowed to
deliver higher profits amid raging competition from retailers
ranging from supermarket operator Safeway Inc and retail
giant Wal-Mart Stores Inc to dollar stores and
convenience marts.
    Kroger, a leader in using purchasing data to offer
customized deals to customers, this year plans to spend $2.1 to
$2.4 billion to maintain its debt rating, buy back shares, pay
dividends and invest in its stores and operations.     
    Its total sales rose 4.6 percent to $22.7 billion, including
fuel for the quarter that ended Aug. 17. Excluding fuel, sales
were up 3.9 percent.
    Net income increased to $317 million, or 60 cents per share,
from $279 million, or 51 cents, a year earlier, on lower
expenses in the latest quarter.
    Identical-store sales - which include results from stores
open without expansion or relocation for five full quarters and
are used to gauge a grocer's performance - were up 3.3 percent
for the latest quarter, excluding the sale of gasoline.
    Kroger's booked a $13 million charge related to inventory
accounting during the latest quarter, down from $35 million a
year earlier. Operating, general and administrative costs plus
rent and depreciation also declined as a percentage of sales.
    The company tightened its full-year forecast for identical
supermarket sales growth, excluding fuel, to a range of 3
percent to 3.5 percent from 2.5 percent to 3.5 percent.
    It maintained its outlook for annual profit of $2.73 per
share to $2.80 per share.
    Shares in Kroger were up 1.9 percent to $38.40 in early
trading on the New York Stock Exchange.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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