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Kroger (KR) stock jumped 9% in morning trading on Friday after the company raised its full-year sales forecast, held its profit outlook steady, and posted results for its most recent quarter that were mixed. The company is navigating an increasingly competitive environment with Walmart (WMT) and Costco (COST) gaining share in grocery.
In its first quarter, the grocery giant reported adjusted earnings per share of $1.49, topping Wall Street forecasts for EPS to hit $1.45, according to Bloomberg data. Its same-store sales grew 3.2% in the quarter, besting forecasts for a 2.3% jump in what Kroger calls "identical sales." Revenue tallied $45.12 billion, just missing forecasts for $45.23 billion.
"We are pleased with our first quarter sales, which reflects strength in pharmacy, e-commerce, and fresh," CFO David Kennerley told investors on the company's earnings call, adding, "As a result, we are raising our identical sales without fuel guidance."
Full-year same-store sales, without fuel, are now expected to come in the range of 2.25%-3.25%. The company previously expected the range of 2%-3%. Wall Street expected the middle of the range to be 2.47% prior to Friday's results.
Kroger also expects "second quarter identical sales without fuel to be roughly at the midpoint of our full year guidance range."
In the first quarter, which ended on May 24, the company said consumers remained cautious, though, as they weighed the impact of Trump's tariffs and higher costs, with Kennerley noting "the macroeconomic environment remains uncertain, and as a result, other elements of our guidance remain unchanged."
Kroger reaffirmed the rest of its guidance, including adjusted earnings per share, which it still expects to be in the range of $4.60-$4.80.
This report comes as Kroger is at a crossroads. Former CEO Rodney McMullen resigned following an investigation by the Board in March, and the search for a permanent successor continues. Chairman of the board, Ron Sargent, is currently serving as interim CEO.
Sargent told investors Friday that "the board has a search committee in place" but that there are "no specific updates at this time."
CFRA analyst Arun Sundaram told Yahoo Finance in an interview that Kroger's management team was also distracted over the last few years by its failed $24.6 billion merger with Albertsons (ACI), which was officially blocked by the Federal Trade Commission in December.
During the merger process, the company said it "paused" its annual review of its store portfolio and now plans to shutter roughly 60 locations in the next 18 months.
