Kroger beats Q2 earnings estimates but revenues fall short

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The Kroger Co. (NYSE: KR) topped market estimates for earnings in the second quarter of 2019 but revenue fell short of expectations. Shares were up 3.7% in morning trade on Thursday.

Total sales inched up to $28.2 billion from $28 billion in
the same period last year but came in shy of estimates of $28.38 billion. Excluding fuel, dispositions and merger transactions, sales
grew 2.5%.

Identical sales, ex fuel, grew 2.2% and digital sales grew 31%.

Kroger beat earnings expectations for Q2 2019 but revenues fell short of estimates

GAAP net income was $297 million, or $0.37 per share,
compared to $508 million, or $0.62 per share, in the prior-year quarter. Adjusted
EPS totaled $0.44, beating forecasts of $0.41.

The company generated operating profit of $559 million in
the quarter. The alternative profit streams are on track to contribute an
incremental $100 million in operating profit in 2019 versus 2018.

During the quarter, Our Brands sales rose 3.1% from last year and the company launched 203 new Our Brands items.

Also see: Kroger Q2 2019 Earnings Preview

As part of its Restock Kroger initiatives, Kroger expanded
to 1,780 pickup locations and 2,225 delivery locations, covering over 95% of
Kroger households. The company also launched Simple Truth Plant Based, a
collection of meatless food products to appeal to a new and rapidly-increasing customer
base.  

For 2019, Kroger expects GAAP EPS of $2.30-2.40 and adjusted EPS of $2.15-2.25. Identical sales are expected to increase 2% to 2.25%.

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