Kroger Q2 Adj. Profit Beats View, But Revenues Miss; Lowers FY16 Outlook

(RTTNews) - Grocery chain operator Kroger Co. (KR) on Friday reported a decline in profit for the second quarter from last year, reflecting one-time charges.

However, adjusted earnings for the quarter beat analysts' expectations, while revenues missed their estimates. Looking ahead, the company lowered its outlook for fiscal 2016 earnings and identical sales growth.

The Cincinnati, Ohio-based company reported net earnings for the second quarter of $383 million or $0.40 per share, down from $433 million or $0.44 per share in the prior-year quarter.

The latest quarter's results included charges of $0.07 per share related to the restructuring of certain multi-employer pension obligations to help stabilize associates' future benefits.

Excluding the effect of these charges, adjusted net earnings for the latest quarter were $454 million or $0.47 per share.

On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $0.45 per share for the quarter. Analysts' estimates typically exclude special items.

Total sales for the quarter increased 4 percent to $26.57 billion from $25.54 billion in the same quarter last year, but missed analysts' consensus revenue estimate of $26.79 billion.

Total sales for the quarter, excluding fuel, increased 7.3 percent. Total sales, excluding fuel and Roundy's, increased 2.9 percent in the quarter, compared to the same period last year.

Kroger, which also operates the Ralphs, Fred Meyer, Food 4 Less, Fry's, King Soopers, Smith's, and Dillons brands, said identical supermarket sales, including fuel centers, decreased 0.5 percent and excluding fuel centers, it advanced 1.7 percent.

Looking ahead to fiscal 2016, Kroger lowered its outlook for net earnings to a range of $2.03 to $2.13 per share, as result of continued deflation.

Kroger's full-year adjusted net earnings guidance range is $2.10 to $2.20 per share, which excludes the $0.07 charge from the company's commitment to restructure certain multi-employer pension obligations.

The company's previous full-year earnings outlook range was $2.19 to $2.28 per share, which did not anticipate the $0.07 charge from the company's commitment to restructure certain multi-employer pension obligations.

The Street is currently looking for full-year earnings of $2.22 per share.

Kroger also lowered its outlook for full-year identical supermarket sales growth, excluding fuel, to a range of 1.4 percent to 1.8 percent from the prior range of approximately 2.5 percent to 3.5 percent.

KR closed Thursday's trading at $31.31. In Friday's pre-market activity, the stock is down $0.21 or 0.67 percent to $31.10.