U.S. grocer Kroger on Thursday raised its annual core sales forecast for the second straight time, banking on resilient demand for cheaper essentials amid rising concerns over imminent price increases due to tariffs.
Shares of the company, which also beat second-quarter comparable sales and profit estimates, were up about 3% in early trading.
Retailers such as Kroger, Albertsons and Walmart have been able to buck a slowdown in the broader industry as consumers, especially from lower-income households, snap up cheaper must-haves as they hunt for value.
Many consumers are also increasingly seeking bargains, according to second-quarter earnings reports and comments from industry executives over the past month.
“Food-at-home sits favorably in times of consumer stress and in terms of tariff exposure, and Kroger has opened FY’25 with consecutive guidance increases,” said Bill Kirk, analyst with Roth Capital Partners.
Walmart and Dollar General raised their annual sales forecasts, indicating wealthier U.S. shoppers were also flocking to their stores worried about the effects of tariffs on prices.
Kroger, which is relatively less exposed to U.S. tariffs, said in June it had been focusing on promotions and maintaining low prices to meet growing customer demand for value.
The company then said it had slashed prices on more than 2,000 products so far this year.
“Sales growth has been strong, led by pharmacy, eCommerce and Fresh, and we are encouraged by the improvement in grocery volumes,” Chief Financial Officer David Kennerley said in a statement on Thursday.
Kroger expects full-year comparable sales to increase in the range of 2.7% to 3.4%, versus its prior forecast of a 2.25% to 3.25% rise.
The company also raised the lower-end of its annual profit forecast to $4.70 from $4.60, while retaining the upper-end at $4.80.
Quarterly identical sales, without fuel, increased 3.4%, compared with analysts’ estimates of 2.84%, according to data compiled by LSEG.
Kroger, which is in the middle of a legal battle with Albertsons after their $25 billion deal collapsed, posted an adjusted profit of $1.04 per share for the quarter, topping estimates of 99 cents.
(Reporting by Anuja Bharat Mistry and Sanskriti Shekhar; in Bengaluru)
Comments