Kroger posts higher profit, stands by outlook

By Lisa Baertlein

LOS ANGELES (Reuters) - Kroger Co (KR.N: Quote, Profile, Research) posted a higher-than-expected fiscal first-quarter profit on Tuesday as grocery sales rose, but the No. 1 U.S. supermarket chain did not raise its full-year forecast.

"While our earnings per share results were well ahead of the consensus estimate, they were only slightly ahead of our own internal budget," Chief Executive David Dillon said on a conference call with analysts. "It's still early (in the fiscal year)."

The Cincinnati-based company, which operates stores under its own name as well as Ralphs and Food 4 Less, has faced concerns that high unemployment from the long recession was pressuring sales

Kroger has been offering lower prices as it competes with retailers such as discounter Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research), the largest seller of groceries in the United States.

"Shoppers remain cautious in this economy, and we do not anticipate that changing any time soon," Dillon said.

Kroger said net income rose to $435.1 million, or 66 cents per share, in the first quarter that ended May 23 from $386 million, or 58 cents per share, a year earlier.

The profit topped the analysts' average forecast of 61 cents per share, according to Reuters Estimates.

Total sales at Kroger, which also runs the Littman and Barclay jewelry chains, fell to $22.8 billion from $23.1 billion, weighed down by the lower price of the gasoline it sells.