- Company closes 60 underperforming stores
- Consumers looking to buy promotional items, private-label brands
- Kroger beats Q1 sales, profit estimates
- Shares up 7%
June 20 (Reuters) - U.S. grocer Kroger bumped up its annual sales growth forecast on Friday and said it would invest in lowering prices to attract value-seeking consumers against a backdrop of tariff-induced uncertainty, sending its shares 7% higher.
President Donald Trump's sweeping tariffs have rattled global markets, raising fears of persistent inflation in the United States due to impending price hikes on imported goods.
Most other retailers have either lowered or withdrawn their financial targets for the year.
While Kroger raised its target for full-year 2025 identical sales growth to 2.25% to 3.25%, from 2% to 3% expected earlier, the company maintained its annual profit forecast. It also topped first-quarter results.
Customers were purchasing more promotional and private-brand products and are expected to remain cautious for the rest of the year, interim CEO Ron Sargent said in a post-earnings call.
Kroger has slashed prices on more than 2,000 products so far this year and will offer more promotions and coupons, executives said. It has also been trying to expand its cheaper private-label brand portfolio.
Price increases would be "a last resort" to mitigate the minimal impact the company absorbs from tariffs, Sargent said.
Kroger said it was reviewing its ecommerce operations after British online supermarket Ocado drew down the remaining balance on its letter of credit this month following a seven-year partnership with the grocer.
Kroger said it would close about 60 underperforming stores over the next 18 months, which resulted in an impairment charge of $100 million in the first quarter.
Maintaining the company's profit target was "good news", Telsey Advisory Group analyst Joe Feldman said.
"We don't see it (in) any company's interest to raise guidance this early after only one quarter, even with the beat."
Kroger reported a first-quarter comparable sales growth of 3.2%, beating analysts' average expectation of 2.4%, according to estimates compiled by LSEG.
Its quarterly earnings per share of $1.49 also topped estimates by 3 cents.
Reporting by Juveria Tabassum in Bengaluru; Editing by Pooja Desai
Source: Reuters