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CINCINNATI — Kroger Co. posted a $2 billion profit in its first quarter, largely on a windfall from the sale of its convenience stores. On the operations side of the business, online sales jumped 66% as overall sales rose 3.4% to $37.5 billion. Comparable-store sales increased 1.4% in the period ended May 26.
Kroger raised the lower end of its guidance for earnings this year, to $2 to $2.15 per adjusted share from $1.95 to $2.15.
The nation’s largest grocery chain by store count announced in February it was selling nearly 800 convenience stores to EG Group, a privately held British gas station operator, for $2.1 billion. Kroger characterized the sale as consistent with its Restock Kroger plan to invest in technology and streamline sales and operations at its 2,800 supermarkets. Proceeds from the convenience stores sale are being dedicated to debt reduction and share buybacks, the company said.
“Restock Kroger is off to a fantastic start. Everything we do supports our customers engaging seamlessly with Kroger,” Rodney McMullen, Kroger’s chief executive officer, said in a statement. “Kroger is creating the future of retail by innovating our core business and adding exciting partnerships like Ocado and our planned merger with Home Chef. We are on track to generate the free cash flow and incremental FIFO operating profit that we committed to in Restock Kroger. We are confident in our ability to deliver on our plans for the year and our long-term vision to serve America through food inspiration and uplift.”
Kroger announced two deals in its first quarter: a $250 million investment in British online grocer Ocado Group to run its automated warehouses and process online orders, and the acquisition of Home Chef, a meal-kit provider.
The company last year opened its first stand-alone restaurant, called Kitchen 1883, and announced it would introduce its first private label clothing line in late 2018.
