By (Reuters) -Kroger raised the lower end of its annual sales forecast after topping Wall Street expectations for quarterly results on Thursday, as its efforts to offer freshly sourced groceries at lower prices helped pull in customers looking to save money.
Shares of the supermarket chain, whose $25-billion mega deal with smaller rival Albertsons (NYSE:ACI) is under antitrust review, rose 1.3% in premarket trading.
U.S. consumers still have tight household budgets that leave little room to splurge, even on food, pushing them to buy items at the best possible price in the market.
To keep up with competition from bigger rival Walmart (NYSE:WMT), Kroger (NYSE:KR) lowered grocery prices and offered promotions to attract deal-hunting consumers.
Its results echo those of Walmart and Target, which raised their annual profit forecasts as Americans flocked to their stores for inexpensive essentials.
Grocers are also benefiting from customers increasingly opting to make food at home, rather than spending at restaurants and fast-food chains such as McDonald’s (NYSE:MCD) and Restaurant Brands-run Burger King.
Since late August, the U.S. Federal Trade Commission, along with several states, went to trial in Portland, Oregon, to block the Kroger-Albertsons deal, saying it would mean higher prices for consumers and less bargaining power for unionized grocery workers.
“As we near the close of the FTC’s preliminary injunction hearing, we are confident in the facts and the strength of our position. The food industry has always been competitive and will continue to be after this merger,” Kroger CEO Rodney McMullen said.
The company’s identical sales, excluding fuel, rose 1.2%, compared with an average LSEG estimate of 0.93% growth.
Excluding items, Kroger posted an adjusted quarterly profit of 93 cents per share, topping an estimate of 91 cents per share.
It now expects fiscal 2024 identical sales, excluding fuel, to grow between 0.75% and 1.75%, compared with its prior forecast of 0.25% to 1.75%.