Kroger forecast annual profit above Wall Street estimates on Thursday, as the supermarket chain benefits from higher prices, easing cost pressures and steady demand for its groceries and other essentials.
Shares of Kroger, which has inked a $25 billion (€23.5 billion) deal to buy smaller rival Albertsons Companies Inc, climbed about 3% in premarket trading.
Kroger's upbeat forecast is in contrast to that of retail chains such as Walmart, Target and Dollar Tree, which have all issued downbeat 2023 profit forecasts, as weakening consumer spending on discretionary goods squeeze margins.
Move To Automation
Analysts have also said Kroger's move to use automation across its businesses, coupled with its personal finance and media divisions, should help cushion margins.
Still, the company projected same-store sales growth, excluding fuel, of 1% to 2% in fiscal 2023, below analysts' estimate of a 2.23% increase.
Albertsons Companies Inc
In February, it was reported that Kroger Co and Albertsons Companies Inc are advancing plans to sell between 250 and 300 stores they hope will alleviate US antitrust concerns over their combination, according to people familiar with the matter.
The divestitures would come as the Federal Trade Commission (FTC), which is reviewing Kroger's proposed $24.6 billion (€23.2 billion) acquisition of Albertsons, is under pressure from some US lawmakers and consumer advocacy groups to block it over concerns it could lead to grocery price hikes when inflation has already been raging.
The stores that Kroger and Albertsons may sell could be worth more than $1 billion (€943 million), the sources said. They are located across all the regions where the two companies operate - for example, the Pacific Northwest, Southern California, Phoenix and Chicago.