U.S. grocer Kroger raised its annual core sales forecast on Thursday, banking on resilient demand for its lower-priced products amid growing concerns over tariff-related pressure on consumer demand.
Shares of the company, which also beat second-quarter comparable sales and profit estimates, were up about 2% in premarket trading.
Retailers such as Kroger, Albertsons and Walmart have been able to buck a slowdown in the broader industry as consumers, especially from lower-income households, snap up cheaper must-haves as they hunt for value.
Many consumers are also increasingly seeking bargains, according to second-quarter earnings reports and comments from industry executives over the past month.
Kroger, which is relatively less exposed to U.S. tariffs, said in June it had been focusing on promotions and maintaining low prices to meet growing customer demand for value.
The company then said it had slashed prices on more than 2,000 products so far this year.
“Sales growth has been strong, led by pharmacy, eCommerce and Fresh, and we are encouraged by the improvement in grocery volumes,” CFO David Kennerley said.
The company expects full-year comparable sales to increase in the range of 2.7% to 3.4%, compared with its prior forecast of a 2.25% to 3.25% rise.
Kroger also raised the lower-end of its annual profit forecast to $4.70 from $4.60, while retaining the upper-end at $4.80.
Quarterly identical sales, without fuel, increased 3.4%, compared with analysts’ estimates of 2.84%, according to data compiled by LSEG.
On adjusted basis, Kroger earned $1.04 per share for the quarter, topping estimates of 99 cents.
Kroger is also in the middle of a legal battle with Albertsons after their $25 billion deal was blocked by a U.S. judge in December.
(Reporting by Anuja Bharat Mistry and Sanskriti Shekhar; in Bengaluru)
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