Kroger 2Q profit dips but tops Street view

(AP) The Kroger Co. reported a second-quarter profit that beat Wall Street expectations as the supermarket operator said its loyalty program helped lift a key sales figure.

The nation's largest traditional grocery store chain also raised its outlook for the year. Its stock edged up in premarket trading.

Kroger, which also operates Ralphs, Food 4 Less and other chains, said sales at supermarkets open at least a year rose 3.6 percent, when excluding fuel. The metric is a key gauge of health because it excludes the impact of newly opened and closed locations.

As traditional grocery stores face growing competition from big-box retailers and drug stores, Kroger is trying to hang onto shoppers by offering tailored discounts based on past purchases. The strategy seems to be paying off, with Kroger noting that customer loyalty increased in the quarter. The company also said cost controls contributed to growth.

The company's net income dipped in period as the result of a higher tax rate, however.

For the three months ended Aug. 11, the company reported net income of $279.1 million, or 51 cents per share. That's down from $280.8 million, or 46 cents per share, a year ago when there were more outstanding shares.

Revenue, including fuel, climbed 3.9 percent to $21.73 billion.

Analysts expected earnings of 49 cents per share on revenue of $21.89 billion.

Kroger now anticipates fiscal 2012 earnings of $2.35 to $2.42 per share, up from $2.33 to $2.40 per share.

Analysts predict $2.38 per share.