By Emily Stephenson
CHICAGO (Reuters) - Kroger Co
The company, which operates stores under the Kroger, Ralphs, King Soopers, Fry's and Food 4 Less banners, said identical store sales were up 2.7 percent and gross margin decreased 12 basis points during the quarter.
Kroger's gross margin fell 71 basis points during the previous quarter, said Scott Mushkin, an analyst with Jefferies & Co. He said the improvement showed investors that the business is resilient despite tough price competition from rivals including Wal-Mart Stores Inc
"I think that Kroger is able to do well in a tough environment, but the environment remains very difficult," Mushkin said. "It's still a good beat where most supermarkets are blowing up left, right and center."
Results came as the Commerce Department reported that in August, retail sales posted the largest gain in five months.
Cincinnati-based Kroger said net profit for the second quarter that ended on August 14 was $261.6 million, or 41 cents a share, compared with $254.4 million, or 39 cents per share, a year earlier.
Analysts on average were expecting 36 cents a share, according to Thomson Reuters I/B/E/S.
Kroger's sales, including fuel, increased 6 percent to $18.8 billion, beating analysts' estimate of $18.7 billion, according to Thomson Reuters data. Excluding gasoline, total sales rose 3.3 percent.
Kroger also stood by its forecast for fiscal-year earnings of $1.60 to $1.80 per share on identical-store sales growth of 2 percent to 3 percent, excluding gasoline sales.
Analysts expect full-year earnings of $1.74 per share.
Kroger shares rose 2.5 percent, or 52 cents, to $21.56 in early trading.
(Reporting by Emily Stephenson, editing by Dave Zimmerman and Maureen Bavdek)
