By Tess Stynes Kroger Co.'s (KR) fiscal first-quarter earnings rose 1.6% as higher costs partly offset the supermarket company's continued sales growth. Shares were up 4.9% at $22.33 in recent premarket trading as the company's board also authorized a $1 billion stock repurchase plan and Kroger raised its full-year earnings guidance. Through Wednesday's close, the stock is down roughly 12% this year. The new buyback program replaces an earlier one that was exhausted on Tuesday. Kroger said it repurchased 14.6 million shares for a total $345.3 million during the first quarter. For the year, Kroger raised its per-share earnings estimate to $2.33 to $2.40 from its prior estimate for $2.28 to $2.38 and affirmed its estimate for identical-store sales excluding fuel growth of 3% to 3.5%. Kroger, the nation's largest traditional grocery retailer, has been able to maintain its sales momentum despite consumer caution amid an overall sluggish economy, high gasoline prices and a weak jobs market. In the latest quarter, identical stores sales, or those open for 15 months, increased 4.2% excluding fuel sales. The retailer has cut business costs and used the savings to lower prices on some items, as well as offer promotions and discounts to customers, while broadly trying to improve the shopping experience to build customer loyalty. For example, Kroger is among the supermarket chains that recently unveiled plans for its own single-serve coffee pods for use in Green Mountain Coffee Roasters Inc.'s (GMCR) Keurig brewers. For the quarter ended May 19, Kroger reported a profit of $439.4 million, or 78 cents a share, up from $432.3 million, or 70 cents a share, a year earlier. The latest period and the year-earlier period both included inventory-related charges of $46 million. The company had projected earnings would be flat to slightly positive from a year earlier. Revenue increased 5.8% to $29.1 billion, and grew 4.3% excluding fuel sales. Analysts polled by Thomson Reuters recently projected $29.13 billion. Operating margin fell to 2.8% from 2.95%. Merchandising expenses were up 6.8%. Write to Tess Stynes at tess.stynes@dowjones.com
