Shares of Kroger Co. (NYSE:KR) were moving higher today after the supermarket operator posted strong results in its first-quarter earnings report. Investments in its revamp plan, Restock Kroger, appear to be paying off, driving the stock up 8.7% as of 12:57 p.m. EDT.
Comparable sales excluding fuel rose 1.9% in the period, its fastest clip in several quarters. Overall revenue increased 3.4% to $37.53 billion, which topped estimates of $37.3 billion. On the bottom line, adjusted earnings per share jumped from $0.58 to $0.73, well ahead of expectations of $0.63.
Investors cheered Kroger's recent moves to acquire meal-kit service Home Chef and partner with Ocado, a British online grocery retailer that specializes in warehouse automation. Meanwhile, the Restock Kroger initiative appeared to be paying off, as private label sales increased 5.1%, and digital sales jumped 66%.
CEO Rodney McMullen said in a press release:
Restock Kroger is off to a fantastic start. Everything we do supports our customers engaging seamlessly with Kroger. Kroger is creating the future of retail by innovating our core business and adding exciting partnerships like Ocado and our planned merger with Home Chef.
Looking ahead, Kroger also offered solid guidance, projecting comparable sales growth excluding fuel of 2% to 2.5% for the year. It also raised the low end of its guidance for adjusted earnings per share; the new range was $2.00 to $2.15, from $1.95 to $2.15.
Like Walmart, the company is making smart investments to reinvent itself as e-commerce grows and the threat of Amazon and its Whole Foods subsidiary looms. Investors finally seem to be taking notice. With more stores than any other traditional supermarket operator, Kroger is not about to give up its market share without a fight.