Kroger (NYSE:KR), America's largest pure supermarket business, brought home the bacon Tuesday morning with earnings that handily exceeded expectations. Responding to the good news, investors pushed the stock up to a new 52-week high.

Sales grew more than 6% for the quarter, with identical store sales up 3.8%, including fuel sales and 2.4% excluding fuel. Gross margins eased a bit in the period (down 82 basis points with fuel, 40 without), though operating margin stayed mostly flat.

Operating profit grew about 5% for the quarter, and earnings per share grew 14%. Investors should note that while Kroger did a good job of beating expectations, ongoing recovery in the southern California markets helped year-over-year comparisons a bit.

Although I believe that tracking free cash flow on a quarter-to-quarter basis can be misleading, Kroger generated sufficient cash to buy back more than $150 million of stock and repay more than $500 million of debt. Looking ahead, management reiterated its intention to steer about one-third of future free cash flow toward debt reduction and the remainder toward stock buybacks and/or dividends.

For investors considering the supermarket industry, there's good news and bad news. The good news is that the businesses tend to be fairly consistent and insulated from cyclical effects. The bad news, as everyone has been pointing out for years now, is that interlopers such as Wal-Mart (NYSE:WMT), Whole Foods (NASDAQ:WFMI), and Walgreen (NYSE:WAG) are applying ever more pressure on the supermarket industry.

Still, the large players such as Kroger, Albertson's (NYSE:ABS), and Safeway (NYSE:SWY) should be able to maintain most of their grasp on the consumer. It's not a high-growth industry by any means, but it doesn't appear doomed, either.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).