(Reuters) - Kroger Co (N:KR) on Thursday raised the lower-end of its full-year earnings forecast and posted better-than-expected quarterly profit, as investments in online and delivery services paid off, sending its shares up nearly 8 percent.
Kroger has been closing underperforming stores and shifting away from areas where it does not have a strong presence. It has also been expanding home delivery, curbside pickup and self-checkout services under its turnaround program "Restock Kroger" to compete with Walmart Inc (N:WMT) and Amazon.com Inc (O:AMZN).
The company said first-quarter earnings per share was slightly ahead of its own expectations due to its tighter control over costs and revenue from services linked to its online operations.
"Restock Kroger is off to a fantastic start...," Chief Executive Officer Rodney McMullen said in a statement.
Kroger said the plan boosted online sales 66 percent in the first quarter.
The company raised the lower end of its adjusted profit forecast to a range of $2.00 to $2.15 per share from $1.95 to $2.15 per share, previously.
First-quarter net earnings rose to $2.03 billion, or $2.37 per share, in the quarter from $303 million, or 32 cents per share, a year earlier, helped by the sale of nearly 800 of its convenience stores to EG Group for $2.15 billion.
Same-store sales, excluding fuel, rose 1.4 percent in the quarter.
"This print was better than feared with comparable-store sales probably slightly above buy side expectations and management's tone about Restock Kroger quite positive," J.P. Morgan analysts wrote in a note.
Excluding one-time items, Kroger earned 73 cents per share, 10 cents above analysts' estimate.
Total sales rose 3.4 percent to $37.53 billion, while analysts' were expecting revenue of $37.31 billion, according to Thomson Reuters I/B/E/S.
Shares of Cincinnati-based Kroger were up 8.7 percent at $28.45 in premarket trading on Thursday and were on track to open at their highest in nearly five months.