Kroger Co (NYSE:KR) stock rose 9.40% (As on June 20, 11:29:40 AM UTC-4, Source: Google Finance) after the company reported first-quarter earnings that exceeded analyst expectations, while revenue fell slightly short of estimates. The grocery retailer also raised its full-year sales guidance but maintained its earnings outlook. Gross margin was 23.0% of sales for the first quarter compared to 22.0% for the same period last year. The improvement in gross margin was primarily attributable to the sale of Kroger Specialty Pharmacy, lower shrink and lower supply chain costs, partially offset by the mix effect from growth in pharmacy sales which have lower margins. In the first quarter, Kroger recognized an impairment charge of $100 million related to the planned closing of approximately 60 stores over the next 18 months. As a result of these store closures, Kroger expects a modest financial benefit.

KR in the first quarter of FY25 has reported the adjusted earnings per share of $1.49, beating the analysts’ estimates for the adjusted earnings per share of $1.45. The company had reported the adjusted revenue growth of 35.9 percent to $45.12 billion in the first quarter of FY25, missing the analysts’ estimates for revenue of $45.28 billion. Compared to the same quarter last year, revenue decreased slightly from $45.3 billion, primarily due to the sale of Kroger Specialty Pharmacy. The company reported identical sales growth without fuel of 3.2% YoY, driven by strong performance in pharmacy, eCommerce, and fresh categories. eCommerce sales jumped 15% compared to the previous year.

Additionally, during the fourth quarter of Kroger’s fiscal 2024, Kroger entered into a $5 billion accelerated share repurchase program (ASR), which is expected to be completed by no later than Kroger’s fiscal third quarter 2025. After completion of the ASR program, Kroger expects to resume open market share repurchases under the remaining $2.5 billion authorization. Kroger expects to complete these open market share repurchases by the end of fiscal 2025, which is contemplated in full-year guidance. Kroger’s net total debt to adjusted EBITDA ratio is 1.69, compared to 1.25 a year ago. The company’s net total debt to adjusted EBITDA ratio target range is 2.30 to 2.50.

For the full fiscal year 2025, Kroger raised its identical sales without fuel guidance to a range of 2.25% to 3.25%, up from its previous forecast. However, the company maintained its adjusted earnings per share outlook of $4.60 to $4.80, in line with analyst expectations of $4.76.