10:17 AM EST, 03/07/2024 (MT Newswires) -- Kroger ( KR ) gave an upbeat full-year profit outlook on Thursday as inflation-hit consumers seek cheaper meal options, providing a boost to the supermarket chain's fiscal fourth-quarter results.

The company expects adjusted earnings to be in a range of $4.30 to $4.50 per share for fiscal 2024, compared with the consensus on Capital IQ for $4.31. In the just ended 2023 fiscal year, adjusted EPS rose 8% to $4.76.

Identical sales growth excluding fuel is pegged at 0.25% to 1.75%, while the Street is looking for a gain of 1%. Last year, same-store sales increased 0.9%. The stock climbed nearly 7% in Thursday trade.

"We plan to balance investments in our business, including lowering prices and increasing associate wages, with productivity and cost savings initiatives, improvement on long-term initiatives in gross margin and growth in our alternative profit businesses," interim Chief Financial Officer Todd Foley said in a statement. "This strength in our model gives us confidence in our ability to deliver on our 2024 guidance."

For the three-month period ended Feb. 3, adjusted earnings, excluding nonrecurring items, advanced to $1.34 a share, or $1.14 when taking out the benefit of a 53rd week. A year ago adjusted earnings were $0.99 and the Street was looking for normalized EPS of $1.13. Sales inclined to $37.06 billion from $34.82 billion, in line with the market view.

"As customers manage macroeconomic pressures, we are lowering prices and offering even more ways to save with personalized promotions and rewards," Chief Executive Rodney McMullen said. "We are increasing customer visits and growing loyal households through the strength of our retail business, which positions Kroger ( KR ) for more ways to drive sustainable future growth."

Kroger ( KR ) continues to anticipate to generate robust free cash flow and to pay its quarterly dividend, with increases over time, subject to board approval. The company said it has paused its share repurchase program to prioritize deleveraging following its planned merger with Albertsons Cos. (ACI).

Last week, the US Federal Trade Commission challenged the proposed roughly $24.6 billion deal between the grocers, claiming it would eliminate competition, increase grocery prices and harm "tens of thousands" of workers.

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