02:45 PM EDT, 09/12/2024 (MT Newswires) -- Kroger ( KR ) lifted the midpoint of its full-year identical sales forecast on Thursday after reporting mixed second-quarter results, underscoring its optimism that consumers will continue prioritizing spending on food and essentials.

The grocery store operator now expects identical sales excluding fuel to grow between 0.75% and 1.75% this year, lifting the lower-end of the outlook from 0.25% previously. Analysts surveyed by Capital IQ are modeling for identical sales growth of 1.1%. Shares of Kroger ( KR ) were up 6% in afternoon trade.

"We are cautiously optimistic about our sales outlook for the second half of the year and expect customers to continue prioritizing food and essentials," Chief Financial Officer Todd Foley told analysts on a conference call, according to a Capital IQ transcript. "We have developed merchandising plans that are designed to enhance customer engagement, drive spending and improve unit volumes."

The company raised its capital expenditures guidance to between $3.6 billion and $3.8 billion from a prior range of $3.4 billion to $3.6 billion. The increased CapEx outlook reflects major and minor store projects, Foley said on the call.

Kroger ( KR ) continues to expect adjusted earnings per share between $4.30 and $4.50, compared with the $4.44 Capital IQ-polled consensus.

For the second quarter, revenue edged up to $33.91 billion for the three months ended Aug. 17 from $33.85 billion a year ago but missed the $34.12 billion average analyst estimate. Adjusted EPS dipped to $0.93 from $0.96 but topped the Street's $0.91 forecast.

Identical sales excluding fuel were up 1.2%. Five analysts were expecting growth of 0.9% for the quarter. While sales outpaced internal expectations, profitability lagged due to product mix pressures related to strong sales of glucagon-like peptide-1, or GLP-1, drugs, Chief Executive Rodney McMullen told analysts.

While these weight loss drugs are expected to have a similar impact on Kroger's ( KR ) results for the remainder of the year, the company is "ramping up" its vaccine efforts, which should help offset some of the GLP-1 pressure in the second half of the year, he said.

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