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Kroger lifts guidance, citing plans to expand

Oct. 17, 2012 @ 12:00 AM

NEW YORK -- Kroger is forecasting stronger growth in the years ahead, as the nation's biggest traditional supermarket operator continues to transform the format of its stores to fend off competitors and keep up with changing shopping habits.

The Cincinnati-based company, which operates its namesake stores as well as Food 4 Less, Fred Meyer, Dillon's and other chains, says the growth will be driven through expansion into new and existing markets, as well as improvement in its core business.

Over the long term, Kroger Co. now expects earnings per share to grow 8 percent to 11 percent, up from the previous forecast of 6 percent to 8 percent. The company stood by its sales and earnings guidance for the current fiscal year.

As competitors such as Target Corp. and Wal-Mart Stores Inc. have expanded their grocery aisles, Kroger has responded by investing more into its Marketplace stores, which have a bigger footprint and sell car parts and furniture in addition to groceries. Last month, for example, Kroger said it would start selling clothes for the first time at a Kroger Marketplace store in Ohio. The store sells shoes, jewelry and undergarments, including brands such as Skechers and Levi's.

The company has about 70 Marketplace stores, up from 42 five years ago.