CINCINNATI — Supermarket operator Kroger reported Thursday that it gained shoppers and market share in the first quarter despite aggressive competition from Wal-Mart.
It wasn't all good news, though, as Kroger, the nation's largest traditional grocery store operator, said its net income fell 14 percent for the quarter because of increased costs. But the results beat analysts' expectations.
"Kroger continues to perform well as the economy struggles to recover," CEO Dave Dillon said.
The company said it earned $373.7 million, or 58 cents a share, for the quarter ended May 22. That beat the average forecast for earnings of 54 cents a share from analysts surveyed by Thomson Reuters.
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Net income was $435.1 million, or 67 cents a share, in the same quarter last year.
Revenue rose 9 percent ,to $24.76 billion, helped by gasoline sales. Excluding gas, revenue rose 3 percent.
Investors were closely watching Kroger's performance as competition in the grocery industry escalates.
Supermarket chains, discounters and others have been fighting fiercely for shoppers since consumers began eating at home more often to save money more than a year ago. Shoppers also became much more focused on price, which led stores to offer aggressive promotions and discounts.
Wal-Mart, which sells more groceries in the United States than any competitor including Kroger, took things up a notch in May when it rolled out attention-grabbing offers like cases of Coke for less than $4.
But Kroger said many shoppers are basing decisions on more than price, and it has invested heavily in improving its stores and other elements of the shopping experience for customers, while keeping prices competitive.
Sales at stores open at least a year, considered a critical indicator for retailers, grew 2.4 percent across all Kroger's regions for the quarter.
"It cannot be just about price." Dillon told investors. "If it is just about price, that really is Wal-Mart's game and not our game, so we don't focus just on that."