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Updated: 8:27 p.m. Thursday, June 14, 2012 | Posted: 9:18 a.m. Thursday, June 14, 2012

Kroger’s profit edges up in 1Q, raises outlook

NEW YORK — The Kroger Co. is forecasting a rosier year after its customer-loyalty programs helped boost net income in the first quarter.

The nation’s largest traditional grocery store chain said Thursday that its targeted discounts and coupon mailings, which are based on purchase histories, are enticing more customers to return to its stores.

The aggressive courtship comes at a time when Kroger and other supermarkets and big-box retailers are struggling to manage their costs for products, which have ballooned as a result of higher fuel and commodity prices.

Rather than taking the risk of scaring off customers by passing on those costs entirely, the Cincinnati-based company is focusing on cutting expenses and boosting traffic in its stores.

The strategy is paying off. Kroger said its “loyal households,” which the company defines based on shopping patterns, grew in the quarter.

These shoppers were buying fewer items per trip, but visiting more often and ultimately buying more than they did a year ago.

For the quarter, Kroger said revenue at stores open at least a year rose 4.2 percent, the 34th straight quarter of growth. The figure is a key performance metric because it strips out the effect of newly opened and closed stores.

The company stood by its forecast that the figure would grow 3 percent to 3.5 percent for the year.

Total revenue for the quarter was $29.06 billion, up from $27.46 billion but shy of Wall Street expectations of $29.16 billion.

Merchandise costs, which include advertising and transportation, rose to $23.1 billion, representing 79.4 percent of sales. That’s up from 78.7 percent in the year ago-quarter.

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