At its annual investor meeting Tuesday in New York, Kroger Co. (KR) outlined plans to expand in to new markets, buy back more of its stock, and increase its capital spending, as it raised its expectations for profits.
Executives said Kroger has been improving as a business over the past few years but its stock price hasn't reflected such because the grocery-store operator wasn't growing in a way that delivers shareholder value.
As a result, Kroger announced Tuesday its board approved a $500 million stock-buyback program, and it now expects to generate a higher profit over the long term.
Kroger also said it plans to increase capital spending by $200 million a year to support the expansion plans in existing and new markets.
Shares were up 4.3% at $24.44 in recent trading Tuesday.
But analysts at the meeting questioned how Kroger will compete with the behemoth Wal-Mart (WMT), which had its annual investor day last week, in these new markets. Kroger said details on that strategy will be outlined later in the day.
Kroger, one of the U.S.'s largest grocery store networks, has outpaced competitors, such as Safeway Inc. (SWY) and Supervalu Inc. (SVU), by marking down its prices to become value-oriented, even before the recession started, and expanding its store-branded line of products to lure budget shoppers.
The latest buyback program replaces an earlier one that had about $340 million remaining.
The company now anticipates long-term per-share earnings growth of 8% to 11%, compared with its earlier view for growth of 6% to 8%...
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Source: Argentine Beef Packers S.A.
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