Executive Summary

• Kroger reported 1Q17 adjusted EPS of $0.58, in line with the consensus estimate. Revenues were $36.3 billion, up 4.9% year over year and slightly above the $35.6 billion consensus estimate.
• Identical supermarket sales excluding fuel were down 0.2%, beating the (0.5)% consensus estimate. Including fuel, identical sales increased by 1.6%.
• Kroger lowered its FY17 adjusted EPS guidance to $2.00–$2.05 from $2.21–$2.25 previously. The company cited increased expectations for LIFO, from $25 million to $80 million, incremental price investments in certain markets and incremental investments in hours and wages as the factors behind the lower guidance. Kroger continues to expect identical sales growth (excluding fuel) of 1% in FY17.