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Kroger stock pops on second-quarter earnings beat

Yahoo Finance Live looks at Kroger's promising second-quarter earnings report citing.

Video Transcript

DAVE BRIGGS: My play is ticker KR. Kroger shares popping in this morning's earnings report. Same store sales minus fuel up 5.8% for the quarter. Earnings per share, $1, both topping expectations. Kroger raising its annual sales and profit forecasts, as consumers drive up demand for groceries and household essentials. Inflation, as you all know, shifting spending away from discretionary goods toward essentials.

Their CEO, Rodney McMullen, saying, quote, "We saw incredible engagement in our private label brands during the quarter, with identical sales growth of 10.2% compared to last year." That's up from 6%. So people really trying to save money by investing, by buying those private labels.

Now, shares of KR up more than 7% on the day and have outperformed the market steadily all year, up more than 14% year to date. A solid performer all year, Rachelle.

RACHELLE AKUFFO: And we know in terms of earnings reports, that all-important forward guidance has really been a make or break for a lot of these companies. So having this upbeat forward guidance clearly a win here for Kroger. And as you mentioned, that people sort of shifting their priorities. We talked yesterday about a lot of people perhaps not just going for some of these big name brands, but really just going with the store brands as well. So that's also boosting their bottom line as well. So a lot to like here in this report, Seana.

SEANA SMITH: Yeah, it is. And I also think it's encouraging just in terms of the current economic landscape, right? Lots of questions about how much consumers are willing to spend and continuing to spend. So I guess you can maybe argue both sides of it. They're trading down, right, which could be a worrisome sign. But they're not totally pulling back on some of their spending.

So certainly, Kroger has been a beneficiary of this current economic environment, but that guidance, I agree with you, the guidance is so key here. And we've seen so many of the stocks that have reported here in this past earnings report trade solely based on the guidance. So the fact that guidance was relatively strong, I think, is an encouraging sign, not only for Kroger, but also for the economy at large as well.