CINCINNATI — Utilizing an unexpected tax benefit as cover for a heavy round of pricing investment drove robust quarterly sales for Kroger, but Wall Street disapproved. Shares in the retailer here were down by more than 6% Tuesday after Kroger said it invested much of a $40 million tax benefit in lower retail prices and service initiatives during the fiscal third quarter ended Nov. 10. Earnings of $253.8 million, or 37 cents per share, came in above expectations of 35 cents but below what might have been expected had Kroger not received the tax benefit, analysts explained. “If you exclude the tax benefit they missed expectations,” Neil Currie, an analyst for UBS, New York, told SN. “But what Kroger sees is a long-term opportunity to press its advantage over competitors with lower prices and better service. This [tax] windfall they received, rather than give it to shareholders, they gave it to customers.” Sales during the period increased 9.8% to $16.1 billion, and identical-store sales improved by 7.7% (5.7% excluding fuel).
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