Mariano's parent holds its own against Walmart, Amazon

Bloomberg News

Kroger Co., the parent company of Mariano's grocery store chain, posted quarterly profit that topped analysts' estimates and digital sales continued to jump, a sign that the grocer's investments to keep pace with rivals are bearing fruit.

Profit excluding some items amounted to 72 cents a share, exceeding the average estimate by a penny. Online sales climbed 42% in the period that ended May 25.

Online grocery delivery remains a big opportunity for Kroger. About 35 million more Americans are now buying food online compared with a year ago, according to Coresight Research. Kroger generated about $5 billion in digital sales last year, and by the end of this year plans to offer pickup or delivery service for all of its U.S. shoppers.

Kroger, facing heightened competition, is seeking growth from all sorts of new endeavors. It has tested autonomous deliveries in Texas and Arizona, selling meal kits in Walgreens drugstores, and even offering CBD lotions and balms. Those investments are costly, though, and gross margins contracted in the quarter.

Competition from Walmart Inc., the nation's biggest grocer, and other rivals are taking a toll. Same-store sales excluding fuel at Kroger rose 1.5%, short of projections.