CINCINNATI — Kroger on Thursday reported increased sales in the third quarter. Identical store sales (excluding fuel) increased 3.1% compared to the prior-year quarter, and were up 14% on a two-year stacked basis. The two-year stack for digital sales increased 103%.

Total company sales were $31.9 billion in the third quarter, up 7.2% versus the same period last year. Excluding fuel, sales increased 2.9%.

“Driven by the momentum in our third-quarter results and sustained food at home trends, we are raising our full-year guidance, Kroger chief financial officer Gary Millerchip said. “We now expect our two-year identical sales stack to be in the range of 13.7% to 13.9%. We expect our adjusted net earnings per diluted share to be in the range of $3.40 to $3.50.  Kroger is executing against its key financial and operational initiatives and continues to invest in strategic priorities that will drive attractive and sustainable total shareholder returns. We believe our business is emerging stronger through the pandemic and is well positioned to grow beyond 2021.”

Kroger said its gross margin was 21.66% of sales for the third quarter. The FIFO gross margin rate, excluding fuel, decreased 41 basis points compared to the same period last year, mainly because of higher supply chain costs and continued price investments partially offset by sourcing benefits.

The LIFO charge for the third quarter was $93 million, compared to $23 million for the same period last year. This increase was primarily attributable to higher inflation across several categories, including grocery and meat.

Chairman and CEO Rodney McMullen  said the results show that Kroger’s initiatives are on target.

“Kroger’s strategy to lead with fresh and accelerate with digital continues to connect with our customers,” he said. “Our agility, and the commitment from our amazing associates, is allowing us to navigate current labor and supply chain conditions and provide the freshest food at affordable prices across our store and digital ecosystem.

“Our focus on execution, combined with our continued discipline in balancing investments in our associates and customers with exceptional cost management, and growth in our alternative profit business allowed us to exceed internal expectations and deliver strong sales and earnings growth.

“Across all aspects of our business, we are innovating and executing with speed against the key initiatives that are transforming our business. Kroger is in a position of strength. We are committed to delivering for our associates, customers, and communities, and we remain confident in our ability to deliver total shareholder returns of 8% to 11% over time.”

Third-quarter highlights related to the “leading with fresh” part of Kroger’s strategy include:

• Home Chef became the newest billion-dollar brand in Kroger’s Our Brands portfolio, surpassing $1 billion in annualized sales.
• Kroger’s Our Brands launched 216 new items during the quarter with plans to launch several innovative and unique products focused on helping customers enjoy the holiday season like Private Selection Holiday Trail Mix and Simple Truth Cranberry Pistachio Bread.
• Expanded launch of our End-to-End Fresh program to over 50 additional stores.
• Announced plans, with Kipster Farms of The Netherlands, to bring the world’s first carbon-neutral, cage-free eggs to retail shelves under the Simple Truth brand. name.

The retailer also noted some accomplishments in the quarter related to the “accelerating with digital” part of its strategy. They include:

• Launched Kroger Delivery Now nationwide with Instacart to provide 30-minute delivery, enabled by first-of-its-kind virtual convenience store shopping experience.
• Introduced Boost by Kroger Plus, an annual membership program that provides customers free delivery and additional fuel points on purchases in four divisions.
• Shared plans for five new customer fulfillment centers powered by the Ocado Group including expansions in California and Florida and entrance for the first time into the Northeast region.
• Announced a collaboration with Bed Bath & Beyond and buybuy Baby on a national e-commerce experience via Kroger.com and a small-scale physical store pilot to expand home and baby product offerings.
• Kroger Precision Marketing launched a new programmatic advertising marketplace  allowing agencies and brands to reach consumers by applying Kroger customer data to campaigns within their preferred ad-buying platform.