Kroger Co. (NYSE:KR) posted second-quarter earnings that exceeded analyst expectations, supported by strong identical store sales and margin expansion. The results prompted the grocer to raise its full-year guidance.

Kroger reported adjusted earnings of $1.04 per share, above the $0.99 consensus. Revenue was $33.9 billion, just below expectations of $34.05 billion. Identical sales without fuel rose 3.4% year-over-year, compared with 1.2% growth a year earlier.

Gross margin improved to 22.5% from 22.1%, aided by the sale of Kroger Specialty Pharmacy, lower supply chain costs, and reduced shrink. E-commerce sales grew 16% in the quarter.

The company raised its full-year identical sales outlook to 2.7%-3.4% from 2.25%-3.25%. Adjusted operating profit was forecast at $4.8-$4.9 billion, up from $4.7-$4.9 billion previously. Full-year adjusted EPS was guided at $4.70-$4.80, compared with $4.60-$4.80 earlier. The midpoint of $4.75 was slightly below the analyst consensus of $4.78.