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CINCINNATI-A cutback in prices, improved customer service and better food and merchandise selection helped boost third-quarter earnings 16% at Kroger Co., prompting one of the nation’s largest supermarket chains to raise its outlook for the year.

The locally-based grocer, which operates 2,473 supermarkets and multi-department stores in 31 states under two dozen local banners, including Kroger, Fry’s, Ralphs and Smith’s, earned $214.7 million, or 30 cents a share, in the quarter ended Nov. 4, compared with $185.4 million, or 25 cents, earned a year earlier. Revenue was also up 5% to $14.7 billion in the 90-day period.

“Our results are being achieved by a balanced approach and are being impacted by more than just the price,” David B. Dillon, Kroger’s chairman and chief executive, said in a conference call with analysts. “These results clearly show what we can achieve by focusing on improving the service, product selection, quality and pricing we offer customers throughout the year.”

Despite tough competition from discount chains like Wal-Mart and specialty players such as Whole Foods Market, sales at stores open at least five quarters were up 5.3%, excluding fuel sales, and 4.9% with gasoline sales included. Comparative store sales, excluding gasoline, are expected to top 5% in the next quarter, the company says.

Dillon noted that despite a drop in gas prices, customers continue to shop close to home and are eating meals at home rather than at restaurants, benefiting Kroger stores.

The strong third-quarter earnings are expected to continue into the fourth quarter based on sales momentum leading into the holiday season, the company said. As a result of those expectations, Kroger raised its earnings estimate from to between 8% and 10% sales growth for the year. The company previously estimated per-share growth to be between 6% and 8%. The new guidance could produce earnings of between $1.41 to $1.44 per share, compared with prior year per-share earnings of $1.31.

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