BY REUTERS

The Kroger Company, the grocery store chain, reported Tuesday that it topped Wall Street earnings targets despite a drop in profit, and it said the weak economy had not slowed its grocery store customers.

Same-store sales, which include stores that have been open five full quarters and have not been moved or expanded, are tracking at the high end of the company’s forecast for growth in 2008 of 3 percent to 5 percent excluding fuel, the company said.

“There really are no clear signs of the customer pulling back at Kroger,” the chief executive, David B. Dillon, told analysts. Executives did, however, say spending for discretionary items like jewelry and home furnishings had declined.

Fourth-quarter net profit was $322.9 million, or 48 cents a share. Net profit in the year-earlier period was $384.8 million, or 54 cents a share, and was aided by an unexpected tax benefit and other items.

An analyst for Goldman Sachs, John Heinbockel, said in a client note that Kroger’s results were “solid and high quality, exhibiting little fallout from an increasingly challenging macroeconomic environment.”

Investors have been worried about the impact of food inflation as consumer confidence and spending sag amid a broad slowdown. Kroger executives estimated that product cost inflation in the fourth quarter was 3.8 percent compared with a year earlier, the highest that the company executives had seen in many years.

Fourth-quarter sales at the company, which operates Kroger, Fred Meyer and Ralphs grocery stores as well as the Littman and Barclay jewelry chains, rose 2.2 percent, to $17.2 billion.

Analysts on average were looking for earnings of 47 cents a share on revenue of $16.88 billion, according to Reuters Estimates.

Same-store sales were up 5.3 percent, excluding fuel.

Kroger said it expected 2008 earnings of $1.83 to $1.90 a share. Analysts had forecast earnings of $1.90 a share.

Shares rose 68 cents, to $26.