Kroger Co raised its forecast for annual profit on Thursday, betting that its quick pickup and delivery services will encourage consumers to order groceries online even as they begin dining out again.

The company has bolstered its business through its "Restock Kroger" program and its partnership with UK-based Ocado Group Plc to use robots to more quickly stock, sort and dispatch goods.

The operator of Ralphs and Fred Meyer stores has also tied-up with third parties such as Instacart to handle deliveries.

The investments have paid off, with Kroger posting triple-digit growth in online sales since the beginning of 2019, even as Amazon.com Inc and big-box rivals Walmart Inc and Target Corp doubled down on grocery.

"'Grocery retail' might soon be known as 'grocery-tech', given the way companies like Kroger are racing to transition from big-box brick-and-mortar to digitally-enabled infrastructure, and logistics companies," Third Bridge analyst Nyree Hinton said.

In the first quarter ended May 22, Kroger's digital sales jumped 16%.

Revenue came in above pre-pandemic levels at $41.3 billion, above estimates of $39.78 billion. Excluding items, Kroger earned $1.19 per share, beating estimates of $1.01.

The reported quarter was also propped up by strong performance in the company's alternative profit business, which includes media, and financial products and services.

Kroger forecast 2021 adjusted profit per share between $2.95 and $3.10, compared with its prior range of $2.75 to $2.95.

The company expects 2021 adjusted same-store sales to fall between 2.5% and 4%, while it had earlier projected a decline of up to 5%.

The forecasts were also above Refinitiv IBES estimates.

"We do not believe most investors expected a print this strong, nor a guidance raise this substantial," J.P. Morgan analyst Ken Goldman said.

Shares of Kroger, which unveiled a $1 billion share repurchase program, were down in a broadly weaker market.

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Sriraj Kalluvila) ((Praveen.Paramasivam@thomsonreuters.com;))