The board of The Kroger Co (NYSE: KR) has made a big bet on their own abilities to boost profitability with a US$500 million share buyback scheme.

In addition, the retailer will also raise annual expenditure by US$200 million, as it seeks to increase square footage, enter new markets and increase store penetration.

The company appears to believe the moves are worthwhile, raising its long term earnings per share (EPS) forecast from 6-8% to 8-11%.

"Our proven strategy and market position provide a tremendous platform to accelerate growth and increase value creation for Kroger shareholders," said Kroger CEO David B. Dillon.

"We are confident that Kroger's unmatched knowledge of the customer and disciplined approach to deploying capital will drive growth at attractive levels of return.

"We will continue to use our strong free cash flow to deliver shareholder value through actions such as our recent 30 percent dividend increase and the continuation of our substantial share repurchase program."

Dillon highlighted that Kroger created 29,000 new jobs during the last five years despite difficult economic conditions.

"We are going to invest to grow and expand our store base, which will create more job opportunities over the next five years, and beyond."

A company release said growth would also be driven by new customer channels such as digital and mobile platforms, as well as new store formats that offer greater access and shopping flexibility.

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