Kroger, one of the largest supermarket chains in the United States, experienced a notable rise in its stock price—over 9%—following the release of its first-quarter earnings. The Cincinnati-based grocer raised its full-year sales forecast, citing a growing number of price-sensitive consumers shifting toward budget-friendly grocery shopping and cooking more meals at home.
The updated outlook, combined with strategic shifts in product offerings and pricing, signals strong momentum for Kroger in an increasingly competitive retail landscape.
Strong Q1 Performance Exceeds Expectations
Kroger reported robust first-quarter earnings, with net income reaching $866 million, or $1.29 per share. On an adjusted basis, earnings per share came in at $1.49, surpassing Wall Street’s expectation of $1.46.
Though revenue slightly missed the projected $45.19 billion by coming in at $45.12 billion, identical sales—excluding fuel—rose 3.2% year-over-year, driven by strong growth in the pharmacy, fresh food, and e-commerce segments.
The company’s e-commerce sales increased 15% year-over-year, reflecting the growing trend of online grocery shopping among consumers seeking both convenience and savings.
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Raising the Bar: Upgraded Full-Year Sales Forecast
Kroger raised its full-year forecast for identical sales, excluding fuel, to a range of 2.25% to 3.25%, up from the previously expected range of 2% to 3%. This reflects consumer behavior trends leaning toward more affordable grocery options, including private-label products and in-home meal preparation.
By focusing on value and investing in its store brand portfolio, Kroger is well-positioned to capture the attention of budget-conscious shoppers amid economic uncertainty.
Private-Label Products Drive Growth
A cornerstone of Kroger’s success has been the performance of its private-label brands. These store-exclusive products offer customers significant savings compared to national brands—without compromising quality.
Interim CEO Ron Sargent noted that Kroger’s private labels have outpaced national brand growth for the seventh straight quarter. Flagship brands like Simple Truth (organic and health-focused items) and Private Selection (premium, gourmet offerings) continue to perform exceptionally well.
To further capitalize on health and protein trends, the company plans to launch 80 new protein-focused products under the Simple Truth brand, including shakes and protein bars.
Promotions and Price Cuts Attract Value-Minded Shoppers
To support consumers facing inflation and budget constraints, Kroger has reduced prices on more than 2,000 items in 2024. The grocer has also simplified promotional offerings to help shoppers find value quickly.
Sargent noted that shoppers are increasingly choosing promotional items, larger pack sizes, and using more coupons. Discretionary spending is down, particularly in categories like snacks and adult beverages.
By catering to this shift in spending behavior, Kroger is gaining ground among households prioritizing savings and home-cooked meals.
Competition Heats Up with Retail Giants
Despite strong performance, Kroger continues to face stiff competition from big-box retailers like Walmart and Costco. These competitors offer competitive pricing, expansive product selection, and bulk deals that appeal to cost-conscious families.
Additionally, with increasing uncertainty over tariffs, many retailers are adjusting their supply chains and pricing strategies. However, Kroger, which sources most of its products domestically, has reported minimal impact from tariff changes so far.
Sargent emphasized the company’s proactive approach to managing imported goods like fresh produce and flowers, noting that price hikes are considered a last resort.
Leadership Changes and Strategic Shifts
Kroger is undergoing leadership transitions following the resignation of longtime CEO Rodney McMullen amid an internal investigation. The board has yet to name a permanent successor, although a national search is underway.
The company also appointed David Kennerley, a former PepsiCo Europe CFO, as its new Chief Financial Officer. His expertise is expected to bring operational efficiency, especially in optimizing Kroger’s expanding digital and logistics operations.
As part of its ongoing transformation, the company is evaluating store performance more rigorously. Around 60 underperforming stores are scheduled for closure over the next 18 months, resulting in a $100 million impairment charge in Q1. However, Kroger also plans to open new stores in high-growth markets starting in 2026.
E-Commerce Still Not Profitable, But Growing
While e-commerce is a bright spot for growth—with a 15% increase in year-over-year sales—it remains unprofitable. The service includes curbside pickup and home delivery options.
CFO David Kennerley stated that the company is actively working to streamline e-commerce logistics, reduce fulfillment costs, and move the segment toward profitability in the coming years.
Frequently Asked Questions
Why did Kroger’s stock price increase recently?
Kroger’s stock rose over 9% after the company raised its full-year sales outlook and reported better-than-expected Q1 earnings, signaling strong performance.
What is driving Kroger’s sales growth?
Increased demand for private-label brands, more home-cooked meals, and a focus on lower prices are key drivers of Kroger’s growth.
How much did Kroger’s e-commerce sales grow?
E-commerce sales grew 15% year-over-year, fueled by greater adoption of online grocery ordering and delivery services.
Are tariffs affecting Kroger’s pricing?
So far, tariffs have had minimal impact on Kroger due to its reliance on domestic food production. The company is working to avoid price hikes on imported goods.
What changes has Kroger made to appeal to budget-conscious shoppers?
Kroger has lowered prices on over 2,000 items and simplified promotions. It’s also expanding its affordable private-label offerings.
Is Kroger closing stores?
Yes, the company plans to close around 60 underperforming stores over the next 18 months, while preparing to open new locations in high-growth areas.
Who is Kroger’s current CEO?
Ron Sargent is serving as interim CEO following the resignation of Rodney McMullen. The board is actively searching for a permanent replacement.
What are Kroger’s top-performing store brands?
Simple Truth and Private Selection are Kroger’s leading private-label brands, focused on organic and premium grocery items.
Conclusion
Kroger’s latest earnings report reflects a company not just surviving, but thriving in a changing retail landscape. By doubling down on value, enhancing private-label offerings, and expanding digital services, Kroger is meeting consumers where they are—both in budget and behavior.
Despite headwinds from competitors and leadership transitions, Kroger’s adaptability, cost discipline, and consumer-focused strategy are positioning it for continued success. With plans to close underperforming stores, optimize e-commerce, and invest in future growth, the supermarket chain is moving forward with a sharpened focus and resilient approach.
As more Americans cook at home and watch their wallets, Kroger stands to benefit from this evolving consumer mindset—making it a stock and brand to watch closely in the months ahead.