WEBULL

Kroger Narrows Sales Outlook As Shoppers Watch Their Wallets

Benzinga · 2d ago

Kroger Company (NYSE:KR) stock fell Thursday after the retailer posted mixed quarterly results marked by softer-than-expected revenue.

The company reported third-quarter adjusted earnings per share of $1.05, beating the analyst consensus estimate of $1.03.

Quarterly sales of $33.859 billion missed the Street view of $34.155 billion.

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Metrics

Identical Sales without fuel increased 2.6%, while e-commerce sales increased 17%.

Kroger reported an operating loss of $1.54 billion, driven by $2.6 billion in previously announced impairment and related charges tied to its automated fulfillment network.

Competition and reduced SNAP benefits pressured demand, and Kroger is scaling back its automation push with a $2.6 billion charge.

“Our eCommerce business posted another quarter of impressive performance. We have now completed our strategic review which we expect will make our e-commerce business profitable in 2026,” said CEO Ron Sargent.

Gross margin was 22.8% of sales for the third quarter compared to 22.4% for the same period last year.

The improvement in gross margin was primarily attributable to the sale of Kroger Specialty Pharmacy, Our Brands performance, lower supply chain costs, and lower shrink.

The LIFO charge for the quarter was $44 million, compared to a LIFO charge of $4 million for the same period last year.

The FIFO gross margin rate rose 49 basis points, including a 25-basis-point boost from the sale of Kroger Specialty Pharmacy.

Kroger launched a $5 billion accelerated share repurchase program in the fourth quarter of fiscal 2024 and completed it in the third quarter of fiscal 2025 under its $7.5 billion authorization.

The company is now repurchasing shares in the open market under the remaining $2.5 billion authorization.

Kroger expects to complete these open-market buybacks by the end of fiscal 2025, as reflected in its full-year guidance.

Outlook

“Given our year-to-date results and outlook for the remainder of the year, we are narrowing our identical sales without fuel guidance to a new range of 2.8% to 3.0%,” said CFO David Kennerley.

In September, it had expected sales growth in the range of 2.7% to 3.4%.

Kroger trimmed its annual sales forecast as cash-strapped shoppers became more selective, Reuters reported on Thursday.

Kroger raised its fiscal 2025 adjusted earnings outlook to $4.75 to $4.80 per share, up from its prior range of $4.70 to $4.80, compared with the $4.77 analyst estimate.

KR Price Action: Kroger shares were down 4.08% at $63.50 at the time of publication on Thursday, according to Benzinga Pro data.

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