Kroger's shares rise as grocer says shoppers seek lower prices, cook more at home
Shares of Kroger rose about 9% on Friday as the supermarket operator raised its full-year sales outlook and said it's drawing shoppers seeking lower-priced store brands and cheaper alternatives to dining out.
The Cincinnati-based grocer said it now expects identical sales, excluding fuel, to increase by 2.25% and 3.25% year over year, higher than its previous expectations for an increase of between 2% and 3%. Identical sales is an industry-specific metric that takes out one-time factors, such as store openings, closures and renovations. Kroger include stores and delivery sales in regions that have been in operation for five full quarters in identical sales.
So far this year, shares of Kroger are up nearly 16%, outpacing the approximately 1% gains of the S&P 500 during the same period.
Here's how the company did for the fiscal first quarter compared with Wall Street's estimates, according to a survey of analysts by LSEG:
In the three-month period that ended May 24, Kroger's net sales were $866 million, or $1.29 per share.
Identical sales, excluding fuel, rose 3.2% compared to the year-ago period, with growth coming from pharmacy, e-commerce and fresh groceries. The company's e-commerce sales grew by 15% year over year.
Kroger, which owns supermarket banners across the country, has gone through significant changes over the past year. A judge blocked its $25 million acquisition of competitor Albertsons in December. Longtime CEO Rodney McMullen resigned in March after a company investigation into his personal conduct. And the company's legal battle with Albertsons over the demise of the merger deal is ongoing.
The company also recently hired a new CFO, David Kennerley, formerly the chief financial officer for PepsiCo Europe, after its former CFO Gary Millerchip left for Costco.
On top of company-specific challenges, Kroger faces stiffer competition from Walmart and Costco — particularly as shoppers spend cautiously and watch prices closely because of tariff uncertainty.
On an earnings call with analysts on Friday, interim CEO Ron Sargent said Kroger is trying to cater to value-minded shoppers by simplifying its promotions, lowering prices on more than 2,000 products so far this year and emphasizing its private brands that tend to cost less.
"Many customers want more value, and as a result, they're buying more promotional products and more of our brand's products," he said. "They're also eating more meals at home."
He said the company has seen a jump in shoppers buying larger pack sizes, using coupons more and buying fewer discretionary items such as snacks and adult beverages.
Kroger's private labels, which tend to be cheaper than name-brand national brands, have been a growth driver as well. For the seventh consecutive quarter, Sargent said Kroger's own brands grew faster than national brands. Its top two brands were Kroger's more premium-focused brands: Simple Truth, its line of organic items, and Private Selection, which includes gourmet and artisan-inspired items like brioche dinner rolls and lobster mac and cheese.
Sargent said Kroger will try to build on that momentum — and health trends it's seeing — by launching 80 new protein products to its Simple Truth line, including protein bars and shakes.
As a grocer that sells many food items from the U.S., Sargent said Kroger isn't as impacted by higher tariffs on imports from across the globe as other companies. Yet in places where it does import goods, such as fruit and vegetables or flowers, he said it is "proactively looking for ways to avoid raising prices for our customers, and we consider price changes as a last resort."
"Tariffs have not had a material impact on our business so far. And given what we know today, we do not expect them to going forward," he said.
Kroger is also taking a hard look at its costs so it can modernize its business and get its e-commerce business closer to profitability, Kennerley said on the earnings call. The e-commerce business, a combination of curbside pickup and deliveries to customers' doors, is not yet profitable.
The company said Friday that it will close about 60 stores over the next 18 months, which led to a $100 million impairment charge in the first quarter.
Sargent said the company had paused its annual store review during the merger process and not all of its stores are "delivering the sustainable results we need," so now it's catching up with closing unprofitable stores. Still, he said, even as it's shuttering stores, Kroger plans to open new locations in higher-growth parts of the country and will accelerate those openings in 2026.
Kroger continues to search for its next CEO. Sargent said the company's board is working with a search firm, but does not yet have an update.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
27 minutes ago
- Yahoo
Walmart to pay $10 million to settle US FTC lawsuit over money transfer fraud
By Jonathan Stempel (Reuters) -Walmart has agreed to pay $10 million to settle a U.S. Federal Trade Commission civil lawsuit accusing the world's largest retailer of ignoring warning signs that fraudsters used its money transfer services to fleece consumers out of hundreds of millions of dollars. The settlement was filed on Friday in Chicago federal court, and requires approval by U.S. District Judge Manish Shah. Walmart also agreed not to process money transfers it suspects are fraudulent, or help sellers and telemarketers it believes are using its services to commit fraud. "Electronic money transfers are one of the most common ways that scammers tell consumers to send them money, because once it's sent, it's gone for good," said Christopher Mufarrige, director of the FTC consumer protection bureau. "Companies that provide these services must train their employees to comply with the law and work to protect consumers." The Bentonville, Arkansas-based retailer did not admit or deny wrongdoing in agreeing to settle. Walmart did not immediately respond to requests for comment. In its June 2022 complaint, the FTC accused Walmart of turning a blind eye to fraudsters who used its money transfer services to cash out at its stores. Walmart acts as an agent for money transfers by companies such as MoneyGram, Ria and Western Union. Money can be hard to trace once delivered. The FTC said fraudsters used many schemes that included impersonating Internal Revenue Service agents, impersonating family members who needed money from grandparents to avoid jail, and telling victims they won lotteries or sweepstakes but owed fees to collect their winnings. Shah dismissed part of the FTC case last July but let the regulator pursue the remainder. Walmart appealed from that decision. Friday's settlement would end the appeal. The case is Federal Trade Commission v Walmart Inc, U.S. District Court, Northern District of Illinois, No. 22-03372. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
CBS News
27 minutes ago
- CBS News
Kroger says it will close 60 stores across the U.S. over the next 18 months
How to shop smarter and spend less as grocery prices climb How to save on groceries as prices climb How to save on groceries as prices climb Kroger said it plans to close 60 of its supermarkets across the U.S. over the next 18 months. The planned store closures represent about 5% of the Cincinnati-based company's 1,239 Kroger-branded grocery stores across 16 states. The grocery retailer did not specify which store locations it plans to cease operating. Kroger did not immediately respond to CBS MoneyWatch's request for comment about the store closure locations. The grocery chain announced the planned reduction of its footprint as it reported its first-quarter earnings Friday. Sales dropped slightly to $45.1 billion compared to $45.3 billion for the same period a year earlier. Kroger said that it expects the 60 store closures to buoy the company financially, according to a regulatory filing. "In the first quarter, Kroger recognized an impairment charge of $100 million related to the planned closing of approximately 60 stores over the next 18 months. As a result of these store closures, Kroger expects a modest financial benefit," the company said. Kroger said the resulting savings will be invested in customer experience initiatives. Kroger also said that all employees at affected stores will be offered roles at other Kroger store locations.
Yahoo
39 minutes ago
- Yahoo
Find Big Beautiful Profits in Trump's Budget Bill
There's a new sheriff in town, or at least that's what the budget bill Trump is back in the saddle, and he's riding in with a 'Big, Beautiful Bill' that aims to reshape the fiscal landscape of America. Whether you love it or loathe it, one thing's certain: there's money to be isn't about political ideology. This is about dollars and cents. And if you're the kind of investor who likes to get ahead of the curve, now's the time to pay I'm breaking down exactly how Trump's latest budget proposal can translate into a market-moving opportunity. We're going to zero in on the sectors that are poised to benefit and understand why policy creates get into the Budget BoomTrump's budget isn't a 'skinny bill' or some placeholder draft. It's a fireworks show of federal spending. This is fiscal stimulus with a red hat and a bullhorn. Infrastructure, defense, border security, energy independence, you name it, there's a line item for are forward-looking machines, and as the bill takes shape, capital is already shifting. Institutional money doesn't wait until the ribbon-cutting ceremony; it loads up when the ink hits the page. That's why understanding the thematic shifts before they materialize in quarterly earnings is key to Government, Big Gains It may seem counterintuitive, but historically, markets have been fond of spending. It doesn't matter if the budget is balanced or busted; the important thing is where the money is going. And Trump's Big, Beautiful Bill tells us that loud and clear. Follow the money for take a look at the big-ticket themes in this budget that are likely to push equity valuations Spending ExplosionThis one is self-explanatory right now. If there's one part of the federal budget Trump never skimps on, it's defense. With ongoing geopolitical tensions and a hawkish stance on global military presence, the defense budget is poised to increase planes, tanks, missiles, cybersecurity, satellites, and advanced warfare tech. The contractors that feed the Pentagon machine are going to be very busy. Of course, Aerospace and Defense stocks immediately come to mind. But don't let yourself get caught up in 20th-century thinking on this one. The future of warfare is all about escalation in the Middle East is very unnerving. The threat of this conflict spilling over to other nations is Hat Capitalism: Infrastructure Gets the Green Light Trump is back to preaching 'America First,' and that includes putting steel to pavement. Roads, bridges, tunnels, ports, and broadband infrastructure are all getting a stocks, raw materials, engineering firms, and specialized machinery manufacturers are among the first to receive contracts and for US-based stocks in these industries to fare the best, of course. This is a clear case of 'The rich get richer,' as stocks that benefited from Trump's spending last time around are likely to benefit again. Don't be afraid to revisit what worked four years . . .------------------------------------------------------------------------------------------------------The Best $1 Investment You Can MakeThis unique Zacks Ultimate arrangement grants you 30-day access to all our private portfolios for only $1 without a cent of additional portfolios have closed 99 double and triple-digit gains so far this year. While not all our picks are winners, members saw gains of +220.3%, +298.3%, +627.5%, and even +1,340.0%.¹Start Zacks Ultimate Access Now >>------------------------------------------------------------------------------------------------------The Wall, Border Tech, and SecurityYes, the wall is back. But this time, it's more about tech than brick. Firewalls have replaced actual walls. We're talking surveillance, drones, biometric scanners, smart fencing, and AI-powered tracking involved in security hardware, software, and border protection will be bidding for billion-dollar contracts. As the world evolves and shifts increasingly to the digital realm, cybersecurity becomes and Mineral Independence Energy policy under Trump has always been built on independence and dominance. This budget loosens the reins on domestic drilling, pipelines, and nuclear energy—all under the banner of 'unleashing American energy.'Coal is politically symbolic, but the real money is in LNG, shale, and infrastructure upgrades. Energy services, fracking equipment, and even uranium players stand to more than just energy this time around. The bill was introduced to Congress around the same time as several Executive Orders aimed at achieving mineral independence for the US. That means that the US does not want to rely on imports for the critical minerals it needs to manufacture critically essential Reindustrialization & Anti-China SentimentThis bill has echoes of Trump's earlier 'Bring Jobs Home' campaign. This means reshoring chip production, subsidizing critical industries, and boosting American-made manufacturing, particularly in strategic sectors such as semiconductors, robotics, and that with anti-China tech policies and you've got a recipe for selective decoupling. Expect friendly tax treatment for U.S.-based manufacturers and aggressive tariffs or bans on Chinese you've been following along the NVIDIA saga at all, you've already seen this. One day, NVIDIA can sell lower-end chips to China, and the next day, it can't. If you're reading between the lines, it's best to bet on US chip manufacturers that don't deal with the Far and Rural Healthcare Expansion Bipartisan support for improved care for veterans and underserved rural populations means healthcare stocks, particularly those focused on logistics, telehealth, and clinic expansion, could receive a significant Federal ContractorsThe big companies, such as Lockheed and Raytheon, will get the headlines. However, the real alpha is hidden in the small- to mid-cap firms that secure subcontractor work. These companies often fly under Wall Street's radar, and their earnings are disproportionately affected by a single large contract.I'm referring to niche suppliers of military-grade connectors, battlefield software, rural broadband specialists, or regional construction companies with existing government ties. These smaller companies are the ones that could potentially surge 10x in a portfolio, versus some of the behemoths, where a billion-dollar contract doesn't even move the Line The One Big, Beautiful Bill is making its way through Congress. There have already been some significant winners and substantial losers as a result. These themes are not going to fall by the wayside overnight. Following the money in that bill could lead to substantial gains for investors over the next three Best Way to Find Zacks' Top Picks Today, I'm pleased to offer you full, 30-day, real-time access to every stock and ETF we recommend as part of our celebrated Zacks Ultimate expert-led recommendation services are designed to highlight the most promising stocks on the market, including the hottest AI firms, insider trades (the legal kind), home run moves, stocks under $10, earnings surprise stocks, and much total cost is only $1, and there's no obligation to spend a cent includes the real-time buy and sell recommendations, along with expert market insights from ALL of Zacks' private portfolio future success isn't guaranteed, Zacks Ultimate members recently had opportunities to close gains of +220.3%, +298.3%, +627.5%, and an incredible +1,340.0%.¹Free Bonus Report: You'll also receive our Special Report, The Semiconductor Surge: A Single Stock to Watch. As demand and revenue for semiconductor stocks continue to boom, this little-known chipmaker looks to rival NVIDIA's explosive growth moving wait – this opportunity ends at midnight Sunday, June Access and Our Bonus Report Right Now for Just $1 >>All the best,DaveDavid BartosiakStock StrategistDave Bartosiak is Zacks' resident earnings surprise expert and the manager of Zacks's Blockchain Innovators. He selects stocks and delivers daily commentary for our Surprise Trader portfolio.¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report This article originally published on Zacks Investment Research ( Zacks Investment Research
