New York – Kroger Co. saw its stock jump over 9% on Friday after the grocery giant raised its full-year sales outlook and reported strong quarterly performance driven by increased consumer demand for value products, larger pack sizes, and home-cooked meals.
The Cincinnati-based supermarket chain said shoppers are turning to lower-priced store brands, using more coupons, and pulling back on non-essential purchases like snacks and alcoholic beverages. These behavior shifts reflect broader economic caution among U.S. households grappling with price sensitivity and tariff-related concerns.
“Many customers want more value, and as a result, they’re buying more promotional products and more of our brand’s products,” said Interim CEO Ron Sargent on an earnings call. “They’re also eating more meals at home.”
Q1 Results Beat Expectations, E-commerce Up 15%
In the fiscal first quarter ending May 24, Kroger posted:
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Adjusted earnings per share: $1.49 (vs. $1.46 expected)
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Revenue: $45.12 billion (vs. $45.19 billion forecast)
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Net income: $866 million, or $1.29 per share
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Identical sales excluding fuel: up 3.2% year-over-year
A major highlight was the company’s e-commerce sales, which climbed 15%, boosted by demand for curbside pickup and home delivery.
Revised Outlook and Strategy Shift
Kroger raised its identical sales forecast (excluding fuel) to 2.25%–3.25%, up from the previous 2%–3% estimate.
Despite facing headwinds, including increased competition from Walmart and Costco, and the collapse of its $25 billion merger with Albertsons, Kroger continues to reposition its business.
The company also confirmed the closure of 60 underperforming stores over the next 18 months, resulting in a $100 million impairment charge this quarter. Sargent explained that a previously paused store review during the failed merger process had delayed these closures.
“Not all stores are delivering the sustainable results we need,” said Sargent, noting that new store openings are planned in high-growth areas with accelerated expansion in 2026.
Private Labels Lead the Way
Kroger’s private-label brands, led by Simple Truth (organic) and Private Selection (gourmet), outpaced national brands for the seventh straight quarter. The company plans to introduce 80 new protein-rich items to the Simple Truth line, including protein shakes and bars, tapping into growing health and wellness trends.
Tariff Resilience and Cost Controls
With most products sourced domestically, Kroger reported minimal exposure to global tariff-related inflation. In areas impacted by imports, such as produce and flowers, the company is focused on price stability.
“Tariffs have not had a material impact on our business so far,” Sargent said. “We do not expect them to going forward.”
New CFO David Kennerley, formerly with PepsiCo Europe, emphasized that the company is also focused on cost optimization, especially to move e-commerce toward profitability, a key growth area that still runs at a loss.
CEO Search Continues
Kroger continues its executive transition following the March resignation of former CEO Rodney McMullen, who stepped down amid a personal conduct investigation. Sargent noted the board is working with a search firm to find a permanent successor but has no updates yet.
So far in 2025, Kroger’s stock is up nearly 16%, significantly outperforming the S&P 500, which has gained just over 1% in the same period.
As economic uncertainties shape consumer habits, Kroger appears well-positioned by leaning into value, digital, and health trends, while actively reshaping its footprint for the future.
