Stock jumps 9% after strong earnings and private label growth
Kroger shares surged more than 9% on Friday after the grocery giant raised its full-year sales forecast and highlighted growing momentum among price-conscious shoppers. The company now expects identical sales, excluding fuel, to rise between 2.25% and 3.25%, above its earlier guidance of 2% to 3%.
The updated outlook reflects Kroger’s success in attracting customers seeking affordable alternatives to eating out and name-brand products. Value-oriented behavior, such as bulk buying, coupon use, and increased demand for private label goods, continues to shape the supermarket’s sales trends.
Q1 results beat expectations
For the fiscal first quarter ended May 24, Kroger reported adjusted earnings of $1.49 per share, topping analyst expectations of $1.46. Revenue came in slightly below estimates at $45.12 billion versus $45.19 billion. Net income for the quarter was $866 million.
Same-store sales excluding fuel rose 3.2% year over year, with strength in pharmacy, fresh food, and a 15% boost in e-commerce. The grocer’s store brands, especially the premium lines Simple Truth and Private Selection, continued to outperform national brands for the seventh consecutive quarter.
Leadership changes and long-term strategy
Following a turbulent year — including the blocked $25 billion Albertsons merger and the resignation of former CEO Rodney McMullen — Kroger is working to refocus operations. The company recently appointed former PepsiCo Europe CFO David Kennerley and is actively searching for a new permanent CEO.
Interim CEO Ron Sargent emphasized on the earnings call that Kroger is streamlining promotions and reducing prices on over 2,000 items to meet shopper demand for affordability. The company also plans to launch 80 new protein products under its Simple Truth line to align with health trends.
Efficiency push and store closures
To improve profitability and streamline operations, Kroger will close approximately 60 underperforming stores over the next 18 months, resulting in a $100 million impairment charge this quarter. The move follows a pause in store reviews during the failed Albertsons merger.
Despite closures, Kroger plans to expand in faster-growing markets with new store openings in 2026. The retailer is also investing in its e-commerce infrastructure, which includes curbside pickup and home delivery, although that segment has yet to turn a profit.
Kroger says tariff impacts have so far been minimal, and the company continues to seek supply chain alternatives to avoid price hikes on imported items like produce and flowers.
