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Kroger Likely to Report In-Line First-Quarter Results, Maintain Outlook, Oppenheimer Says

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Kroger Likely to Report In-Line First-Quarter Results, Maintain Outlook, Oppenheimer Says

Kroger's (KR) fiscal first-quarter results are expected to be largely in line with expectations for a softer start to the year, Oppenheimer said in a Tuesday note.

The supermarket chain, which will release its quarterly results on Thursday, is also expected to reaffirm its full-year guidance, according to Oppenheimer analysts, including Rupesh Parikh.

In March, Kroger projected adjusted earnings of $5.10 to $5.30 per share for fiscal 2026, compared to the current FactSet consensus of $5.23. It pegged full-year identical sales growth, excluding fuel, at 1% to 2%, taking into account a roughly 130 basis-point headwind from the Inflation Reduction Act, which reduces reimbursement rates on key medications. Same-store sales in fiscal 2025 grew 2.9%.

"We expect a largely in-line (first-quarter) delivery even with a more difficult grocery/pharmacy backdrop to start the year," Parikh wrote. "We believe management has already incorporated headwinds related to egg deflation, the Inflation Reduction Act, and (Supplemental Nutrition Assistance Program) when the company provided guidance in early March."

Kroger's first-quarter identical sales, excluding fuel, would be near the low end of the full-year range, driven primarily by continued egg deflation, Chief Financial Officer David Kennerley said during the earnings conference call in March, according to a FactSet transcript.

Oppenheimer is also projecting a 1% identical sales increase for the quarter, while Wall Street is looking for a 1.1% growth.

"We view this report as one of the most anticipated ones in a while as investors await a strategic update from new CEO Greg Foran on plans to more aggressively reduce prices," Parikh said. Foran took over in February.

But with Kroger still evaluating recent efforts, Oppenheimer believes the company is unlikely to unveil new comprehensive strategic plans until later this year.

The brokerage has a perform rating on the stock, without any price target.

"(Kroger) shares remain on our radar with valuation a key positive," Parikh said.

Price: $63.67, Change: $-0.40, Percent Change: -0.62%

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