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Kroger Maintains Full-Year Outlook Following Mixed First-Quarter Results

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Kroger Maintains Full-Year Outlook Following Mixed First-Quarter Results

Kroger (KR) reiterated its full-year outlook on Thursday as the supermarket chain's fiscal first-quarter sales topped market estimates, although earnings fell short of expectations.

The company continues to anticipate adjusted earnings between $5.10 and $5.30 a share for fiscal 2026. The consensus on FactSet is for non-GAAP EPS of $5.23.

Identical sales growth, excluding fuel, is still pegged at 1% to 2% for the ongoing fiscal year, including a headwind of about 130 basis points from the Inflation Reduction Act. The Street is looking for a gain of 1.5% for the full year.

"Our confidence in the full-year outlook is supported by continued progress on cost savings, improving e-commerce, profitability, growth in media and disciplined reinvestment in value," Chief Financial Officer David Kennerly said during an earnings call, according to a FactSet transcript.

For the three-month period ended May 23, Kroger's adjusted EPS increased to $1.58 from $1.49 the year before, but missed the average analyst estimate of $1.59. Sales rose to $46.12 billion from $45.12 billion, ahead the Street's view for $45.59 billion.

Shares of the company declined 7.1% in Thursday trade, taking its year-to-date loss to 8%.

Identical sales without fuel rose 1%, slowing from a 3.2% gain a year earlier, but topping the market's forecast for growth of 0.9%.

"Our first-quarter results reflect improving underlying volumes relative to the market, partially offset by pressure from lower inflation and pharmacy related headwinds," Kennerly said on the call. "Looking ahead, we expect inflationary pressure to increase as the year progresses, reflecting the broader macro environment."

For the ongoing three-month period, Kroger expects identical sales to be "roughly" in line with the previous quarter, reflecting continued pharmacy headwinds and ongoing pressure on consumer spending, according to Kennerly. The consensus on FactSet is for growth of 1.4%.

Adjusted EPS is projected to be in line with the prior-year quarter, Kennerly told analysts, while the Street is looking for $1.13.

Price: $57.43, Change: $-4.39, Percent Change: -7.10%

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