Kroger topped Wall Street estimates on second-quarter earnings but fell short on revenue, noting an increase in consumers eating at home more that could benefit the retail operator through year’s end.
Kroger continues to realign strategy after its merger with Albertsons Cos. fell through.
Company net earnings were $609 million, or 91 cents per diluted share, versus $466 million, or 64 cents per diluted share, in the year-earlier quarter. Adjusted for one-time events, company net earnings were $695 million, or $1.04 per diluted share, versus $681 million, or 93 cents per diluted share, in the year-prior period.
A consensus analyst estimate from Zacks Investment Research called for adjusted diluted earnings per share of $1 and revenues of $34.12 billion.
Kroger posted an identical sales gain, excluding fuel, of 3.4% in the quarter year over year, the company reported. Total company sales were $33.94 billion compared to $33.91 billion for the year-previous quarter, which included $718 million from Kroger Specialty Pharmacy sales. Kroger closed the transaction to sell its specialty pharmacy business to Elevance Health in October of 2024, but the company retained its in-store retail locations and Little Clinics.
Operating profit was $863 million versus $815 million in the year-before quarter.
Kroger Chairman and CEO Ron Sargent said in a conference call lower- and middle-income consumers are shifting to eating more meals at home, more coupon use and private-label purchasing, while higher-income shoppers have been more willing to purchase premium products. He added discretionary spending has been somewhat soft.
Kroger updated its guidance for identical sales, now up 2.7% to 3.4% from 2.25% to 3.25%; operating profit, now up to $4.8 billion to $4.9 billion versus $4.7 billion to $4.9 billion; and earnings per share, now up $4.70 to $4.80 from $4.60 to $4.80.
In announcing the results, Sargent said, “Kroger delivered another quarter of strong results, which demonstrates the clear and measurable progress we’ve made on our priorities, to simplify our organization, to improve the customer experience and to focus on work that creates the most value.”
