Kroger Cuts Sales Guidance After Quarterly Report
Kroger cuts sales guidance after quarterly results, citing an IRA pharmacy headwind and cautious shoppers; traders may reprice exposure as EPS held.
KEY TAKEAWAYS
- Kroger lowered full-year identical sales without fuel guidance to 0.2% to 0.8%, including about 140 bps IRA headwind.
- Q2 identical sales without fuel rose 0.2% versus 3.4% a year earlier.
- Adjusted EPS was $1.09 and the company reaffirmed full-year profit targets while flagging cost savings and digital offsets.
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The Kroger Co. (NYSE: KR) on Sept. 11, 2026 cut its full-year identical sales without fuel guidance to 0.2%–0.8%, citing cautious consumer spending and an approximately 140-basis-point headwind from the Inflation Reduction Act (IRA) on pharmacy revenue. The company reaffirmed its full-year profit targets.
Quarter Results and Guidance
Kroger reported fiscal second-quarter 2026 results for the quarter ended Aug. 15, 2026, with sales of $34.6 billion and operating profit of $971 million. Reported earnings per share (EPS) were $1.05, and adjusted EPS was $1.09, up about 5% year-on-year and exceeding consensus estimates. Adjusted FIFO (first-in, first-out) operating profit was $1,076 million, compared with $863 million in the year-ago quarter.
Same-store sales excluding fuel rose 0.2% in the quarter, down sharply from 3.4% a year earlier. Kroger lowered its full-year identical sales without fuel guidance to 0.2%–0.8%, down from the prior 1.0%–2.0% range. The company said the new guidance includes an approximately 140-basis-point headwind from the IRA, which reduced pharmacy revenues by lowering Medicare prescription drug prices.
Adjusted e-commerce sales grew 20% year-on-year, while Kroger Precision Marketing profit rose 24%. The company maintained its full-year adjusted net earnings per diluted share guidance at $5.10–$5.30 and kept targets for operating profit, free cash flow, capital spending, and tax rate unchanged.
Drivers and Market Context
Management attributed the weaker sales growth to cautious consumer spending amid macroeconomic uncertainty and competitive pressure from discount and value retailers. A Cyclospora outbreak in produce reduced identical sales without fuel by roughly 35 basis points. Deflation in categories such as eggs and increased price sensitivity among value-seeking shoppers added to the pressure.
Despite the top-line challenges, Kroger plans to rely on cost savings and growth in digital revenue to maintain margins and meet profit targets. The company continues to invest in stores, technology, and marketing. By cutting its same-store sales outlook while holding profit guidance steady, Kroger signaled its confidence in managing demand shifts through operational efficiency and digital channels.
