TLDR
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Kroger stock rose 8.88% to $71.34 after Q1 earnings topped estimates.
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Identical-store sales increased 3.2% in Q1, driven by pharmacy, fresh foods, and e-commerce.
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Kroger plans to close 60 underperforming stores while accelerating new store openings.
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E-commerce sales jumped 15%, though the segment remains unprofitable.
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Full-year identical-store sales outlook raised to 2.25%-3.25%; shares up nearly 16% year-to-date.
The Kroger Co. (NYSE:KR) shares climbed 8.88% to $71.34 as of writing after the grocery retailer posted solid first-quarter results for the period ending May 24, 2025.
The company beat Wall Street expectations and raised its full-year sales guidance, boosting investor confidence despite planned store closures and leadership transitions.
Q1 Earnings Exceed Forecasts
Kroger reported adjusted earnings per share of $1.49, topping analysts’ expectations of $1.46. Total revenue came in slightly below estimates at $45.12 billion versus the expected $45.19 billion but reflected a healthy 3.7% year-over-year increase. Identical-store sales excluding fuel rose 3.2%, led by pharmacy, fresh food, and e-commerce categories.
Net income for the quarter stood at $866 million, or $1.29 per diluted share, down 8.6% compared to the previous year. The company posted an adjusted operating profit of $1.52 billion, up 1.3% year-over-year, while gross margin improved to 23%, attributed to the sale of its Specialty Pharmacy division, reduced shrinkage, and lower supply chain costs.
Store Closures and Expansion Plans
Kroger will close 60 underperforming stores over the next 18 months. The move resulted in a $100 million impairment charge in the first quarter. Despite these closures, Kroger plans to ramp up new store openings, with 30 major projects planned for 2025 and accelerated expansion in 2026.
Kroger’s shares rise as grocer says shoppers seek lower prices, cook more at home https://t.co/yN6a1jBkgY
— CNBC (@CNBC) June 20, 2025
Interim CEO Ron Sargent noted that the store evaluation process had been paused during the company’s failed merger attempt with Albertsons, but is now resuming to streamline operations.
E-commerce Growth and Profitability Focus
E-commerce sales surged 15% year-over-year, driven by increased household adoption and faster order pickup times. However, the segment remains unprofitable. Kroger has consolidated e-commerce operations under CIO Yael Cosset and is actively seeking ways to improve margins through technology and operational enhancements.
The company emphasized growing its private-label brands, including the Simple Truth and Private Selection lines, which continue to outpace national brands. Plans include launching 80 new protein-focused products under the Simple Truth brand to cater to health-conscious consumers.
Cost Management and Leadership Changes
New CFO David Kennerly is leading cost optimization efforts, focusing on improving processes and reducing the cost of goods sold. Kennerly and Sargent believe there are meaningful opportunities to enhance operational efficiency using new technologies. Meanwhile, Kroger’s board is still searching for a permanent CEO following Rodney McMullen’s departure earlier this year.
Positive Outlook Despite Market Challenges
🟢 Kroger Raises Sales Forecast, Stock Pops +6.9%
• Q1 earnings beat: EPS of $1.49 vs. $1.45 expected; same-store sales +3.2% (vs. 2.3% forecast).
• Guidance raised: Full-year same-store sales (ex-fuel) now expected at 2.25%–3.25%.
• Analysts say Kroger is well-positioned… pic.twitter.com/jPRF9NH66Q
— StocksToBuyNow.ai (@AnessHusseinAli) June 20, 2025
Kroger raised its full-year identical-store sales forecast to 2.25%-3.25%, up from 2%-3%. Other financial guidance remains unchanged, reflecting caution amid uncertain economic conditions. The company also reported minimal impact from tariffs due to its high level of domestic sourcing.
