TLDR
- Kroger posted Q2 adjusted EPS of $1.09, beating the $1.04 consensus estimate
- Identical sales without fuel came in at just 0.2%, down from 3.4% a year ago
- Full-year identical sales guidance was cut to 0.2%-0.8%, from 1.0%-2.0%
- Full-year adjusted EPS guidance was maintained at $5.10-$5.30
- KR stock fell 2.8% in premarket trading to $55.35
Kroger (KR) dropped 2.8% in premarket trading Friday to $55.35 after the grocery chain reported Q2 results that included a cut to its full-year sales outlook.
Identical sales without fuel rose just 0.2% in the quarter ended August 15, a sharp slowdown from the 3.4% growth posted in the same period last year. Total company sales came in at $34.6 billion, up from $33.9 billion a year ago.
Adjusted EPS of $1.09 came in ahead of the $1.04 Wall Street consensus and was up 4.8% year-over-year. Operating profit rose to $971 million from $863 million in the prior-year period.
KROGER $KR Q2’26 EARNINGS HIGHLIGHTS
🔹 Revenue: $34.6B (Est. $34.58B) 🟡; +2% YoY
🔹 Adj. EPS: $1.09 (Est. $1.06) 🟢; +5% YoY
🔹 Adj. FIFO Oper Profit: $1.08B (Est. $1.01B) 🟢; -1% YoYCuts FY26 Guide:
🔹 Identical Sales ex-Fuel: +0.2%-+0.8%; from +1.0%-+2.0%Affirms FY26… pic.twitter.com/LfKpkBxuRW
— Wall St Engine (@wallstengine) September 11, 2026
Adjusted FIFO operating profit was $1.076 billion, slightly below last year’s $1.091 billion.
Sales Guidance Cut Weighs on Sentiment
The headline concern for investors was the lowered sales guidance. Kroger cut its full-year identical sales without fuel forecast to a range of 0.2%-0.8%, down from the prior range of 1.0%-2.0% set in June.
The company flagged an approximately 140 basis point headwind from the Inflation Reduction Act as a factor in the revised range.
On the earnings side, Kroger held its full-year adjusted EPS guidance steady at $5.10-$5.30, matching the $5.20 analyst consensus at the midpoint.
Gross margin was 22.4% of sales in Q2, down slightly from 22.5% a year ago. Pressure came from higher fuel sales mix, higher shrink, and higher transportation costs.
Those were partially offset by better e-commerce profitability, favorable pharmacy mix, and sourcing initiatives.
Bright Spots in the Quarter
Kroger reported adjusted eCommerce sales growth of 20% and Kroger Precision Marketing profit growth of 24% for the quarter.
CFO David Kennerly pointed to the profitability performance as a reason for confidence: “We are reaffirming our adjusted FIFO net operating profit and adjusted earnings per diluted share guidance, reflecting our confidence and visibility into the same factors that drove our profitability in the second quarter.”
Kroger also raised its quarterly dividend by 11% during the quarter, the 20th consecutive year of dividend increases.
The company repurchased $1.0 billion of its stock during Q2, bringing year-to-date buybacks to $1.2 billion under its $2 billion authorization. Around $800 million remains, which Kroger expects to complete by end of fiscal 2026.
The net total debt to adjusted EBITDA ratio stood at 1.91x, up from 1.63x a year ago, though still within the company’s 2.30x-2.50x target range.
KR’s 52-week high is $76.58.
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