Kroger's stock rose 2.70% Friday after the grocery chain posted quarterly sales and profit that landed close to analyst estimates. The company trimmed its same-store sales outlook for the year but held its bottom-line forecast steady and kept its dividend-raise streak intact.
Kroger reported quarterly results before market open Friday, and shares climbed 2.70% to $58.49 that session. The quarter brought only modest gains in key fundamentals, with a minor beat on profitability, but it was enough to satisfy Kroger bulls.
Sales and profit near consensus
Total sales for the quarter rose 2% year over year to just over $34.62 billion, driven by a marginal rise in identical sales, excluding fuel, to slightly below $30 billion. That compared unfavorably with the second quarter of 2025's 3.4% gain in the same metric.
Non-GAAP net income fell to $667 million from $695 million a year earlier, but a smaller share count pushed adjusted per-share profit up to $1.09 from $1.04. Analysts had modeled total sales of $34.65 billion and adjusted net income of $1.06 per share, so neither headline metric strayed far from consensus.
Kroger said sales would have inched up only 0.1% had it excluded fuel, the divestment of its Vitacost e-commerce unit earlier this year, and the closure of several fulfillment centers. Gross margin held at 22.4%, essentially unchanged from the year-ago quarter, as higher fuel sales offset increased transportation costs and higher shrink. Adjusted e-commerce sales, meanwhile, jumped 20%, and the company described its pharmacy sales mix as favorable.
Guidance trimmed but profit outlook holds
Management trimmed its full-year identical sales growth estimate to a range of 0.2% to 0.8%, down from 1% to 2%, citing a roughly 140-basis-point drag on pharmacy sales from adjustments tied to the 2022 Inflation Reduction Act. The company kept its adjusted earnings-per-share forecast at $5.10 to $5.30, which would mark at least 5% year-over-year growth, matching the prior quarter's pace.
Kroger also said it plans to keep raising its dividend, having delivered a payout every quarter since reinstating it in mid-2006 and raised it annually for 20 consecutive years. This year's increase was 11%, bringing the quarterly payout to $0.39 per share for a yield of 2.5%, well above the current sub-1.1% average for S&P 500 stocks. The company still plans to spend the roughly $800 million remaining from its $2 billion buyback authorization this year.
Source: The Motley Fool
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