The Kroger Co. (NYSE:KR) reported first-quarter results that matched Wall Street’s earnings expectations and exceeded revenue forecasts, although the shares moved lower in premarket trading following the announcement.
The grocery retailer posted adjusted earnings per share of $1.58, in line with analyst estimates, while revenue increased 2.2% year-over-year to $46.1 billion, ahead of the consensus forecast of $45.35 billion.
Despite the stronger-than-expected top-line performance, Kroger shares were down 1.4% before the opening bell.
Sales Growth Supported by Digital Momentum
Identical sales excluding fuel rose 1.0% during the quarter, compared with growth of 3.2% in the same period last year.
The company continued to see strong traction in its digital business, with adjusted eCommerce sales climbing 19%.
Kroger Precision Marketing also delivered robust growth, with profit increasing by more than 20% compared with the prior-year period.
Profitability Improves Despite Margin Pressure
Adjusted FIFO operating profit rose to $1.544 billion from $1.518 billion a year earlier.
However, gross margin narrowed to 22.7%, down from 23.0% in the first quarter of 2025.
The decline was primarily attributed to higher transportation expenses, egg deflation and planned investments aimed at maintaining competitive pricing.
These headwinds were partly offset by a favorable pharmacy sales mix, stronger eCommerce profitability and sourcing efficiencies.
Management Focused on Operational Execution
Commenting on the results, Chief Executive Officer Greg Foran said the company remains focused on improving execution and enhancing the customer experience.
“We are pleased with our first quarter results, but we know there is more work to do,” said CEO Greg Foran. “That is why we are building a culture that is never satisfied, with a constant focus on serving our customers better.”
Full-Year Guidance Remains Unchanged
Kroger maintained its financial outlook for fiscal 2026, projecting adjusted earnings per share of between $5.10 and $5.30.
The midpoint of the range, $5.20, sits slightly below the current analyst consensus of $5.24.
The retailer also reaffirmed its forecast for identical sales growth excluding fuel of 1.0% to 2.0% and adjusted FIFO operating profit of $5.0 billion to $5.2 billion.
Cash Generation Remains Strong
For the full year, Kroger expects free cash flow of $2.7 billion to $2.9 billion.
Capital expenditures are projected to range between $3.8 billion and $4.0 billion as the company continues investing in stores, digital capabilities and operational improvements.
With revenue surpassing expectations, continued digital growth and guidance intact, Kroger enters the remainder of fiscal 2026 focused on balancing customer value initiatives with profitability and long-term growth investments.