Kroger Cuts 2026 Identical Sales Outlook After Slowdown
Second-quarter identical sales without fuel rose 0.2% as the company lowered its full-year range to 0.2%–0.8%.
The Kroger Co. (KR) lowered its full-year 2026 identical sales without fuel outlook to 0.2%–0.8% after second-quarter growth slowed to 0.2%, from 1.0% in the first quarter and 2.4% two quarters earlier.
The grocery retailer said the new range includes about 140 basis points of headwind from the Inflation Reduction Act. It reaffirmed adjusted FIFO operating profit of $5.0 billion to $5.2 billion, adjusted EPS of $5.10 to $5.30, free cash flow of $2.7 billion to $2.9 billion, capital spending of $3.8 billion to $4.0 billion, and a 23% tax rate.
Chief Executive Greg Foran said improving sales momentum remains a top priority. Chief Financial Officer David Kennerley said the company is updating identical sales guidance given first-half results and the macro environment, and is reaffirming profit and earnings guidance on the same factors that drove second-quarter profitability.
Total sales were $34.6 billion, compared with $33.9 billion a year earlier. Excluding fuel, the sale of Vitacost, and the exit of certain fulfillment centers, sales increased 0.1%.
Adjusted EPS was $1.09, up 5% from $1.04 a year earlier. GAAP earnings were $1.05 a share, versus $0.91. Operating profit was $971 million. Adjusted FIFO operating profit was $1,076 million.
FIFO gross margin excluding rent, depreciation and amortization, and fuel increased 13 basis points, reversing a 9 basis point decline in the first quarter. The improvement was driven primarily by eCommerce profitability and media, favorable pharmacy mix, sourcing initiatives, and tariff refunds, partially offset by higher shrink, higher transportation costs, and greater value delivered to customers. GAAP gross margin was 22.4%.
The LIFO charge was $39 million. The operating, general and administrative rate excluding fuel and adjustment items increased 33 basis points, a larger rise than the 16 basis point increase in the first quarter. Kroger attributed the second-quarter OG&A increase primarily to planned investments in associate wages, increased health care costs, and sales deleverage, partially offset by lower incentive plan costs and productivity initiatives.
Adjusted eCommerce sales grew 20%, slightly above 19% in the first quarter. Kroger Precision Marketing profit grew 24%.
Kroger increased its dividend 11%, marking a 20th consecutive year of increases. It repurchased $1.0 billion of shares in the quarter and $1.2 billion year-to-date under a $2 billion authorization announced in December 2025. About $800 million remains, and the company expects to complete the remaining repurchases by the end of fiscal 2026.
Net total debt to adjusted EBITDA was 1.91, compared with 1.63 a year earlier, still below the company’s 2.30 to 2.50 target range.
Kroger will host an investor update meeting on October 20, 2026, when additional details on strategic initiatives and longer-term financial targets are expected.