Kroger’s first quarter saw a negative market reaction as the company’s profit missed Wall Street’s expectations, despite revenue exceeding consensus and ongoing growth in key areas. Management pointed to rising operating costs outpacing sales and highlighted uneven execution across stores as meaningful challenges. CEO Greg Foran described the current pace of cost growth as “not sustainable, and frankly, it’s not acceptable,” emphasizing efforts to close operational gaps and deliver more consistent performance. The company also noted a shift in customer behavior toward more deliberate, value-driven shopping patterns due to inflation and reduced government benefits.
Is now the time to buy KR? Find out in our full research report (it’s free for active Edge members).
Kroger (KR) Q1 CY2026 Highlights:
- Revenue: $46.12 billion vs analyst estimates of $45.46 billion (2.2% year-on-year growth, 1.4% beat)
- EPS (GAAP): $1.47 vs analyst expectations of $1.60 (8% miss)
- EPS (GAAP) guidance for the full year is $5.20 at the midpoint, beating analyst estimates by 1.2%
- Operating Margin: 3.1%, in line with the same quarter last year
- Locations: 2,828.5 at quarter end, up from 2,789.5 in the same quarter last year
- Same-Store Sales rose 1% year on year (3.2% in the same quarter last year)
- Market Capitalization: $39.28 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Kroger’s Q1 Earnings Call
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John Heinbockel (Guggenheim Securities) asked how closing the execution gap between top and lagging stores might impact market share and food volume growth. CEO Greg Foran highlighted targeted visits and operational discipline, noting immediate sales improvements when underperforming stores receive focused attention.
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Simeon Gutman (Morgan Stanley) questioned the timeline and magnitude of price investments. Foran and CFO David Kennerley declined to specify numbers or timing, stating more details would be shared in the fall and emphasizing that cost savings are more than sufficient to fund these initiatives.
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Tom Palmer (JPMorgan) inquired about the regional rollout and funding of price investments. Foran underscored a careful, surgical approach and that price cuts are being paced alongside cost savings, with specifics to come in October.
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Krisztina Katai (Deutsche Bank) asked for detail on operational cost reduction opportunities and their potential scale. Foran and Kennerley described a “reasonably long list” of opportunities across shrink, replenishment, and labor, with early results already exceeding expectations.
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Michael Lasser (UBS) queried whether Kroger could achieve long-term earnings growth without radical change amid competitive pressures from non-grocery players. Foran argued Kroger’s existing scale, store format, and media assets position it well, while Kennerley cited H2 profit improvement driven by cost initiatives and digital business momentum.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace and scale of operational cost savings and their reinvestment into price, (2) further margin improvement from eCommerce and retail media, and (3) progress in closing the performance gap across Kroger’s store network. Additional focus will be on consumer spending trends and the impact of inflation and SNAP benefit changes on traffic and basket size.
Kroger currently trades at $58.24, down from $64.12 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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