Kroger reported strong Q2 with 3.4% ID sales growth and $1.04 EPS, raising full-year guidance. Management highlighted e-commerce momentum (delivery surpassing pickup), AI-driven shrink improvements, and a strategic review of fulfillment centers. Pharmacy benefited from returning ESI customers and Rite Aid closures. Identical sales without fuel grew 3.4%, beating expectations, with pharmacy, e-commerce, and fresh categories leading.
Kroger reported strong Q2 with 3.4% ID sales growth and $1.04 EPS, raising full-year guidance. Management highlighted e-commerce momentum (delivery surpassing pickup), AI-driven shrink improvements, and a strategic review of fulfillment centers. Pharmacy benefited from returning ESI customers and Rite Aid closures. Identical sales without fuel grew 3.4%, beating expectations, with pharmacy, e-commerce, and fresh categories leading.
Kroger reported strong Q2 with 3.4% ID sales growth and $1.04 EPS, raising full-year guidance. Management highlighted e-commerce momentum (delivery surpassing pickup), AI-driven shrink improvements, and a strategic review of fulfillment centers. Pharmacy benefited from…
Kroger is accelerating new store projects, expecting a 30% increase in store openings in 2026, with more efficient layouts and faster construction timelines. They are also reviewing e-commerce fulfillment network (CFCs) site-by-site to improve profitability.
Management highlighted AI as a key tool for modernization, with implemented uses in pricing, shrink improvement, and fulfillment enabling two-hour pickup. They see more opportunities ahead in scheduling, planogramming, and customer personalization.
E-commerce delivery sales surpassed store pickup for the first time, signaling a shift toward faster delivery preferences.
Management highlighted AI as a key tool for modernization, with implemented uses in pricing, shrink improvement, and fulfillment enabling two-hour pickup. They see more opportunities ahead in scheduling, planogramming, and customer personalization.
Grocery units nearly flat, expecting further improvement. Management expressed confidence in the business momentum, citing strong sales growth, improved customer metrics, and a clear path for cost savings and investments.
Kroger is accelerating new store projects, expecting a 30% increase in store openings in 2026, with more efficient layouts and faster construction timelines. They are also reviewing e-commerce fulfillment network (CFCs) site-by-site to improve profitability.
Management expressed confidence in the business momentum, citing strong sales growth, improved customer metrics, and a clear path for cost savings and investments.
“this quarter was the first time that delivery sales passed store pickup sales. So I think that indicates that delivery is really important to our customers.”
“We've deployed an AI tool specifically against shrink. We can see the direct result of the AI tool that allows us to see much better inventory levels sell through... we're actually now trying to transition that into an opportunity for us t…”
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| EPS | FY2025 | $4.70–$4.80 | $4.75 | RAISED |
| RevenueIDENTICAL_SALES | FY2025 | 2.7%–3.4% | 3.05% | RAISED |
| Issued | Metric | Target | Guide | Actual | Outcome |
|---|---|---|---|---|---|
| FY2025 Q3 | EPS | FY2025 | $4.75–$4.80 | $4.85 | Met / beat |
Express Scripts (ESI) customers are returning to Kroger pharmacies, directly boosting comparable sales and indicating restored contractual access.
“This quarter, we've been pleased to welcome more ESI customers back into our stores. We continue to expect that the full return of the business will take time. And in Q2, ESI had a roughly 15 basis point positive impact on our ID sales.”
… quarter compared to the first quarter, but continues to trend in line with our original expectations from the beginning of the year. Our pharmacy business delivered another strong quarter, driven by core pharmacy scripts and growth in GLP-1s. Although strong growth in pharmacy sales impacts our margin rate, it drives positive gross profit dollar growth and improves our overall operating profit. This quarter, we've been pleased to welcome more ESI customers back into our stores. We continue to expect that the full return of the business will take time. And in Q2, ESI had a roughly 15 basis point positive impact on our ID sales. We continue to keep a close watch on the changing tariff environment. As a domestic food retailer we expect a smaller impact than some of our competitors. We continue to be proactive to address exposure where we do have it and our approach remains to raise prices as a last resort to ensure that we keep prices as low as possible for our customers. Tariffs have not had a material impact on our business thus far, and as of now, do not expect them to going forward. Our FIFO gross margin rate, excluding rent, depreciation and amortization, fuel and …
For the first time, Kroger's e-commerce delivery sales surpassed store pickup sales, indicating a structural shift toward faster delivery options. — This shift favors delivery partners like Instacart and could accelerate investments in rapid fulfillment infrastructure.
“we're seeing a clear trend of customers opting for faster delivery times, an area where we are well positioned based on our conveniently located store network, coupled with our delivery partner, Instacart.”
Rite Aid's store closures create market share opportunities for Kroger's pharmacy business.
“Our pharmacy team is doing a really nice job. And we think there's a big opportunity in pharmacy given the Rite Aid closures”
thank you our next question comes from jacob eiken phillips of melius research the lines are open please go ahead morning jacob uh hi uh good morning everyone good morning um i i did want to say that my mom appreciates the the paper coupons in case you wanted an anecdote but i wanted to ask about pharmacy so there's obviously a lot of share to gain from like closures and then i think on You said that it's incremental when they start shopping the store, but also on the flip side, I think a good portion of your current customers don't even realize that the stores have pharmacy. So can you talk a little bit about what you're doing to close the gap both ways to get people to shop the store…
Our pharmacy team is doing a really nice job. And we think there's a big opportunity in pharmacy given the Rite Aid closures and the new ownership structure at some of our competitors. We think there's going to be an opportunity to continue to grow pharmacy better than the house.