Kroger reported first-quarter sales of $46.12 billion on Thursday, topping analyst estimates, while holding its full-year outlook as consumers remain cautious about spending.
Analysts had forecast revenue of $45.47 billion, according to The Wall Street Journal. Identical sales, excluding fuel, rose 1% from the same period a year earlier. Adjusted e-commerce sales grew 19%, and Kroger Precision Marketing profit grew more than 20%, the company said.
Net earnings attributable to Kroger came in at $903 million, or $1.46 per diluted share, compared with $866 million, or $1.29 per diluted share, in the same quarter a year ago. On an adjusted basis, the company earned $1.58 per share, missing the $1.59 consensus estimate by a penny, Reuters reported.
At 22.7% of sales, gross margin narrowed from 23% in the year-ago period. Kroger attributed the contraction to a heavier mix of lower-margin fuel revenue, rising transportation costs, and falling egg prices, factors that outweighed gains from a stronger pharmacy product mix, better e-commerce unit economics, and more favorable procurement terms.
Operating expenses also rose, as Kroger invested in associate wages and hours. Operating profit still climbed to $1,407 million from $1,322 million in the prior-year period, with reduced depreciation and amortization charges providing enough lift to overcome the squeeze on margins.
"We are pleased with our first quarter results, but we know there is more work to do," CEO Greg Foran said in a statement.
The company left its full-year 2026 outlook intact, maintaining targets of 1% to 2% identical-sales growth excluding fuel, per-share earnings of $5.10 to $5.30, and free cash flow between $2.7 billion and $2.9 billion. Price-conscious consumers have intensified competition with Walmart $WMT and Costco $COST, prompting Kroger to announce markdowns on thousands of products; the chain said it plans to finance those cuts partly through savings from direct-sourcing arrangements and more efficient use of technology.
In premarket trading, Kroger shares were down roughly 3% after the report.