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KR posted Q1 EPS of $1.49, beating estimates and rising from $1.43 a year ago.
E-commerce sales jumped 15%, supporting growth in fresh and pharmacy categories.
Kroger raised its FY25 identical sales outlook to 2.25%-3.25% on a strong consumer response.
The Kroger Co. (KR - Free Report) reported first-quarter fiscal 2025 results, with revenues falling short of the Zacks Consensus Estimate and declining year over year. In contrast, earnings surpassed the consensus mark and showed improvement from the prior-year period. Despite the mixed performance, Kroger delivered strong underlying results, driven by solid sales in pharmacy, e-commerce and fresh categories. This positive momentum prompted management to raise its identical sales without fuel growth outlook.
While management acknowledged the ongoing macroeconomic uncertainties, Kroger is confident that its strategic focus on fresh offerings, Our Brands and digital capabilities continues to resonate with consumers. Shares of Kroger rallied 9.8% during last Friday's trading session.
Kroger’s Quarterly Performance: Key Insights
Kroger delivered adjusted earnings of $1.49 per share, which beat the Zacks Consensus Estimate of $1.45. The bottom line improved from the year-ago period’s earnings of $1.43. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Total sales were $45,118 million, down from $45,269 million reported in the year-ago period, which included $917 million from Kroger Specialty Pharmacy sales. The metric also came below the Zacks Consensus Estimate of $45,383 million.
Excluding fuel, Kroger Specialty Pharmacy and adjustment items, total sales rose 3.7% year over year. We note that identical sales without fuel rose 3.2%. E-commerce sales grew 15% during the quarter under discussion.
Kroger’s gross margin expanded 100 basis points to 23%. This increase was driven by the divestiture of Kroger Specialty Pharmacy, reduced shrink and lower supply-chain expenses. However, this was partially offset by a higher contribution from pharmacy sales, which typically carry lower margins. The FIFO gross margin rate, excluding rent, depreciation and amortization, fuel and adjustment items, jumped 79 basis points year over year.
The Operating, General and Administrative rate, excluding fuel and certain adjustment items, rose 63 basis points. This increase can be attributed to the sale of Kroger Specialty Pharmacy and an accelerated contribution to a multi-employer pension plan, partly offset by improved productivity.
The adjusted FIFO operating profit was $1,518 million, down from $1,499 million reported in the year-ago period.
Kroger ended the quarter with cash of $340 million, total debt of $17,945 million and shareowners’ equity of $8,908 million. Net total debt increased to $5,726 million over the last four quarters.
The company reaffirmed its fiscal 2025 capital expenditure outlook of $3.6 billion to $3.8 billion. It also maintained its adjusted free cash flow guidance of $2.8 billion to $3 billion.
Sneak Peek Into Kroger’s Outlook
For fiscal 2025, Kroger now foresees identical sales without fuel to increase between 2.25% and 3.25%, up from the prior range of 2%-3%.
It continues to envision adjusted earnings between $4.60 and $4.80 per share compared with $4.47 in fiscal 2024. Management maintained the adjusted FIFO operating profit guidance of $4.7-$4.9 billion for fiscal 2025 compared with $4.7 billion reported in fiscal 2024.
Shares of this Zacks Rank #4 (Sell) company have risen 10.1% in the past three months compared with the industry’s growth of 9.8%.
Picks You Can’t Miss Out On
Sprouts Farmers (SFM - Free Report) , which is engaged in the retailing of fresh, natural and organic food products, currently sports a Zacks Rank #1 (Strong Buy). SFM has a trailing four-quarter earnings surprise of 16.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings implies growth of 13.7% and 35.5%, respectively, from the year-ago reported numbers.
Nomad Foods Limited (NOMD - Free Report) , Europe's leading frozen food company, sports a Zacks Rank #1. NOMD has a trailing four-quarter earnings surprise of 3.2%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial-year sales and earnings indicates growth of 4.6% and 7.3%, respectively, from the year-ago period’s reported figure.
The Chefs' Warehouse, Inc. (CHEF - Free Report) , a premier distributor of specialty food products in the United States, the Middle East and Canada, currently holds a Zacks Rank #2 (Buy). CHEF delivered a trailing four-quarter earnings surprise of 10.2%, on average.
The Zacks Consensus Estimate for Chefs' Warehouse’s current financial-year sales and earnings calls for growth of 5.7% and 10.2%, respectively, from the year-ago period’s reported figure.
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Kroger's Q1 Earnings Beat Estimates, E-commerce Sales Rise 15% Y/Y
Key Takeaways
The Kroger Co. (KR - Free Report) reported first-quarter fiscal 2025 results, with revenues falling short of the Zacks Consensus Estimate and declining year over year. In contrast, earnings surpassed the consensus mark and showed improvement from the prior-year period. Despite the mixed performance, Kroger delivered strong underlying results, driven by solid sales in pharmacy, e-commerce and fresh categories. This positive momentum prompted management to raise its identical sales without fuel growth outlook.
While management acknowledged the ongoing macroeconomic uncertainties, Kroger is confident that its strategic focus on fresh offerings, Our Brands and digital capabilities continues to resonate with consumers. Shares of Kroger rallied 9.8% during last Friday's trading session.
Kroger’s Quarterly Performance: Key Insights
Kroger delivered adjusted earnings of $1.49 per share, which beat the Zacks Consensus Estimate of $1.45. The bottom line improved from the year-ago period’s earnings of $1.43. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Total sales were $45,118 million, down from $45,269 million reported in the year-ago period, which included $917 million from Kroger Specialty Pharmacy sales. The metric also came below the Zacks Consensus Estimate of $45,383 million.
Excluding fuel, Kroger Specialty Pharmacy and adjustment items, total sales rose 3.7% year over year. We note that identical sales without fuel rose 3.2%. E-commerce sales grew 15% during the quarter under discussion.
Kroger’s gross margin expanded 100 basis points to 23%. This increase was driven by the divestiture of Kroger Specialty Pharmacy, reduced shrink and lower supply-chain expenses. However, this was partially offset by a higher contribution from pharmacy sales, which typically carry lower margins. The FIFO gross margin rate, excluding rent, depreciation and amortization, fuel and adjustment items, jumped 79 basis points year over year.
The Operating, General and Administrative rate, excluding fuel and certain adjustment items, rose 63 basis points. This increase can be attributed to the sale of Kroger Specialty Pharmacy and an accelerated contribution to a multi-employer pension plan, partly offset by improved productivity.
The adjusted FIFO operating profit was $1,518 million, down from $1,499 million reported in the year-ago period.
The Kroger Co. Price, Consensus and EPS Surprise
The Kroger Co. price-consensus-eps-surprise-chart | The Kroger Co. Quote
KR’s Financial Snapshot
Kroger ended the quarter with cash of $340 million, total debt of $17,945 million and shareowners’ equity of $8,908 million. Net total debt increased to $5,726 million over the last four quarters.
The company reaffirmed its fiscal 2025 capital expenditure outlook of $3.6 billion to $3.8 billion. It also maintained its adjusted free cash flow guidance of $2.8 billion to $3 billion.
Sneak Peek Into Kroger’s Outlook
For fiscal 2025, Kroger now foresees identical sales without fuel to increase between 2.25% and 3.25%, up from the prior range of 2%-3%.
It continues to envision adjusted earnings between $4.60 and $4.80 per share compared with $4.47 in fiscal 2024. Management maintained the adjusted FIFO operating profit guidance of $4.7-$4.9 billion for fiscal 2025 compared with $4.7 billion reported in fiscal 2024.
Shares of this Zacks Rank #4 (Sell) company have risen 10.1% in the past three months compared with the industry’s growth of 9.8%.
Picks You Can’t Miss Out On
Sprouts Farmers (SFM - Free Report) , which is engaged in the retailing of fresh, natural and organic food products, currently sports a Zacks Rank #1 (Strong Buy). SFM has a trailing four-quarter earnings surprise of 16.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and earnings implies growth of 13.7% and 35.5%, respectively, from the year-ago reported numbers.
Nomad Foods Limited (NOMD - Free Report) , Europe's leading frozen food company, sports a Zacks Rank #1. NOMD has a trailing four-quarter earnings surprise of 3.2%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial-year sales and earnings indicates growth of 4.6% and 7.3%, respectively, from the year-ago period’s reported figure.
The Chefs' Warehouse, Inc. (CHEF - Free Report) , a premier distributor of specialty food products in the United States, the Middle East and Canada, currently holds a Zacks Rank #2 (Buy). CHEF delivered a trailing four-quarter earnings surprise of 10.2%, on average.
The Zacks Consensus Estimate for Chefs' Warehouse’s current financial-year sales and earnings calls for growth of 5.7% and 10.2%, respectively, from the year-ago period’s reported figure.