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Kroger's Q3 EPS hit $1.05, beating estimates, with identical sales ex-fuel up 2.6% year over year.
Gross margin improved to 22.8% on lower supply chain costs and the sale of Kroger Specialty Pharmacy.
KR revised FY25 identical sales and EPS outlook, supported by strong e-commerce and brand performance.
The Kroger Co. (KR - Free Report) reported third-quarter fiscal 2025 results, wherein the bottom line increased year over year and beat the Zacks Consensus Estimate, while sales fell short of the consensus mark. The performance was driven by strength in e-commerce and pharmacy, supported by operational efficiencies and a focus on customer experience. KR’s brands had a strong quarter with premium lines like Simple Truth and Private Selection being the strongest performers.
Kroger’s Quarterly Performance: Key Insights
Kroger posted adjusted earnings of $1.05 per share, surpassing the Zacks Consensus Estimate of $1.04 and improving from 98 cents in the prior-year quarter. The GAAP loss per share was $2.02, against the earnings per share of 84 cents in the year-ago period.
Total sales for the quarter stood at $33.9 billion, which increased from $33.6 billion in the previous year period, but fell short of the Zacks Consensus Estimate of $34.3 billion. However, excluding fuel and the Kroger Specialty Pharmacy business, sales advanced 2.6% year over year. Identical sales without fuel rose 2.6% year over year, reflecting strong momentum in key growth categories. E-commerce sales jumped 17% year over year.
Gross margin came in at 22.8%, up from 22.4% in the year-ago quarter. The gross margin expansion was mainly driven by the sale of Kroger Specialty Pharmacy, the company’s “Our Brands” performance, reduced shrinkage and lower supply chain costs, though partially offset by higher pharmacy sales and price investments. The FIFO gross margin rate, excluding rent, depreciation and amortization, and fuel, jumped 49 basis points year over year.
The Operating, General and Administrative rate, excluding fuel and adjustment items, rose 27 basis points year over year. The increase can be attributed to the sale of Kroger Specialty Pharmacy, along with investments in associate wages and benefits, somewhat negated by reduced incentive plan costs and better productivity.
Adjusted FIFO operating profit reached $1,089 million, up from $1,017 million recorded in the year-ago period. GAAP operating loss was $1,541 million against an operating profit of $828 million delivered last year.
KR’s Financial Snapshot
Kroger ended the third quarter with cash and temporary cash investments of $3,956 million, total debt of $18,010 million and shareowners’ equity of $7,039 million.
Kroger’s net total debt-to-adjusted EBITDA ratio stood at 1.73 compared with 1.21 a year ago, comfortably below the firm’s 2.30-2.50 target range, signaling financial flexibility to support investments and shareholder returns.
Kroger started a $5 billion accelerated share buyback in the fourth quarter of fiscal 2024 and concluded it during the third quarter of fiscal 2025. This ASR was concluded as part of the company’s $7.5 billion buyback plan. Kroger is now buying back the remaining $2.5 billion worth of shares in the open market and expects to close it by the end of fiscal 2025.
The company reaffirmed its fiscal 2025 capital expenditure outlook of $3.6-$3.8 billion and adjusted free cash flow guidance of $2.8-$3 billion.
Sneak Peek Into Kroger’s Guidance
Kroger narrowed the guidance range and expects identical sales without fuel to grow 2.8%-3.0% compared with the prior estimate of 2.7-3.4%.
The company continues to see FIFO operating profit in the range of $4.8-$4.9 billion. Management now envisions adjusted EPS between $4.75 and $4.80 compared with the previously guided range of $4.70-$4.80.
Shares of this Zacks Rank #3 (Hold) company have risen 4% over the past year compared with the industry’s growth of 19.7%.
Image Source: Zacks Investment Research
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The Zacks Consensus Estimate for AEO’s current fiscal-year sales and earnings implies a decline of 0.1% and 30.5%, respectively, from the year-ago figures. AEO delivered a trailing four-quarter earnings surprise of 35.1%, on average.
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The Zacks Consensus Estimate for Boot Barn’s current fiscal-year sales and earnings implies growth of 16.2% and 20.5%, respectively, from the year-ago figures. BOOT delivered a trailing four-quarter earnings surprise of 5.4%, on average.
Amazon.com, Inc. (AMZN - Free Report) engages in the retail sale of consumer products, advertising, and subscription services through online and physical stores in North America and internationally. At present, Amazon holds a Zacks Rank of 2.
The Zacks Consensus Estimate for Amazon’s current fiscal-year sales and earnings implies growth of 11.9% and 29.7%, respectively, from the year-ago figures. AMZN delivered a trailing four-quarter earnings surprise of 22.5%, on average.
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Kroger Q3 Earnings Beat Estimates, E-Commerce Sales Jump 17%
Key Takeaways
The Kroger Co. (KR - Free Report) reported third-quarter fiscal 2025 results, wherein the bottom line increased year over year and beat the Zacks Consensus Estimate, while sales fell short of the consensus mark. The performance was driven by strength in e-commerce and pharmacy, supported by operational efficiencies and a focus on customer experience. KR’s brands had a strong quarter with premium lines like Simple Truth and Private Selection being the strongest performers.
Kroger’s Quarterly Performance: Key Insights
Kroger posted adjusted earnings of $1.05 per share, surpassing the Zacks Consensus Estimate of $1.04 and improving from 98 cents in the prior-year quarter. The GAAP loss per share was $2.02, against the earnings per share of 84 cents 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
Total sales for the quarter stood at $33.9 billion, which increased from $33.6 billion in the previous year period, but fell short of the Zacks Consensus Estimate of $34.3 billion. However, excluding fuel and the Kroger Specialty Pharmacy business, sales advanced 2.6% year over year. Identical sales without fuel rose 2.6% year over year, reflecting strong momentum in key growth categories. E-commerce sales jumped 17% year over year.
Gross margin came in at 22.8%, up from 22.4% in the year-ago quarter. The gross margin expansion was mainly driven by the sale of Kroger Specialty Pharmacy, the company’s “Our Brands” performance, reduced shrinkage and lower supply chain costs, though partially offset by higher pharmacy sales and price investments. The FIFO gross margin rate, excluding rent, depreciation and amortization, and fuel, jumped 49 basis points year over year.
The Operating, General and Administrative rate, excluding fuel and adjustment items, rose 27 basis points year over year. The increase can be attributed to the sale of Kroger Specialty Pharmacy, along with investments in associate wages and benefits, somewhat negated by reduced incentive plan costs and better productivity.
Adjusted FIFO operating profit reached $1,089 million, up from $1,017 million recorded in the year-ago period. GAAP operating loss was $1,541 million against an operating profit of $828 million delivered last year.
KR’s Financial Snapshot
Kroger ended the third quarter with cash and temporary cash investments of $3,956 million, total debt of $18,010 million and shareowners’ equity of $7,039 million.
Kroger’s net total debt-to-adjusted EBITDA ratio stood at 1.73 compared with 1.21 a year ago, comfortably below the firm’s 2.30-2.50 target range, signaling financial flexibility to support investments and shareholder returns.
Kroger started a $5 billion accelerated share buyback in the fourth quarter of fiscal 2024 and concluded it during the third quarter of fiscal 2025. This ASR was concluded as part of the company’s $7.5 billion buyback plan. Kroger is now buying back the remaining $2.5 billion worth of shares in the open market and expects to close it by the end of fiscal 2025.
The company reaffirmed its fiscal 2025 capital expenditure outlook of $3.6-$3.8 billion and adjusted free cash flow guidance of $2.8-$3 billion.
Sneak Peek Into Kroger’s Guidance
Kroger narrowed the guidance range and expects identical sales without fuel to grow 2.8%-3.0% compared with the prior estimate of 2.7-3.4%.
The company continues to see FIFO operating profit in the range of $4.8-$4.9 billion. Management now envisions adjusted EPS between $4.75 and $4.80 compared with the previously guided range of $4.70-$4.80.
Shares of this Zacks Rank #3 (Hold) company have risen 4% over the past year compared with the industry’s growth of 19.7%.
Image Source: Zacks Investment Research
Picks You Can’t Miss Out On
American Eagle Outfitters, Inc. (AEO - Free Report) operates as a multi-brand specialty retailer in the United States and internationally. At present, American Eagle sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AEO’s current fiscal-year sales and earnings implies a decline of 0.1% and 30.5%, respectively, from the year-ago figures. AEO delivered a trailing four-quarter earnings surprise of 35.1%, on average.
Boot Barn Holdings, Inc. (BOOT - Free Report) operates specialty retail stores in the United States and internationally. At present, Boot Barn holds a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Boot Barn’s current fiscal-year sales and earnings implies growth of 16.2% and 20.5%, respectively, from the year-ago figures. BOOT delivered a trailing four-quarter earnings surprise of 5.4%, on average.
Amazon.com, Inc. (AMZN - Free Report) engages in the retail sale of consumer products, advertising, and subscription services through online and physical stores in North America and internationally. At present, Amazon holds a Zacks Rank of 2.
The Zacks Consensus Estimate for Amazon’s current fiscal-year sales and earnings implies growth of 11.9% and 29.7%, respectively, from the year-ago figures. AMZN delivered a trailing four-quarter earnings surprise of 22.5%, on average.