Kroger (KR) shares surged 9% in Friday morning trading after the supermarket chain raised its full-year sales forecast, maintained its profit outlook, and posted mixed quarterly results. The company continues to face growing competition from major players like Walmart (WMT) and Costco (COST), which are gaining grocery market share.
In its fiscal first quarter, Kroger reported adjusted earnings per share of $1.49, beating Bloomberg’s consensus estimate of $1.45. Same-store sales—referred to by Kroger as “identical sales”—rose 3.2%, ahead of the 2.3% analysts expected. Revenue came in at $45.12 billion, narrowly missing projections of $45.23 billion.
“We are pleased with our first quarter sales, which reflects strength in pharmacy, e-commerce, and fresh,” CFO David Kennerley told investors during the earnings call. He added, “As a result, we are raising our identical sales without fuel guidance.”
Kroger now expects full-year same-store sales, excluding fuel, to grow between 2.25% and 3.25%, up slightly from its previous 2%-3% range. Analysts were expecting the midpoint to land at 2.47% before the update.
The company also said it expects “second quarter identical sales without fuel to be roughly at the midpoint of our full year guidance range.”
The first quarter, which ended May 24, showed that shoppers remained cautious amid higher costs and the effects of President Trump’s tariffs. “The macroeconomic environment remains uncertain, and as a result, other elements of our guidance remain unchanged,” Kennerley said.
Kroger reiterated its full-year adjusted earnings per share outlook of $4.60 to $4.80.
The update comes at a time of transition for Kroger. Former CEO Rodney McMullen resigned in March following a board-led investigation, and a permanent successor has yet to be named. Chairman Ron Sargent is currently serving as interim CEO.
Sargent told investors Friday that “the board has a search committee in place” but noted there are “no specific updates at this time.”
CFRA analyst Arun Sundaram told Yahoo Finance that leadership has also been distracted in recent years by Kroger’s now-defunct $24.6 billion merger with Albertsons (ACI), which was blocked by the Federal Trade Commission in December.
During the merger talks, Kroger said it “paused” its routine review of store locations. It now plans to close about 60 underperforming stores over the next 18 months. In a pre-earnings note, UBS analyst Michael Lasser warned that Kroger was at “risk of further market share erosion” as competitors like Walmart and Costco strengthen their grocery foothold.
On the call, Sargent said Kroger is focused on delivering “profitable market share growth” by expanding its store base, maintaining competitive pricing, and rolling out promotional efforts.
Shares of Kroger are down 2.7% over the past month. For comparison, Costco and Walmart shares have fallen about 5% and 2%, respectively.
Consumer behavior is also shifting as households across income brackets adjust to ongoing uncertainty. Sargent noted that Kroger has observed “different shopping behaviors” as both “high and low income levels … [are] navigating a significant uncertainty” and choosing to eat at home more frequently.
According to JPMorgan analyst Ken Goldman, May marked the 27th consecutive month in which inflation for food at home remained lower than for food away from home.
Shoppers are also becoming more selective with their purchases.
“We are kind of seeing a shift into larger pack sizes and increased use of coupons,” Sargent said. Spending on discretionary items like snacks, adult beverages, pet products, and general merchandise has also softened.
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