The Kroger Co (KR) investor relations material

Executive summary

• Identical sales without fuel grew 0.2% year-over-year, with traffic up but basket size down due to disciplined consumer spending and external headwinds; total sales reached $34.6 billion.

• Adjusted eCommerce sales grew 20% and retail media/marketing profit rose 24%, contributing to a second consecutive quarter of profitable e-commerce growth.

• Adjusted EPS was $1.09, up 5% year-over-year, and adjusted FIFO operating profit reached $1,076 million.

• Pharmacy and fuel segments delivered strong profit and volume growth, with pharmacy benefiting from a branded-to-generic mix shift and fuel gallons sold outpacing the industry by 520 basis points.

• The company maintained market share gains versus traditional grocery competitors despite industry-wide softness.

Financial highlights

• Adjusted earnings per diluted share was $1.09, a 5% increase from the prior year.

• Adjusted FIFO operating profit was $1,076 million, compared to $1,091 million last year.

• Gross margin for Q2 was 22.4%, slightly down from 22.5% last year; FIFO gross margin rate (excluding rent, depreciation, amortization, and fuel) increased 13 basis points.

• Net income attributable to shareholders was $641 million, with GAAP EPS of $1.05.

• Dividend per share for Q2 was $0.39, up from $0.35 in Q2 2025.

Outlook and guidance

• Full-year identical sales without fuel guidance lowered to 0.2%-0.8% from 1%-2%, reflecting a 138-140 basis point headwind from the Inflation Reduction Act.

• Full-year adjusted FIFO operating profit guidance maintained at $5.0-$5.2 billion; adjusted EPS guidance held at $5.10-$5.30.

• Free cash flow expected at $2.7-$2.9 billion; capital expenditures at $3.8-$4.0 billion.

• Tax rate guidance is 23%.

• Pharmacy headwinds from the Inflation Reduction Act expected to accelerate in Q4 but with no profit impact.