Kroger (KR) Q2 2025 earnings summary

Executive summary

• Q2 2024 delivered solid results, with identical sales excluding fuel up 1.2% year-over-year, digital sales up 11%, and delivery sales up 17%, supported by growth in loyal households and customer visits.

• Adjusted FIFO operating profit was $984 million and adjusted EPS was $0.93, down 3% year-over-year; GAAP operating profit was $815 million and net earnings were $466 million.

• The company advanced integration work and financing for the pending Albertsons merger, including a $10.5 billion senior notes offering and amended divestiture agreements.

• Recognized for sustainability, workplace inclusion, and community impact, with multiple awards and scholarships granted.

• The business model remains resilient amid economic pressures, with customers trading down and focusing on essentials.

Financial highlights

• Q2 2024 sales were $33.9 billion, flat year-over-year; sales excluding fuel rose 1.3%.

• Net income attributable to Kroger was $466 million, or $0.64 per diluted share, compared to a net loss of $180 million in Q2 2023, which included a $1.4 billion opioid settlement charge.

• Gross margin was 22.6% of sales; FIFO gross margin rate excluding fuel improved by 42 basis points year-over-year.

• Net total debt to adjusted EBITDA ratio improved to 1.24, well below the target range of 2.3–2.5.

• Adjusted free cash flow guidance for FY24 is $2.5–$2.7 billion, with capital expenditures expected at $3.6–$3.8 billion.

Outlook and guidance

• Full-year identical sales without fuel guidance raised to 0.75%–1.75%.

• FY24 adjusted FIFO operating profit expected at $4.6–$4.8 billion and adjusted EPS at $4.30–$4.50.

• CapEx guidance increased to $3.6–$3.8 billion, reflecting accelerated store projects.

• Adjusted free cash flow guidance unchanged despite higher CapEx.

• Tax rate expected at 23% for FY24.