The Kroger Co (KR) Q3 2025 earnings summary

Executive summary

• Identical sales without fuel rose 2.3% year-over-year, led by strong pharmacy and digital growth, with delivery sales up 18% and robust customer engagement and loyalty.

• Adjusted FIFO operating profit reached $1.02B and adjusted EPS was $0.98, up 3% year-over-year, while GAAP operating profit was $828M and GAAP EPS was $0.84.

• Sale of Kroger Specialty Pharmacy for $464M reduced sales by $340M in Q3 and will lower annualized sales by $3B, but improved gross margin and had no material effect on operating profit.

• Our Brands outpaced national brands, with 226 new items introduced and Private Selection leading growth.

• The Albertsons merger was terminated following court injunctions; a new $7.5B share repurchase program was announced.

Financial highlights

• Q3 2024 sales were $33.6B, down from $34.0B year-over-year, mainly due to the pharmacy sale and lower fuel sales; excluding fuel and the pharmacy sale, sales increased 2.7%.

• Adjusted net earnings per diluted share for Q3 2024 were $0.98, compared to $0.95 in Q3 2023.

• Gross margin was 22.9% of sales; FIFO gross margin rate (ex-fuel) increased 51 bps year-over-year.

• Net total debt to adjusted EBITDA ratio improved to 1.21x, down from 1.40x a year ago.

• Free cash flow for the year-to-date period was $4.4B, with capital investments of $2.8B excluding lease buyouts.

Outlook and guidance

• Full-year identical sales without fuel expected at 1.20%-1.50%, with trends near the midpoint.

• Adjusted FIFO operating profit forecasted at $4.6-$4.7B; adjusted EPS at $4.35-$4.45.

• Adjusted free cash flow expected at $2.5-$2.7B; capital expenditures at $3.6-$3.8B.

• Adjusted effective tax rate forecast at 22.5%.

• Digital sales anticipated to grow at a double-digit rate over time, outpacing other food-at-home sales.