On Dec. 4, The Kroger Co. reported third quarter 2025 results that included an operating loss of $1.54 billion, driven by a $2.6 billion impairment charge related to its automated fulfillment network. Excluding the impairment and other one-time items, the Cincinnati-based retailer posted adjusted earnings of $1.05 per share and raised its full-year guidance.
Total company sales reached $33.9 billion for the quarter, compared to $33.6 billion in the same period last year. Identical sales without fuel increased 2.6 percent.
“Kroger delivered another quarter of strong results reflecting meaningful progress on our strategic priorities,” said Chairman and CEO Ron Sargent. “Our e-commerce business posted another quarter of impressive performance. We have now completed our strategic review, which we expect will make our e-commerce business profitable in 2026.”
E-Commerce growth, fulfillment changes
E-commerce sales increased 17 percent during the quarter. The company previously announced plans to close three automated fulfillment facilities in Pleasant Prairie, Wisconsin; Frederick, Maryland; and Groveland, Florida, in January. Kroger expects these changes to improve e-commerce operating profit by about $400 million in 2026.
The $2.6 billion impairment charge resulted in a GAAP loss of $2.02 per share for the quarter. Adjusted FIFO operating profit was $1.09 billion, up from $1.02 billion in the prior year.
Margin improvement
Gross margin improved to 22.8 percent from 22.4 percent in the same period last year. The company attributed the improvement to the sale of Kroger Specialty Pharmacy, private brand performance, lower supply chain costs and reduced shrink. These gains were partially offset by the mix effect from higher-margin pharmacy sales and price investments.
The company also made an accelerated contribution to multi-employer pension plans during the quarter to help stabilize associate benefits and reduce future obligations.
Updated guidance
Kroger narrowed its identical sales guidance to 2.8 to 3 percent, up from the previous range of 2.7 to 3.4 percent. The company raised the lower end of its adjusted earnings per share guidance to $4.75 to $4.80, from $4.70 to $4.80.
“We are pleased with the continued momentum in our business, with particularly strong performance from e-commerce and pharmacy,” said CFO David Kennerley.
Capital allocation
During the quarter, Kroger completed a $5 billion accelerated share repurchase program that began in the fourth quarter of fiscal 2024. The company is executing open market share repurchases under its remaining $2.5 billion authorization, expected to be completed by the end of fiscal 2025.
Kroger’s net total debt to adjusted EBITDA ratio stood at 1.73, compared to 1.21 a year ago. The company’s target range is 2.30 to 2.50.
The Kroger Co. operates more than 2,700 supermarkets and multi-department stores under various banner names. The company serves more than 11 million customers daily.
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