The Kroger Co. reported Sept. 11 that its second quarter identical sales without fuel increased 0.2 percent, a marked slowdown from 3.4 percent growth in the same period last year. The Cincinnati, Ohio-based grocer lowered its full-year identical sales without fuel outlook for 2026 while reaffirming its earnings guidance.
For the quarter ended Aug. 15, total company sales were $34.6 billion, compared to $33.9 billion for the same period last year. Excluding fuel, the sale of Vitacost and the exit of certain fulfillment centers, sales increased 0.1 percent. Identical sales included an unfavorable 138 basis point impact from the Inflation Reduction Act. Year to date, identical sales without fuel are up 0.6 percent.
E-commerce remained a bright spot, with adjusted e-commerce sales growing 20 percent and Kroger Precision Marketing profit growing 24 percent.
“Kroger delivered a solid second quarter. I am pleased with the progress we are making,” said CEO Greg Foran. “Our teams kept driving value for customers, improving execution in our stores, growing e-commerce profitably and managing costs with discipline. Improving sales momentum remains a top priority. While there is more work to do, I am confident in our plan to become America’s favorite grocer.”
Margins and expenses
Gross margin was 22.4 percent of sales, compared to 22.5 percent a year ago. The decrease was primarily driven by the mix effect of higher fuel sales, higher shrink, higher transportation costs and greater value delivered for customers, partially offset by improvement in e-commerce profitability and media, favorable pharmacy mix, sourcing initiatives, tariff refunds, a decreased LIFO charge and depreciation and amortization, the grocer said.
The FIFO gross margin rate, excluding rent, depreciation and amortization, and fuel, increased 13 basis points. The LIFO charge for the quarter was $39 million, compared to $62 million last year.
The operating, general and administrative rate, excluding fuel and adjustment items, increased 33 basis points, primarily attributable to planned investments in associate wages, increased health care costs and sales deleverage, partially offset by lower incentive plan costs and ongoing productivity initiatives.
Operating profit was $971 million, up from $863 million a year ago. Adjusted FIFO operating profit was $1.08 billion, compared to $1.09 billion last year.
Updated 2026 guidance
Kroger lowered its full-year identical sales without fuel guidance to a range of 0.2 percent to 0.8 percent, down from 1 percent to 2 percent. The updated range includes an approximately 140 basis point headwind from the Inflation Reduction Act.
The company reaffirmed the remainder of its guidance, including adjusted FIFO operating profit of $5 billion to $5.2 billion, free cash flow of $2.7 billion to $2.9 billion and capital expenditures of $3.8 billion to $4 billion.
“Given our first half results and the macro environment, we are updating our identical sales without fuel guidance to a new range of 0.2 percent to 0.8 percent,” said CFO David Kennerley. “We will continue to invest in the business for growth, manage our margins with discipline and create long-term shareholder value.”
Kroger will host an investor update meeting on Oct. 20, where it plans to share additional details on strategic initiatives and longer-term financial targets.
The Kroger Co. (NYSE: KR) is one of America’s largest retailers, serving more than 11 million customers daily through a digital shopping experience and retail food stores under a variety of banner names.
Related: Kroger Q1 Identical Sales Rise 1%; Company Reaffirms 2026 Guidance