March 5, 2026 – The Kroger Co. (NYSE: KR) has released its financial results for the fourth quarter and full fiscal year 2025, showcasing solid performance that reflects the company's strategic initiatives in enhancing customer value and operational efficiencies. CEO Greg Foran expressed confidence in the company's growth trajectory, while the CFO, David Kennerley, provided a detailed outlook for 2026.

1. Key Highlights from Fourth Quarter Results

Kroger reported total sales of $34.7 billion for the fourth quarter of 2025, a slight increase from $34.3 billion in the same quarter of the previous year. Excluding fuel, sales rose by 2.1%, indicating stable demand as the company navigates through a challenging retail environment.

Earnings Performance

Earnings Per Share (EPS): Increased to $1.35, up from $0.90 in Q4 2024.

Adjusted EPS: Rose to $1.28, compared to $1.14 a year ago.

Operating Profit: Reached $1.246 billion, a significant jump from $912 million in the prior year.

The gross margin improved to 23.1%, compared to 22.7% in Q4 2024, driven by sourcing enhancements, lower supply chain costs, and better fuel margins.

Operating Metrics

Identical Sales: For the fourth quarter, identical sales growth stood at 2.4% without fuel, maintaining the same growth rate as the previous year.

Operating, General and Administrative (OG&A) Rate: Increased by 21 basis points, reflecting investments in labor to enhance customer service.

2. Full-Year 2025 Financial Overview

Kroger's full-year sales for 2025 amounted to $147.6 billion, a marginal increase from $147.1 billion in 2024. The company noted that this includes $2 billion from Kroger Specialty Pharmacy sales, emphasizing the diversified revenue streams.

Annual Performance Summary

Adjusted EPS: Grew to $4.85, up from $4.47 in 2024.

Operating Profit: Declined to $1.9 billion, down from $3.8 billion the previous year primarily due to a $2.5 billion impairment charge related to the automated fulfillment network.

Gross Margin: Improved to 22.9%, compared to 22.3% in 2024.

Capital Allocation Strategy

Kroger continues to prioritize strong free cash flow generation, aiming to invest in long-term sustainable earnings growth and maintain its investment-grade debt rating. The company executed a $5 billion accelerated share repurchase program and announced an additional $2 billion share repurchase authorization, underscoring its commitment to shareholder returns.

3. Guidance for Fiscal Year 2026

Looking ahead, Kroger provided a positive outlook for 2026:

Identical Sales Growth (without fuel): Expected to be between 1.0% - 2.0%.

Adjusted FIFO Operating Profit: Projected to be $5.0 - $5.2 billion.

Adjusted EPS: Anticipated to be between $5.10 - $5.30.

Free Cash Flow: Expected to range from $2.7 - $2.9 billion.

Capital Expenditures (Cap Ex): Estimated at $3.8 - $4.0 billion.

Strategic Focus

CFO David Kennerley indicated that the 2026 guidance reflects Kroger's commitment to investing more aggressively in customer value and improving gross margins, while acknowledging an approximately 130 basis point headwind from the Inflation Reduction Act.

4. Leadership Comments

CEO Greg Foran noted, "Kroger delivered a strong finish to the year, with improving market share trends and solid sales growth that reflect meaningful progress strengthening the business." He emphasized the company's focus on enhancing customer experiences both in-store and online, alongside ongoing cost-saving initiatives.

Conclusion

As Kroger navigates the evolving retail landscape, its robust financial performance and strategic investments position it well for future growth. The company's commitment to delivering value to shareholders while enhancing customer satisfaction remains a cornerstone of its operational philosophy.

With a solid foundation for 2026, Kroger aims to continue its trajectory of growth and resilience in the competitive grocery sector.

Original press release