Kroger reported second-quarter 2026 sales of $34.6 billion, up from $33.9 billion a year earlier, while adjusted earnings per diluted share increased 5% to $1.09 from $1.04.
The grocery retailer generated operating profit of $971 million, compared with $863 million a year earlier, while adjusted FIFO operating profit was $1.076 billion compared with $1.091 billion.
GAAP diluted earnings per share increased to $1.05 from $0.91.
Identical sales excluding fuel increased 0.2%, compared with 3.4% growth in the prior-year quarter.
Adjusted eCommerce sales grew 20%, while profit from Kroger Precision Marketing increased 24%, highlighting continued growth in two of the company’s strategic higher-growth businesses.
Total sales, excluding fuel, the divestiture of Vitacost, and the exit of certain fulfillment centers, increased by 0.1%.
Gross margin was 22.4% compared with 22.5% a year earlier.
Kroger said gross margin was pressured by a higher mix of fuel sales, increased shrink, transportation costs and investments in customer value. Those pressures were partly offset by improved eCommerce profitability, media growth, a favorable pharmacy mix, sourcing initiatives, tariff refunds, and a smaller LIFO charge.
The FIFO gross margin rate, excluding rent, depreciation, amortization, and fuel, improved by 13 basis points.
Kroger’s operating, general and administrative expense rate increased by 33 basis points, primarily due to planned wage investments, higher healthcare costs, and sales deleverage. Those pressures were partly offset by lower incentive compensation and productivity initiatives.
The company also continued returning substantial capital to shareholders.
Kroger increased its dividend 11% during the quarter, marking its 20th consecutive year of dividend increases.
It repurchased $1 billion of stock during the second quarter and $1.2 billion year-to-date under a $2 billion repurchase authorization announced in December 2025.
Approximately $800 million remained under that program at quarter-end, and Kroger expects to complete the authorization by the end of fiscal 2026.
Kroger’s net total debt-to-adjusted EBITDA ratio was 1.91, compared with 1.63 a year earlier and below the company’s target range of 2.30 to 2.50.
For fiscal 2026, Kroger lowered its identical sales excluding fuel forecast to growth of 0.2% to 0.8%, compared with its previous guidance of 1% to 2%.
The updated outlook includes an approximately 140-basis-point unfavorable effect related to the Inflation Reduction Act.
Kroger nevertheless reaffirmed its other major full-year financial targets.
Adjusted FIFO operating profit is still expected between $5 billion and $5.2 billion, while adjusted diluted EPS remains projected at $5.10 to $5.30.
The company continues to expect free cash flow of $2.7 billion to $2.9 billion and capital expenditures of $3.8 billion to $4 billion. Its projected adjusted tax rate remains 23%.
Management said profitability benefited from cost savings, strong pharmacy and fuel results, and improving economics within Kroger’s eCommerce operations.
Kroger plans to provide additional details about its strategic initiatives and longer-term financial targets at an investor update scheduled for October 20, 2026.
The company serves more than 11 million customers daily across its digital operations and retail store network and employs more than 400,000 associates.
KEY QUOTES:
“Kroger delivered a solid second quarter, with adjusted EPS growth of 5 percent. I am pleased with the progress we are making. Our teams kept driving value for customers, improving execution in our stores, growing eCommerce 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.”
Greg Foran, Chief Executive Officer of Kroger
“Our second quarter results demonstrate the resiliency of Kroger’s business model and the discipline with which our teams are executing. Adjusted earnings per diluted share grew 5%, driven by cost savings, strong pharmacy and fuel performance, and improvement in the profitability of our eCommerce business.”
David Kennerley, Chief Financial Officer of Kroger
“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% to 0.8%, which includes an approximately 140 basis point headwind from the Inflation Reduction Act. We are reaffirming our adjusted FIFO net operating profit and adjusted earnings per diluted share guidance, reflecting our confidence and visibility into the same factors that drove our profitability in the second quarter.”
David Kennerley, Chief Financial Officer of Kroger
