Kroger cuts same-store sales outlook for 2026

The reduced outlook includes an estimated negative impact of 140 basis points from the Inflation Reduction Act, which is impacting pharmacy pricing. Shutterstock

Kroger trimmed its outlook for full-year identical-store sales growth on Friday to less than 1%, excluding fuel, as the company continues to face headwinds.

The Cincinnati-based retailer now expects full-year IDs excluding fuel to increase between 0.2% and 0.8%, down from previous guidance of 1% to 2% growth. The reduced outlook includes an estimated negative impact of 140 basis points from the Inflation Reduction Act, which is impacting pharmacy pricing.

Kroger’s outlook for full-year profits remains the same as previous guidance, with earnings per share projected to come in at $5.10 to $5.30, as the company continues to drive cost savings and efficiencies amid ongoing sales pressures, the company said in its second-quarter earnings call with analysts.

Kroger reported ID sales growth of 0.2%, excluding fuel, for the second quarter, which was less than analysts expected. Total sales in the second quarter, which ended Aug. 15, were $34.6 billion, vs. $33.9 billion in the year-ago period. Excluding fuel, the sale of Vitacost and the exit of certain fulfillment centers, sales increased 0.1%, the company said.

“Sales were tracking well through the quarter until our final period, when we absorbed the impact of the cyclospora outbreak, which cost us roughly 35 basis points of total company IDs without fuel, reflecting the impact of produce categories,” said Greg Foran, CEO.

He said the outbreak had a broad impact across the produce department, despite the recall being confined to leaf lettuce from Mexico.

He also said consumer spending has been pressured by high gasoline prices, and that lower drug prices in pharmacy reduced sales by about 140 basis points in Q2.

Despite those sales pressures, some categories, including natural foods and prepared meals, notched sales growth that was “well ahead of total sales,” Foran said. The company added more than 600 new natural and organic items during the quarter, he said. In addition, the company’s premium private label, Private Selection, had sales increases of 14% in the quarter, bolstered by prepared meal offerings such as Mandarin Orange Chicken and Gnocchi Alla Sorrentina.

Ecommerce also continues to be a bright spot for the company, with adjusted sales up 20% and Kroger’s second straight quarter of profitable ecommerce growth. Ecommerce customer counts were also up 20%, driven by strong engagement during online deal days.

“Ecommerce is where most of the growth in our industry will come from over the next several years, and we intend to take our share of it,” Foran said, citing a focus on fast delivery to meet increasing consumer demand.

Retail media revenues were up 24%, which marked the company’s best quarter since 2021, he said.