The Kroger Co. (NYSE: KR) reported higher Q1 earnings as eCommerce sales, pharmacy profit and cost savings supported results despite softer identical sales.

Key Highlights

  • Sales rose to $46.1 billion in Q1 from $45.1 billion a year earlier.
  • Adjusted EPS increased to $1.58 from $1.49 in the prior-year quarter.
  • Identical sales excluding fuel grew 1.0%, including a 130 basis-point pharmacy headwind.
  • Adjusted eCommerce sales grew 19%, while Kroger Precision Marketing profit rose more than 20%.

The Kroger Co. (NYSE: KR) reported first-quarter fiscal 2026 results that showed modest grocery sales growth, stronger digital momentum and continued pressure from pricing and transportation costs. The US food retailer posted sales of $46.1 billion for the quarter ended May 23, compared with $45.1 billion a year earlier.

Adjusted earnings per share rose to $1.58, up from $1.49 in the prior-year period. Reported earnings per share were $1.46, compared with $1.29 last year. Operating profit increased to $1.41 billion, while adjusted FIFO operating profit reached $1.54 billion.

Identical sales excluding fuel increased 1.0%. The figure included a 130 basis-point drag from the Inflation Reduction Act and an additional 40 basis-point headwind from the shift from branded to generic prescriptions. Kroger said pharmacy profit still exceeded expectations, helped by prescription trends and favorable mix.

The company’s core grocery performance was supported by fresh food, private-label brands and digital orders. Kroger said its in-house brands gained share and outpaced national brands by 175 basis points, even as egg deflation weighed on sales.

eCommerce remained the strongest growth channel. Adjusted digital sales rose 19%, led by delivery, while the company said its eCommerce business, including retail media, became profitable in the quarter. Growth was helped by store-based fulfillment and third-party delivery partnerships.

Margin pressure remained visible. Gross margin declined to 22.7% from 23.0% a year earlier. FIFO gross margin, excluding rent, depreciation and amortization, fuel and adjustment items, fell 9 basis points. Kroger cited higher transportation costs, egg deflation and planned price investments as the main pressures.

The company said transportation costs reduced gross margin by 15 basis points, largely due to higher diesel prices. Operating, general and administrative expenses also increased as Kroger invested in store hours, associate training and uniforms.

Kroger reaffirmed its full-year 2026 guidance. The company expects identical sales excluding fuel to grow 1.0% to 2.0%, adjusted FIFO operating profit of $5.0 billion to $5.2 billion and adjusted EPS of $5.10 to $5.30. Free cash flow is expected between $2.7 billion and $2.9 billion.