Retail giant Kroger intends to shut down approximately 60 stores, while announcing an increase in Q1 sales figures.
Kroger, one of the top food and consumables retailers in North America, has announced updates to its full-year 2025 guidance for ID sales without fuel. The new range stands at 2.25%-3.25%, reflecting the company's strong performance in the first quarter of the year.
In Q1, Kroger reported impressive results, with earnings per share (EPS) of $1.29 and an operating profit of $1,322 million. The company's adjusted EPS for the quarter was $1.49, and its adjusted FIFO operating profit stood at $1,518 million. Kroger's identical sales (excluding fuel) increased by 3.2% compared to the same period last year, and total company sales reached $45.1 billion.
The company's FIFO gross margin rate, excluding rent, depreciation and amortization, fuel, and adjustment items, rose by 79 basis points from the same period last year, primarily due to the sale of Kroger Specialty Pharmacy, lower shrink, and lower supply chain costs. However, multi-employer pension contributions drove a 29-basis-point increase in Q1. The operating, general, and administrative rate, excluding fuel and adjustment items, rose 63 basis points compared with the year-ago period.
Kroger is not just focusing on financial growth; the company is also leveraging technology to streamline operations and improve efficiency. Kroger's use of technology has significantly improved the efficiency of employees’ jobs by streamlining daily tasks and operational processes. This includes digital solutions on the shop floor and enhancements in supply chain management.
Kroger has invested in automation, predictive maintenance, and robotics, which help reduce labor demands by making inventory management and restocking more efficient. These innovations free employees from repetitive tasks and improve operational efficiency overall. Additionally, Kroger has centralized its e-commerce operations with a dedicated business unit that leverages technology to speed up order fulfillment and reduce customer wait times, indirectly supporting store employees by improving workflow and customer satisfaction.
Kroger's e-commerce sales increased by 15% in Q1, reflecting the growing importance of online shopping. The company also recognized an impairment charge of $100 million in relation to the store closures it announced earlier this year. However, Kroger expects a modest financial benefit from these closures and plans to reinvest those savings into the customer experience.
Despite the store closures, Kroger remains committed to its workforce. The company will offer jobs at other locations to all employees now at stores slated to close. Kroger employs nearly 420,000 associates who serve more than 11 million customers daily across its retail food stores under a variety of banner names.
Kroger reaffirmed the rest of its guidance, including capital expenditures of $3.6 billion-$3.8 billion. The company, which is No. 4 on The PG 100, Progressive Grocer’s 2025 list of the top food and consumables retailers in North America, also affirmed its commitment to investing in its business to spur long-term sustainable net earnings growth.
PG also named Kroger among its Retailers of the Century, a testament to the company's enduring success and innovation in the retail industry. Kroger's CFO, David Kennerly, noted that the strong sales results and positive momentum give confidence to raise the identical sales without fuel guidance.
[1] Source: Kroger Investor Relations [2] Source: Kroger Newsroom [3] Source: Kroger Newsroom [4] Source: Progressive Grocer
- Kroger's strong performance in the first quarter of 2025, marked by a rise in identical sales and an increase in financial indicators such as earnings per share and operating profit, reinforces its significant impact in the retail industry.
- Reflecting the company's focus on both financial growth and operational efficiency, Kroger has strategically invested in technology to streamline processes and improve the supply chain, while also exploring innovations in automation, predictive maintenance, and robotics.
- As Kroger undergoes changes in its physical retail footprint with the closure of certain stores, the company remains dedicated to its workforce, providing job opportunities for displaced employees at other locations, and reaffirms its commitment to maintaining a strong presence in the food-and-drink, lifestyle, and retail sectors.
