1Q In-Line But 2Q Guided Below The Street...

Research evidence excerpt

1Q In-Line But 2Q Guided Below The Street...

Consumer

Food Retailers - Market Overweight

KROGER CO. (KR) June 18, 2026

1Q In-Line But 2Q Guided Below The Street... Rating:

Outperform

The Wolfe Byte Price: $61.82

Kroger reported 1Q results roughly in-line with expectations and reaffirmed its FY Price Target:

outlook. Commentary on 2Q suggests a more back-half-weighted guide, and there $86

continue to be concerns about the size of incremental price investments coming % Upside:

38.7%later this year.

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Kroger will be hosting an Investor Day on October 20th. We expect this to be a Company Information

key event for the industry as they unpack plans to further close price gaps that 52-Week Range $59 - $76

have widened over the last several years. Market Cap. (MM) $38,116

Enterprise Value (MM) $60,615

1Q Results (ending May). IDs ex. fuel increased +1.0% (64bps headwind from egg Shares Out. (MM) 616.6

deflation) vs consensus at +0.9% and decelerated 60bps on a 2-yr basis from the prior Avg. Value Traded (MM) $450.90

SI% of Float 5.1%

quarter. Management noted that units are trending in the right direction, but remain

negative. FIFO EBIT of $1.54bn beat consensus at $1.52bn, while adj EPS of $1.58

missed consensus at $1.59.

FIFO gross margins were down -9bps in 1Q; Improved on a 2-Yr basis. FIFO 70

Gross Margins were down -9bps YoY in 1Q (vs flat in 4Q) as the higher fuel sales, 65

transportation costs (~15bps), egg deflation, and price investments offset the benefits 60

of pharmacy, improved e-commerce profitability, and sourcing benefits. On a 2-Yr 55

basis, the FIFO Gross Margin was up +71bps in 1Q vs +54bps in 4Q. The OG&A rate Jul-25 Aug-25 Sep-25 Oct-25 Nov-25 Dec-25 Jan-26 Feb-26 Mar-26 Apr-26 May-26 Jun-26