KR: Choppy Road Ahead—Remain Sidelined as Investment Concerns Not Easing Anytime Soon

Research evidence excerpt

KR: Choppy Road Ahead—Remain Sidelined as Investment Concerns Not Easing Anytime Soon

unding Opportunity in Costs; More Detail Needed: Mgmt 2026E 1.63 A 1.05 E 1.22 E 1.30 E 5.15 E

seemed confident in its ability to generate cost savings across most pockets of its Prior 1.55 E 1.16 E 1.18 E 1.31 E 5.20 E

business, flagging COGS savings 30% ahead of plan in Q1, and expectations savings ramp 2027E 1.64 E 1.07 E 1.24 E 1.41 E 5.35 E

through yr. Quantification is needed to build credibility, esp. since KR has been well run Prior 1.68 E 1.25 E 1.26 E NC 5.60 E

with an annual savings target. That said, ACI a prime example of investors not giving credit

for cost savings w/out the top-line inflection. Source:NA = NotCompanyAvailable,Data,NC =WellsNo Change,Fargo SecuritiesNE = Noestimates,Estimate and Factset.

Edward Kelly, CFA'26 Guidance Reiterated, but Back-Half Weighted: While some were looking for a cut,

KR reiterated the '26 guide (1-2% ID's, $5.10-5.30 in EPS) post a marginally weaker Q1. Equity Analyst | Wells Fargo Securities, LLC Edward.J.Kelly@wellsfargo.com | 212-214-5304

That said, Q2 guide for EPS in line w/ LY's $1.04 sits well below St at $1.13 on 1% IDs ex

John Parkefuel (vs. St 1.5%). This also implies an acceleration in 2H IDs and EPS growth. Re-inflation

Associate Equity Analyst | Wells Fargo Securities, LLC

and ramping cost saves help, but back half weighted guidance isn't helping the investment John.Parke@wellsfargo.com | 212-214-3327

case. Adam Gregorio

Pricing Investment Bear Case Hard to Break: Price war concerns were overdone (for Adam.Gregorio@wellsfargo.com | 212-214-8117

now), but the direction of this negative narrative is unchanged and the investment case

for KR remains difficult. Threading the needle with funded price investment is hard to