Produce(ing) Progress: KR 1Q Review

研报英文原文证据摘录

Produce(ing) Progress: KR 1Q Review

Deutsche Bank

Research

Rating Company Date

Buy Kroger Co. 18 June 2026

North America Reuters Bloomberg Rating Buy

United States KR.N KR US Price target (USD) 79.00 Price at 17 Jun 26 61.82

52-week range 75.60 – 59.28

Consumer

Retailing / Food & Drug Chains Valuation & Risks

Krisztina Katai

Against relatively low expectations, KR delivered a broadly in line 1Q print; Research Analyst

+1-212-250-0590 however, a soft 2Q outlook and increased reliance on a 2H acceleration drove

increased skepticism. Specifically, 2Q ID Sales/EPS guidance of +1%/flat YoY Jessica Taylor

implies a step up in 2H (2%/10% growth YoY at the midpoint) based on maintained Research Associate

FY guidance. In addition, FIFO gross margin ex. Fuel was light (-9bps) while FY +1-212-250-3165

guidance still calls for YoY expansion, despite price investments. While

Nick Breckenridge management remains confident of its ability to fund price investments through a Research Associate

broad set of cost savings (procurement, shrink, and productivity), the measured +1-212-250-9179

and surgical approach to pricing – rather than a more aggressive reset – has

resulted in pushback from the skeptics viewing it as a “slow bleed” from here.

For our part, we welcome management’s increased sense of urgency which is a

welcome change in the KR story, and see meaningful runway for store-level,

operational, and financial improvements. On the top line, there is a meaningful

store-level opportunity, with ~20% of the fleet meaningfully underperforming,

where better execution (in-stock, fresh, labor deployment) can drive improved

traffic and basket. At the same time, KR has identified a range of margin

opportunities across COGS (direct sourcing, supplier negotiations), goods-not-