The Kroger Co. (NYSE: KR) reported results for its second quarter of fiscal 2026 on September 11, 2026, for the period ended August 15. The company posted earnings per diluted share of $1.05 and adjusted earnings per diluted share of $1.09, and it reaffirmed its full-year adjusted earnings guidance while lowering its full-year identical sales guidance. Kroger competes for grocery market share against other large-format retailers, including Walmart, Albertsons and Costco, as well as online and club-format operators expanding their grocery offerings.
The results arrive as US grocers work through slower sales growth following several years of elevated food prices. Kroger's identical sales without fuel rose 0.2% in the quarter, compared with 3.4% growth in the same period last year, a deceleration the company said included an unfavorable 138 basis point impact from the Inflation Reduction Act.
#Kroger's Adjusted EPS Rises 5% To $1.09
Operating profit for the quarter was $971 million, up from $863 million a year earlier. Adjusted FIFO operating profit, which excludes the LIFO charge, was $1,076 million, down from $1,091 million in last year's second quarter.
Gross margin was 22.4% of sales, compared with 22.5% a year ago. Kroger attributed the decline to a higher mix of fuel sales, increased shrink and transportation costs, and greater value delivered to customers.
The operating, general and administrative expense rate, excluding fuel, increased 33 basis points from a year earlier. Kroger said this reflected planned wage investments, higher health care costs and sales deleverage, partly offset by lower incentive plan costs.
"Kroger delivered a solid second quarter, with adjusted EPS growth of 5 percent," said Greg Foran, CEO, The Kroger Co., in the company's earnings release. Foran added that "improving sales momentum remains a top priority."
#Kroger Lowers Full-Year Sales Guidance, Holds Profit Targets
Kroger lowered its full-year 2026 identical sales guidance without fuel to a range of 0.2% to 0.8%, down from the 1% to 2% range it had issued on June 18, 2026. The company said the new range includes an approximately 140 basis point unfavorable impact from the Inflation Reduction Act.
The company reaffirmed its other full-year targets. FIFO operating profit guidance remains $5 billion to $5.2 billion, adjusted earnings per diluted share guidance remains $5.10 to $5.30, free cash flow guidance remains $2.7 billion to $2.9 billion, and capital expenditure guidance remains $3.8 billion to $4 billion.
"Given our first half results and the macro environment, we are updating our identical sales without fuel guidance to a new range of 0.2% to 0.8%," said David Kennerley, CFO, The Kroger Co., in the earnings release.
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#Kroger Grows eCommerce And Media, Raises Dividend 11%
Adjusted eCommerce sales grew 20% in the quarter, and profit at Kroger Precision Marketing, the company's retail media business, grew 24%.
Kroger raised its quarterly dividend 11% during the quarter, marking its 20th consecutive year of dividend increases, and said it expects to keep increasing the dividend over time, subject to board approval.
The company repurchased $1 billion in shares during the quarter and $1.2 billion year to date, under a $2 billion authorization its board approved in December 2025. About $800 million remains under that authorization, which Kroger expects to complete by the end of fiscal 2026.
Kroger's net total debt to adjusted EBITDA ratio was 1.91, up from 1.63 a year earlier, and remained below the company's target range of 2.3 to 2.5.
#Risks And Outlook
Kroger said its forward-looking statements are based on management's current assumptions and are subject to a range of uncertainties, including labor negotiations, tariff changes, inflationary and deflationary trends, competitive pricing actions and the outcome of litigation tied to its terminated merger with Albertsons and its opioid settlements.
Management reaffirmed its full-year adjusted earnings per diluted share guidance of $5.10 to $5.30, citing confidence in the trends that supported second quarter profitability, even as it lowered its sales growth outlook. Kroger will host an investor update meeting on October 20, 2026, where it plans to share additional strategic and longer-term financial targets.