KR Earnings: Kroger Stock Rises as Q1 Earnings Top Estimates  

Shares of The Kroger Co. (KR) are rising in pre-market trading at the time of writing, following news that the company delivered better-than-expected earnings for the first quarter of fiscal 2025. Adjusted earnings per share (EPS) came in at $1.49, exceeding the consensus estimate of $1.45.

Meanwhile, total company sales of $45.12 billion, came in marginally lower than analysts’ expectations of $45.16 billion. However, Identical sales (without fuel) jumped to 3.2%, significantly higher than the prior year period’s 0.5%.

For reference, in Q1FY24, Kroger reported adjusted EPS of $1.43 on sales of $45.3 billion. Unfortunately, Kroger has recently been impacted by a controversial incident involving illnesses and deaths linked to meals sold at its outlets, as well as rival Walmart (WMT).

Key Details of Kroger’s Q1 Results                          

Kroger’s gross margins improved to 23%, compared to 22% in Q1FY24, mainly due to the sale of Kroger Specialty Pharmacy, lower shrink, and reduced supply chain costs.

During the first quarter, Kroger also recorded an impairment charge of $100 million related to the planned closure of roughly 60 stores over the next 18 months. The company intends to reinvest the savings from the closures into enhancing the customer experience.

Notably, Kroger has surpassed analysts’ estimates in each of the past nine quarters. The company’s strong results were attributed to robust performance in its Pharmacy, eCommerce, and Fresh segments.

Kroger’s Guidance for Fiscal Year 2025

Looking ahead, Kroger has updated its Identical sales (without fuel) guidance, now projecting growth in the range of 2.25% to 3.25% for fiscal year 2025. At the same time, the company reaffirmed its adjusted EPS guidance of $4.60 and $4.80. Moreover, adjusted free cash flow is expected to be in the range of $2.8 billion to $3 billion, while capital expenditures are forecasted between $3.8 billion and $3.8 billion.

Is Kroger a Buy Right Now?

Ahead of the Q1 print, analysts remained divided on Kroger’s long-term stock trajectory. On TipRanks, KR stock has a Moderate Buy consensus rating based on four Buys and four Hold ratings. Also, the average Kroger price target of $72.50 implies 10.7% upside potential from current levels. Year-to-date, KR stock has gained 8.2%.

Please note that these ratings were issued before the results were announced and are subject to change as analysts revisit their views on the stock.

See more KR analyst ratings