At a Glance

  • Kroger's first-quarter fiscal 2026 identical sales excluding fuelgrew 1%, with strong performance in digital, fresh, and private-label sales, CEO Greg Foreman said on Thursday morning's earnings call. Total sales rose about 2% year over year to $46.1 billion, and operating profit grew more than 6%.
  • Foreman said the company's e-commerce business turned profitable for the first time in the quarter.
  • Kroger expects e-commerce profitability to continue expanding, CFO David Kennerly said on the call, relying on this trend to "become a larger contributor to margin expansion over time."

Deeper Dive

Kroger executives view the company's online business as a particular source of strength. Foreman said on the call that digital sales grew 19% year over year in the quarter, driven mainly by delivery, and the company's e-commerce business attracted a "record number" of new household customers.

Additionally, according to Kennerly, about half of the company's e-commerce growth in the quarter came from orders delivered within one hour.

Digital sales growth boosted Kroger's retail media business, which grew more than 20% in the first quarter. Kroger includes retail media revenue in its e-commerce performance calculations.

Despite Kroger's significant digital growth in the first quarter, the company's identical sales performance slowed notably compared with the same period in fiscal 2025—when the companyrecorded sales growth of 3.2%. Kennerly noted that due to changes in how the federal government pays for certain prescription drugs, Kroger's identical sales in the most recent quarter were negatively impacted by 130 basis points—a factor thatalso affected other grocers. Kennerly said the accelerated shift from brand-name to generic drugs also weighed on Kroger's results in the first quarter.

Foreman emphasized on the call that improving store operations must be a key priority for Kroger. He noted the company needs to "move faster, make decisions more quickly, and extract more value from existing assets and talent."

When asked about store performance, Foreman said he believes about 60% of the company's stores need to improve their results. "The gap between our best stores and the rest needs to narrow, and closing that gap is one of our biggest near-term opportunities," he said.

However, Foreman suggested stores can make meaningful operational changes in a relatively short period of time.

"I visited a store the previous weekend. It was in poor shape and had been in negative identical sales, but after a day of hard work by the team, it basically turned into a fairly healthy positive identical sales store," he said. "So when you run a store well, the results really do differ."

Foreman also said Kroger's store network is not expanding fast enough, putting the company at a disadvantage against other grocery chains. "Competitors continue to expand their store footprints while we have pulled back," he said. "Our existing store network is one of our strongest assets, but stalling on store growth means stalling on market share."

Foreman noted that Kroger's value proposition is too difficult for consumers to understand and made clear the company will take steps to change that.

"We need to be more competitive, more consistent, and easier for customers to understand," Foreman said.

Kroger reaffirmed its fiscal 2026 guidance, expecting identical sales growth of between 1% and 2%.

Foreman, a former Walmart U.S. executive,joined Kroger in February. Neil Saunders, managing director of GlobalData Retail, said in emailed comments that Foreman brings a much-needed sense of urgency to the company to drive improved performance.

"The new management led by Greg Foreman has clearly identified some of the problems and is using more urgent language, indicating that Kroger needs to return to best-in-class grocer standards across multiple dimensions," Saunders wrote. "We see this as a key shift. For a long time, Kroger has felt complacent and process-driven rather than customer-oriented and commercially aggressive."

Katherine Douglas Moran contributed to this report.