Kroger Co. reported fourth‑quarter 2025 results that beat earnings expectations but fell short of revenue forecasts. GAAP earnings per share rose to $1.35, a 50% increase from the $0.90 reported in Q4 2024 and a $0.15 (12.5%) beat over the consensus estimate of $1.20. Total revenue reached $34.73 billion, up 1.2% year‑over‑year, but missed the $35.02 billion consensus by $0.29 billion (0.8%). Adjusted earnings per share climbed to $1.28, and identical sales excluding fuel grew 2.4%, matching the prior‑year quarter.
The earnings beat was largely driven by disciplined cost management and a 0.4‑percentage‑point expansion in gross margin, which rose to 23.1% from 22.7% in Q4 2024. Sourcing efficiencies and lower supply‑chain costs helped offset the impact of the Inflation Reduction Act, which reduced pharmacy reimbursement rates and applied a 130‑basis‑point headwind to identical sales. Revenue fell short of expectations because competitive pricing pressure in the grocery segment and a modest decline in legacy sales weighed against the strong 20% growth in e‑commerce, which helped cushion the overall top‑line.
Kroger’s guidance for fiscal 2026 signals a cautious outlook. Management expects identical sales excluding fuel to grow 1.0%‑2.0% and projects adjusted FIFO operating profit of $5.0‑$5.2 billion. Adjusted EPS guidance is $5.10‑$5.30 for the year. The company also reiterated its target of reaching e‑commerce profitability in 2026, supported by a hybrid fulfillment model and partnerships with third‑party delivery services.
CEO Greg Foran said, "Kroger delivered a strong finish to the year, with improving market share trends and solid sales growth that reflect meaningful progress strengthening the business." He added, "We have the right foundation in place, and I'm focused on making it even stronger by delivering more value to customers, improving the customer experience in stores and online, and driving cost savings and productivity to fund our growth."
Investors reacted to the revenue miss, with the stock falling 2.87% in pre‑market trading. The EPS beat was offset by concerns over the top‑line shortfall and the guidance that reflects modest growth amid the IRA headwind. The market’s focus on revenue underscored the importance of top‑line momentum in the highly competitive retail environment.
The results highlight a mixed picture for Kroger. The EPS beat demonstrates operational efficiency and effective cost control, while the revenue miss signals ongoing competitive pressure and the impact of regulatory headwinds. The guidance indicates a cautious outlook, with modest growth expected in identical sales and a focus on achieving e‑commerce profitability. These factors suggest that while Kroger remains well‑positioned, it faces challenges that could affect its long‑term growth trajectory.
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