8 surprises from Kroger’s third-quarter earnings
Kroger last week reported sluggish third-quarter earnings, taking an operating loss of $1.3 billion, while working to cut costs as it lowers prices for inflation-weary shoppers. The Cincinnati-based grocery giant attributed much of that loss to the closure of three ecommerce facilities, which significantly increased its expenses.
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Kroger last week reported sluggish third-quarter earnings, taking an operating loss of $1.3 billion, while working to cut costs as it lowers prices for inflation-weary shoppers. The Cincinnati-based grocery giant attributed much of that loss to the closure of three ecommerce facilities, which significantly increased its expenses.
Key takeaways from Kroger’s third-quarter call with analysts: Middle-income shoppers are starting to look more like lower-income shoppers: Higher-income shoppers continued to keep a strong pace with Kroger, but middle-income consumers are feeling the heat, Interim CEO Ronald Sargent told analysts, according to a transcript on financial services site AlphaSense. “They’re making smaller, more frequent trips to manage budgets and they are cutting back on discretionary purchases,” Sargent noted.
The SNAP shutdown hit Kroger hard: Uncertainty around funding of the Supplemental Nutrition Assistance Program (SNAP) added incremental pressure to Q3 same-store sales, especially during the final weeks of the quarter, Sargent said. Lower-income households continued to pull back, reducing their shopping tips and basket sizes. This prompted Kroger to boost its promotional activity during the quarter, which helped consumers put further pressure on the grocer’s bottom line.
Third-party delivery is a bright spot: Kroger recently expanded its relationships with delivery platforms Instacart, DoorDash and Uber Eats, with the expectation that its ecommerce segment will become profitable in 2026. Ecommerce sales increased 17% during the third quarter, led by delivery. In the first month of the DoorDash partnership, Kroger fulfilled 1 million orders and saw increased business from new customers.
Kroger is making a major ecommerce strategy shift: The grocer is moving away from its large, automated fulfillment centers and shifting its focus to store-based fulfillment, which it said does a better job of meeting consumer demand for speed and flexibility.
Corporate workers head back to office: Kroger’s corporate employees are now expected to be back to the office five days a week.
New-store growth is ramping up: After years of limited expansion, Kroger now has a solid focus on new stores. The grocer said it plans to break ground on 14 new stores during its fourth quarter and that it expects to increase new store builds by 30% in 2026. Harris Teeter will open its first store in Jacksonville, Fla. Plus, Kroger said it remains open to other methods of growth. “We also have opportunities to grow through acquisition,” Sargent said. “We haven’t ruled that out despite our last few years …”
Private label continues to outpace national brands: Kroger’s store brands continue to outpace national labels, with Simple Truth and Private Selection ranking as the strongest performers. The products are central to Kroger’s strategy of driving sales, building loyalty and improving profitability, the grocer said.
Retail media becomes a major profit engine: Kroger reported another quarter of double-digit growth in retail media and said that business segment is accelerating into the fourth quarter. Partnerships with the third-party delivery platforms gives the grocer further avenues to grow its retail media channel, one that offers higher margins than its traditional grocery business.
