01—Abstract
Summary
Summary of the 10-Q filed June 26, 2026. Cited figures are marked; the original filing is the authoritative source.
The Kroger Co. reported first-quarter 2026 results for the 16-week period ended May 23, 2026.
Sales rose to $46.12 billiona from $45.12 billion, with supermarket fuel sales up 21.3% and sales without fuel up 0.2%. Operating profit increased to $1.41 billion from $1.32 billion, and net earnings attributable to The Kroger Co. were $903 million, or $1.46 per diluted share, versus $1.29 a year earlier. Excluding Adjusted Items, adjusted net earnings were $1.58 per diluted share, up 6.0% from $1.49, though adjusted net earnings in dollars declined 1.6%.
Identical sales excluding fuel rose 1.0%, compared with 3.2% in the prior-year quarter, with eCommerce sales up 13%. Cash flow from operations was $1.77 billionb, versus $2.15 billion a year earlier, and capital investments, excluding lease buyouts, were $1.45 billion. Kroger repurchased $213 million of shares at an average price of $67.77 and paid $215 million in dividends.
Total debt, including finance leases, fell $571 millionc from fiscal year-end 2025 following repayment of $500 million of 3.5% senior notes. Cash and temporary cash investments stood at $2.87 billion, and $1.8 billion remained under the December 2025 Repurchase Program. The company stated it was in compliance with its financial covenant.
Legal matters include opioid settlement liabilities totaling $976 milliond ($132 million current and $844 million long-term) and the Albertsons merger termination dispute, in which Albertsons seeks a $600 million termination fee, with trial scheduled to begin October 19, 2026. Management believes the aggregate range of loss from litigation is not material.
02—Key points
Key Highlights
- Sales of $46.12 billion, up from $45.12 billion, driven mainly by a 21.3% increase in supermarket fuel sales; sales without fuel rose 0.2% to $40.86 billion.
- Operating profit of $1.41 billion (3.05% of sales) versus $1.32 billion (2.93%) a year earlier; FIFO operating profit was $1.46 billion.
- Diluted EPS of $1.46 versus $1.29; adjusted diluted EPS of $1.58 versus $1.49, a 6.0% increase excluding Adjusted Items.
- Identical sales excluding fuel rose 1.0%, compared with 3.2% in the prior-year quarter; eCommerce sales grew 13%.
- Operating cash flow fell to $1.77 billion from $2.15 billion, while capital investments rose to $1.45 billion from $1.18 billion.
- Total debt declined $571 million from fiscal year-end 2025 after repaying $500 million of 3.5% senior notes; no commercial paper or revolver borrowings were outstanding.
- Repurchased $213 million of shares, with $1.8 billion remaining under the December 2025 program; the December 2024 program was exhausted during the quarter.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2027filed June 26, 2026Financial Statements
Q2 FY2027 against Q2 FY2026
| Line item | Q2 FY2027Q2 FY2026 | Change |
|---|---|---|
| Revenue | $34.62B$33.94B | +2.0% |
| Operating Income | $971.00M$863.00M | +12.5% |
| Net Income | $642.00M$610.00M | +5.2% |
| EPS (Basic) | $1.05$0.91 | +15.4% |
| EPS (Diluted) | $1.05$0.91 | +15.4% |
| Shares Outstanding (Basic) | 606.00M662.00M | −8.5% |
| Shares Outstanding (Diluted) | 608.00M665.00M | −8.6% |
05—Questions
Frequently Asked Questions
Why did sales increase while sales without fuel were nearly flat?
Total sales rose 2.2% to $46.12 billion, primarily because supermarket fuel sales increased 21.3%, reflecting a 22.7% increase in the average retail fuel price. Sales without fuel increased only 0.2% to $40.86 billion, as identical sales excluding fuel rose 1.0% and closed stores and the Vitacost.com sale offset some growth.
What drove the change in profitability this quarter?
Operating profit increased to $1.41 billion from $1.32 billion, and operating profit as a percentage of sales rose 12 basis points, primarily due to lower OG&A and depreciation and amortization as a percentage of sales and higher fuel operating profit, partially offset by lower FIFO gross margin. Gross margin fell to 22.7% from 23.0%, mainly because of higher fuel sales mix, transportation costs, egg deflation and price investments.
What were the Adjusted Items in the quarter?
The 2026 Adjusted Items included $62 million of transformation costs and $25 million of merger-related litigation costs in OG&A, plus a $14 million unrealized loss on investments. Together they reduced diluted EPS by $0.12, resulting in adjusted diluted EPS of $1.58 versus GAAP EPS of $1.46.
How is Kroger managing its debt and capital returns?
Kroger repaid $500 million of 3.5% senior notes using cash on hand, reducing total debt including finance leases by $571 million from fiscal year-end 2025. It remained in compliance with its financial covenant, and it paid $215 million in dividends and repurchased $213 million of shares during the quarter.
What are the main legal exposures disclosed?
Kroger has $976 million of estimated opioid settlement liabilities ($132 million current and $844 million long-term). It is also in litigation with Albertsons, which seeks a $600 million termination fee after the merger was enjoined; trial is scheduled to begin October 19, 2026. Management believes the aggregate range of loss from litigation is not material.
06—Continue