01—Abstract
Summary
Summary of the 8-K filed September 11, 2026. Cited figures are marked; the original filing is the authoritative source.
The Kroger Co. (NYSE: KR) reported results for its second quarter ended August 15, 2026, in a press release furnished as Exhibit 99.1 to this Form 8-K.
Sales were $34.6 billiona versus $33.9 billion a year earlier, and identical sales without fuel rose 0.2%, compared with 3.4% in the prior-year quarter. The filing shows operating profit of $971 million (up from $863 million) and diluted EPS of $1.05 (up from $0.91). Adjusted FIFO operating profit was $1,076 million versus $1,091 million, and adjusted EPS was $1.09 versus $1.04.
Gross margin was 22.4% compared with 22.5%, and the OG&A rate increased 33 basis points, driven by associate wages, health care costs and sales deleverage. Kroger reaffirmed its full-year 2026 adjusted EPS guidance of $5.10 to $5.30b and adjusted FIFO operating profit guidance of $5.0 to $5.2 billion, but lowered its full-year identical sales without fuel guidance to 0.2% to 0.8% from 1.0% to 2.0%. The company cited an approximately 140 basis point headwind from the Inflation Reduction Act in that metric.
Free cash flow ($2.7 to $2.9 billionc) and capital expenditures ($3.8 to $4.0 billion) guidance were unchanged. On capital allocation, Kroger repurchased $1.0 billion of shares during the quarter and $1.2 billion year to date under a $2 billion authorization, with about $800 million remaining and completion expected by the end of fiscal 2026.
The net total debt to adjusted EBITDA ratio was 1.91, compared with 1.63 a year earlier, within a target range of 2.30 to 2.50. The filing also notes a $2.5 billiond fulfillment network impairment and related charge in the rolling four-quarter adjusted EBITDA reconciliation, and an investor update meeting is scheduled for October 20, 2026.
02—Key points
Key Highlights
- Sales of $34.6 billion in the second quarter, up from $33.9 billion; identical sales without fuel rose 0.2% versus 3.4% a year earlier.
- Diluted EPS of $1.05 versus $0.91; adjusted EPS of $1.09 versus $1.04, up 5% per the CFO's comments.
- Operating profit of $971 million versus $863 million; adjusted FIFO operating profit of $1,076 million versus $1,091 million.
- Full-year identical sales without fuel guidance lowered to 0.2% to 0.8% from 1.0% to 2.0%, including an approximately 140 basis point Inflation Reduction Act headwind.
- Adjusted EPS ($5.10 to $5.30) and adjusted FIFO operating profit ($5.0 to $5.2 billion) guidance reaffirmed; free cash flow and capital expenditure guidance unchanged.
- Repurchased $1.0 billion of shares in the quarter and $1.2 billion year to date; about $800 million remains under the $2 billion authorization.
- Net total debt to adjusted EBITDA of 1.91, compared with 1.63 a year earlier, within the 2.30 to 2.50 target range.
03—Questions
Frequently Asked Questions
Why did Kroger lower its identical sales guidance while keeping its EPS guidance unchanged?
The CFO said that, given first-half results and the macro environment, the company updated its identical sales without fuel guidance to 0.2% to 0.8%, including an approximately 140 basis point headwind from the Inflation Reduction Act. The company reaffirmed its adjusted FIFO operating profit and adjusted EPS guidance, citing confidence and visibility into the factors that drove second-quarter profitability.
What drove the change in Kroger's margins and operating expenses this quarter?
Gross margin was 22.4% versus 22.5%, mainly due to higher fuel sales mix, higher shrink, higher transportation costs and greater value delivered to customers, partly offset by eCommerce profitability, media, pharmacy mix, sourcing initiatives and tariff refunds. The OG&A rate, excluding fuel and adjustment items, increased 33 basis points, primarily from planned associate wage investments, higher health care costs and sales deleverage.
How much did Kroger return to shareholders, and what is left under the buyback?
Kroger repurchased $1.0 billion of shares in the second quarter and $1.2 billion year to date under a $2 billion authorization announced in December 2025. About $800 million remains, and the company expects to complete the remaining repurchases by the end of fiscal 2026. The dividend was increased 11% earlier in the quarter, marking the 20th consecutive year of increases.
What does the filing say about the fulfillment network impairment and the balance sheet?
The rolling four-quarter adjusted EBITDA reconciliation includes a $2,497 million adjustment for fulfillment network impairment and related charges. Net total debt was $15.5 billion, and the net total debt to adjusted EBITDA ratio was 1.91, against a target range of 2.30 to 2.50. Kroger stated it expects to continue generating strong free cash flow while maintaining its investment grade debt rating.
When will Kroger provide more detail on its strategy and longer-term targets?
Kroger will host an investor update meeting on October 20, 2026, where it will share additional details on its strategic initiatives and longer-term financial targets.
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