Q2 2026 Kroger Co Earnings Call Transcript
Key Points
- Adjusted EPS grew 5% to $1.09, demonstrating strong earnings power despite top-line pressure.
- E-commerce sales grew 20% and achieved second consecutive quarter of profitable e-commerce growth.
- Retail media revenue grew 24%, the best performance since 2021, with media monetization up 88 basis points.
- FIFO gross margin rate increased 13 basis points, driven by e-commerce profitability, media, pharmacy mix, tariff refunds, and sourcing initiatives.
- Cost savings exceeded plan, with broad-based contributions across COGS and goods not for resale, funding customer value investments.
- Identical sales without fuel grew only 0.2%, missing initial guidance and reflecting a challenging macro environment.
- Full-year identical sales without fuel guidance was lowered to 0.2%-0.8% from 1%-2%, citing ongoing pressures.
- Cyclospora outbreak cost approximately 35 basis points in produce sales and also negatively impacted shrink.
- Pharmacy headwinds from the Inflation Reduction Act and generic shift reduced identical sales by about 200 basis points, with further acceleration expected.
- Operating, general and administrative rate increased 33 basis points due to wage investments, higher healthcare costs, and sales deleverage.
Good morning, and welcome to the Kroger Company Second Quarter 2026 Earnings Conference Call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. Please note this event is being recorded. I would now like to turn the conference call over to Rob Quast, Vice President, Investor Relations. Please go ahead.
Good morning.
Thank you for joining us for Kroger's second quarter 2026 earnings call. I am joined today by Kroger's Chief Executive Officer, Greg Foran, and Chief Financial Officer, David Kennerly.
Before we begin, I want to remind you that today's discussions will include forward-looking statements. We want to caution you that such statements are predictions and actual events or results can differ materially. A detailed discussion of the many factors that we believe may have a material effect on our business on an ongoing basis is contained in our
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