Gas Prices, Specialty Pharmacy Sale Drag On Kroger Q3 Results
Third quarter sales at Kroger were down year-over-year as the sale of Kroger Specialty Pharmacy and lower gas prices were a drag on results.
Company-wide sales for the quarter ended November 9 were $33.6 billion, down from sales of $34 billion in the comparable quarter the previous year. Excluding the impact of the Kroger Specialty Pharmacy sale and lower gas prices, third quarter sales were up 2.7%. Identical sales increased 2.3% without the impact of fuel sales.
Operating profit in the quarter was $828 million, down from operating profit of $912 million in the third quarter of the previous year. Adjusted earnings per share were $0.98 in the quarter, up from earnings per share of $0.95 in the comparable quarter the previous year.
"Kroger achieved strong sales results in the third quarter led by our pharmacy and digital performance, which reflects the strength and diversity of our model,” said Rodney McMullen, chairman and CEO of Kroger. “We continued to grow total households this quarter by delivering exceptional value for customers, with low prices, personalized offers, and great quality Our Brands products, all through a seamless shopping experience.”
Kroger increased delivery sales by 18% over last year led by Customer Fulfillment Centers, improved pickup productivity to a record low cost per order supported by the addition of order batching and routing technology in all stores, and enhanced its Boost by Kroger Plus Membership by including Disney streaming options with an annual membership.
Additionally, during the third quarter, Kroger introduced 226 new Our Brands items, announced its five food trends for 2025, and released its 12 Days of Murray's Cheese advent calendar featuring a curated collection of cheeses, jams, and crackers.
Looking ahead to the fourth quarter, Kroger has narrowed its forecast on identical sales without fuel are expected to grow between 1.2% and 1.5%, compared to the previous guidance of 0.75% to 1.75%. Adjusted net earnings per diluted share are now expected to fall between $4.35 and $4.45. Previous guidance called for adjusted net earnings per diluted share of between $4.30 and $4.50.
“While we expect the macroeconomic environment to remain uncertain near term, the strength of our model gives us confidence in our ability to deliver value for customers and invest in our associates while generating attractive and sustainable returns for shareholders,” McMullen said.
