Kroger’s Earnings Are Coming. Affordability Is a Key Word for the Grocer—and Consumers.

(Shelby Tauber/Bloomberg)

Key Points

• Kroger is expected to report third-quarter earnings of $1.03 per share and revenue of $34.2 billion, a 1.7% increase.
• Comparable sales without fuel grew 3.4% year-over-year in the second quarter, with e-commerce sales increasing 16%.
• Rising food prices and potential SNAP benefit reductions pose challenges for consumer demand and grocery retailers.

Supermarket chain Kroger is set to report third-quarter earnings on Thursday before the market opens. While grocery sales are stable, shoppers remain sensitive to prices and seek discounted items amid affordability challenges.

For the three months ended in November, analysts polled by FactSet expect Kroger to post $1.03 in earnings per share, up by five cents from a year ago. Total revenue is estimated to grow 1.7% to reach $34.2 billion, while same-store sales are expected to increase 2.9%.

Three months ago, Kroger reported better-than-expected second-quarter earnings, and raised its outlook for the year on improving sales volume. Comparable sales without fuels grew 3.4% year-over-year, while adjusted earnings came at $1.04 per share, up from 93 cents a year ago.

Pharmacy and fresh produce segments drove much of the sales growth. As more consumers shop online, e-commerce generated 16% more sales compared with a year ago. Analysts suggested that the simplified organization and improved customer experience at Kroger was showing signs of early success.

For the full fiscal year, Kroger expects comparable sales excluding fuel to grow 2.7% to 3.4% from the previous year, adjusted higher from the previous forecast of 2.25% to 3.25% growth.

Rising prices at restaurants have pushed more people to shop at grocery stores and eat at home. Over the past 12 months, costs for “food away from home”—a measurement for restaurant prices used by the Bureau of Labor Statistics—increased 3.7%, outpacing “food at home,” or grocery costs, by one percentage point.

Still, consumer demand could wobble as rising food prices continue to squeeze shoppers’ wallets. Tariffs imposed earlier this year have further boosted costs of various imported foods, although President Donald Trump’s administration recently rolled back the levies on many agricultural products, including beef, coffee, and cocoa.

Survey data suggest that many Americans are feeling the pinch. In a September survey by Axios and the Harris Poll, roughly half of Americans said it’s harder to afford groceries now than a year ago. Another survey by retail consulting firm Dunnhumby showed that 28.5% of American consumers reported reducing meal size or skipping meals due to economic hardship.

Things could get worse when federal food assistance gets taken away. In November, benefits from the Supplemental Nutrition Assistance Program, or SNAP, were paused due to funding lapses during a federal government shutdown—the first time in the program’s 60-year history.

The pause translated almost immediately into a contraction in grocery demand—a blow not only to low-income households, but also food retailers and their suppliers. Roughly 42 million Americans rely on SNAP to buy food essentials, receiving nearly $100 billion benefits in 2024.

While SNAP funding resumed this month, some enrollees may still lose their food assistance due to new work requirements for the program. There are other legal and political battles over SNAP as well.

This week, Agriculture Secretary Brooke Rollins threatened to cut off federal funding for food stamps in more than 20 Democratic-led states that have—according to her—refused to share the program’s personal data on recipients with the Trump administration.

Write to Evie Liu at evie.liu@barrons.com