Can Kroger Keep Its Earnings Promise With Sales This Weak?

Kroger (KR) has cut its 2026 same-store sales outlook and kept its 2026 profit outlook. If you own the stock, the easy comfort is that earnings held. The risk sits inside that comfort. The cost savings holding up profit are the same savings management plans to spend on lower shelf prices, and the stock is down 15% over the past six months.

Should The Sales Cut Worry You As A Kroger Owner?

Less than it first looks. Management now expects 2026 identical sales, excluding fuel, to grow 0.2% to 0.8%, down from an initial range of 1% to 2%. In the quarter that ended August 15, 2026, those sales still grew 0.2% despite headwinds worth about 265 basis points.

The biggest pieces came from the pharmacy counter. Lower drug prices under the Inflation Reduction Act took about 140 basis points, and the shift from brand-name to generic prescriptions took about 60. The CFO says neither one costs Kroger any profit.

The grocery side is the harder problem. Management says reductions in SNAP benefits, higher fuel prices, and softer consumer confidence are squeezing household budgets. Traffic rose slightly in the second quarter, while the average ticket fell.

So What Is Holding Up Kroger’s Earnings?

Kroger, a grocer with about $149.3 billion of sales over the past twelve months, kept its 2026 guide for adjusted FIFO operating profit at $5 billion to $5.2 billion. The CFO leans on cost savings, pharmacy margin, e-commerce profitability and retail media in the second half of 2026, and expects share repurchases to support per-share earnings.

Some of those levers are already working. Retail media grew 24% in the second quarter. The CEO says savings can fund the price investment and calls the second quarter a demonstration.

Three of the ten analyst questions after the second-quarter results touched on what the outlook assumes, from three different analysts. They asked how much went into lower prices, how much inflation to expect, and how much fuel margin the guide carries. The same subject drew three questions after the first-quarter results in June.

Management did not settle all of it. The CEO said Kroger is not giving exact figures on the price investment. The CEO also expects inflation pressure to mount. The CFO keeps Kroger’s inflation outlook broadly the same but expects a bit more pressure in the second half of 2026 than the first. The CFO has also built softer fuel margins into the same period.

What Could Test Kroger’s Profit Promise Next?

By the CEO’s own account, when Kroger lowers shelf prices, sales go down at first because each item costs less, and customers take time to notice. So the plan meant to grow sales can hold them back before it lifts them.

The 2026 profit outlook looks reachable on the levers management names. It is still a bet that savings arrive faster than price cuts, inflation and softer fuel margins take them away. The next test is the investor update in October, where management plans to set long-term targets and show how savings fund the customer experience. Until then, see how Kroger stacks up on our stock scorecard.

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