Kroger targets 3% sales growth in 2029, expands higher-margin businesses
Key Facts
Kroger announced a plan on 20 October 2026 targeting comparable sales growth of about 3% in 2029, with investments in groceries and the expansion of higher-margin businesses, according to a company statement and Reuters coverage. The sales target excludes fuel and pharmacy and forms part of the grocery chain's long-term financial framework. The company is targeting compound annual growth in adjusted earnings before interest, taxes, depreciation and amortization of between 3% and 6% over fiscal years 2027 to 2029. It also set a compound annual growth target for adjusted net earnings per share of between 7% and 11% over the same period. These targets exclude the pending acquisition of Giant Eagle, according to Kroger's statement.
The plan follows Kroger's September update, when it lowered its fiscal 2026 guidance for identical sales growth excluding fuel to a range of 0.2% to 0.8%, according to its earnings release filed with the U.S. Securities and Exchange Commission. Its June guidance range was 1.0% to 2.0%. The company maintained its adjusted earnings per share forecast for the current fiscal year at $5.10 to $5.30. In its quarterly filing, it said the effects of the Inflation Reduction Act reduced identical sales growth excluding fuel by 138 basis points in the second quarter. Falling egg prices also reduced sales growth on the same measure by 30 basis points during the period.
Investment priorities for implementing the strategy include fresh food, prepared meals and private-label products, according to Reuters. Kroger's investment plans also include its membership program as part of its focus on the grocery business. The company plans to cut costs through direct sourcing, according to the news agency. It also intends to use technology and artificial intelligence to streamline operations while investing in customer-facing products and services. It aims to grow e-commerce and retail media advertising to expand higher-margin revenue streams as part of its roadmap to improve business performance.
Adjusted e-commerce sales rose 20% in the second quarter, according to Kroger's earnings release. The growth calculation excluded the effects of exits from fulfillment centers, the sale of Vitacost and the discontinuation of the "Ship Marketplace" platform. Earnings at Kroger Precision Marketing grew 24% in the same quarter, according to the statement. In digital services, the company said its AI shopping assistant helps customers plan meals, discover recipes and build a shopping basket tailored to their budgets and dietary needs. Digital chief Yael Cosset said "the goal is not autonomy in every area," explaining that the level of AI use depends on risk, the repeatability of the task and the need for human judgment.
In its breakdown of quarterly performance, Kroger said in its regulatory filing that lower unit sales weighed on identical sales. Higher spending per item supported sales during the period. Growth in e-commerce, food categories and pharmacy provided additional support, according to the same filing. A decline in the number of common shares outstanding contributed to the increase in adjusted earnings per share. Adjusted earnings per share also benefited from a lower last-in, first-out inventory valuation charge, according to the company's explanation of the factors behind the improvement in the measure.
Alongside the business growth plan, the Giant Eagle purchase agreement includes cash consideration of $1.25 billion, according to Kroger's acquisition announcement. The agreement also includes the assumption of about $400 million in existing obligations. Giant Eagle comprises 197 supermarkets and 11 standalone pharmacies, according to figures the company provided when announcing the deal. These stores and pharmacies are located in Ohio, Pennsylvania, West Virginia, Maryland and Indiana. In the market reaction to the financial plan, Kroger shares rose about 2% in premarket trading on 20 October 2026, according to Reuters.
As for upcoming shareholder payouts, about $800 million remained under the share repurchase authorization at the end of the second quarter, according to the earnings release. Kroger expected to complete the remaining purchases by the end of the current fiscal year. The company set the close of business on 16 November 2026 as the record date for shareholders eligible for the next quarterly cash dividend, according to the board's announcement. The dividend is scheduled for payment in December. On the acquisition, Kroger expects to complete the Giant Eagle purchase in 2027, subject to regulatory approvals and customary closing conditions, according to the deal announcement.