Kroger targets 3% comparable sales growth in 2029 as performance slows
Key Facts
Kroger announced a target for comparable sales growth of about 3% in 2029 as part of a long-term financial framework following a slowdown in identical sales growth in the second quarter. The grocer said in its plan statement that the sales target excludes fuel and pharmacy, defining the scope of the business it aims to grow at that rate. It also set a target for compound annual growth in adjusted net earnings per share of between 7% and 11% under the new financial framework. The company is targeting compound annual growth in adjusted earnings before interest, taxes, depreciation and amortization of between 3% and 6%, according to the same statement. That earnings growth target spans fiscal years 2027 to 2029, while the sales target refers to the growth rate in 2029.
The targets come after Kroger reported identical sales growth excluding fuel of 0.2% in the second quarter, compared with 3.4% in the corresponding period, according to its quarterly earnings statement. On operating profitability, the results showed adjusted operating profit calculated on a first-in, first-out basis fell to $1,076 million. That profit stood at $1,091 million in the corresponding second quarter, with the decline coinciding with slower identical sales growth. In its outlook update accompanying the results, the company maintained its free cash flow range for the current fiscal year at $2.7–2.9 billion. It thus kept its annual free cash flow forecast unchanged despite slower sales growth and a decline in adjusted profit during the quarter.
Kroger attributed some of the pressure on identical sales to customers switching from branded drugs to generic alternatives, according to its filing with the U.S. Securities and Exchange Commission. It said the shift reduced identical sales growth excluding fuel by 61 basis points in the second quarter. An outbreak of the Cyclospora parasite also hurt sales growth on the same measure by about 35 basis points during the same period, according to the filing. On competition, the Associated Press reported that the company faces pressure from the expansion of discount chains Aldi and Lidl, alongside Amazon. In its coverage dated 13 October 2026, the agency described the competitors as "fast-growing discount chains such as Aldi and Lidl and e-commerce giants such as Amazon."
As part of an operational overhaul, Kroger announced plans to cut 3,000 employees in administrative roles, according to the Associated Press. The planned cuts will be implemented over the next three years, alongside expanded use of artificial intelligence to streamline operations. In addition to these internal changes, the company announced an agreement to buy Giant Eagle for $1.65 billion, according to the acquisition statement. Giant Eagle has annual sales of about $9 billion, according to figures Kroger cited when announcing the agreement. Kroger expects to maintain a target ratio of net total debt to adjusted earnings before interest, taxes, depreciation and amortization of between 2.3 and 2.5 times after completing the purchase.
Kroger linked the acquisition's expected impact on earnings per share to the period after the transaction closes, according to the statement announcing the Giant Eagle purchase agreement. The company expects the deal to add to adjusted diluted earnings per share in the second full year after closing. That estimate excludes nonrecurring transaction and integration costs, under the terms the company set for its forecast of the acquisition's contribution. On approvals, Kroger and Giant Eagle expect to divest a limited number of Giant Eagle stores to obtain the necessary regulatory approvals. The arrangement was outlined in Kroger's filing with the U.S. Securities and Exchange Commission as part of the conditions for proceeding with and completing the acquisition.
Regarding upcoming shareholder payments, Kroger's board approved a quarterly cash dividend, according to the company's dividend announcement. The company set the payment at 39 cents per share, payable on 1 December 2026. On expansion through acquisitions, Kroger set 2027 as the expected date for completing the Giant Eagle purchase, according to its regulatory filing. The expected closing remains subject to meeting the transaction's necessary regulatory conditions, according to the filing with the U.S. Securities and Exchange Commission. Other closing conditions must also be met to complete the acquisition within the expected timeframe.