Key takeaways:
- Kroger reported first-quarter total company sales of $46.12 billion, an increase from $45.11 billion a year ago, with identical sales excluding fuel rising by 1%.
- CEO Greg Foran identified three immediate operational priorities: cutting operating costs, moving faster as an organization and closing the execution gap between top-performing and underperforming stores.
- The grocery chain will anchor its go-forward strategy around five core customer pillars: Fresh, Fast, For you, Friendly, and Affordable, while leaning heavily into its fast-growing ecommerce and retail media divisions.
Greg Foran has spent his first 100 days as Kroger’s chief executive officer walking store aisles, visiting distribution centers and speaking directly with associates. Now, he is laying out a clear vision for the nation’s largest traditional grocery chain.
Taking the helm earlier this year, former Walmart U.S. CEO Foran stepped into leadership during a complex retail environment. Consumers are facing significant economic pressures, and shopping habits are shifting as buyers spread their dollars across multiple channels. Despite these industry hurdles, the new executive remains highly optimistic about the company’s fundamental position.
“I said it on day one, and it’s still true today. This is the best job in retail, full stop,” Foran said on the company’s first-quarter earnings call on Thursday. He expressed deep confidence in the supermarket format, highlighting that physical stores paired with digital capabilities present a massive runway for the business.
Foran was also candid about where the retailer currently falls short. He provided a detailed assessment of Kroger’s challenges and outlined a comprehensive strategy to lower costs, deliver better customer value and plans to grow the company’s footprint.
In the first quarter ended May 23, total company sales reached $46.12 billion, up from $45.11 billion for the same period last year. Identical sales without fuel increased by 1%.
The retailer also saw a bump in profitability. Adjusted earnings per share rose 6% year-over-year to $1.58, up from $1.49. Operating profit reached $1.407 billion, compared to $1.322 billion a year ago.
Gains were driven largely by strong performance in the fresh food departments, private-label brands and a rapidly expanding digital business. Still, management acknowledged that top-line growth faced headwinds from an accelerating shift toward generic pharmacy prescriptions and consumer budget constraints.
Foran’s Assessment of Challenges and Opportunities
While the financial results met expectations, Foran broke down his assessment of Kroger’s internal operations into three distinct areas that require attention.
“First, our operating costs have been growing faster than our sales,” Foran said. “That’s not sustainable, and frankly, it’s not acceptable.” Stripping costs will fund future investments, he said.
Second, the corporate organization must become more agile. Foran noted that the teams working behind the scenes need to make decisions more quickly and extract greater value from the company’s existing assets and talent pool.
Third, store execution needs to be far more consistent. The gap between Kroger’s top-tier supermarkets and its struggling locations is too wide.
“Over the last 15, 16 weeks, I’ve probably now gotten to well over 100 of our stores, and many of our competitors,” Foran said. “As a rough rule of thumb, I would say that two out of five I would find in very good condition. Another two out of five are in moderate condition, and there’s generally one out of five where we could improve the performance.”
Expanding the Retail Footprint
Beyond improving existing locations, Foran signaled a major shift in Kroger’s real estate strategy. Over the past few years, the company has paused significant physical expansion. Meanwhile, competitors have aggressively opened new locations and captured local market share.
Foran intends to reverse this trend. The grocer has already started ramping up its real estate pipeline, focusing thoughtfully on markets and store formats that promise the highest returns.
“Our existing footprint is one of our strongest assets, but standing still in store growth means standing still in market share,” Foran said.
Winning Customers with the Five Fs
With the goal of becoming America’s best grocer, Kroger is rallying the organization around five fundamental priorities. These pillars are designed to touch every associate and directly impact the daily customer experience.
- Fresh: Produce and protein are the primary reasons shoppers choose a specific grocery store. Kroger is raising its internal standards and measuring freshness based on how long products last in a customer’s home.
- Fast: Convenience is critical. This applies to keeping items in stock, speeding up checkout lines and ensuring online orders are delivered accurately and on time.
- For you: Kroger possesses deep loyalty card data, covering 95% of all transactions. The company plans to use these insights to deliver personalized offers that customers truly value.
- Friendly: Store associates are considered a primary competitive advantage. The company is investing heavily in better training, simpler tools and updated uniforms to help employees serve shoppers better.
- Affordable: While it does not start with an F, Foran noted, affordability remains a cornerstone of the strategy. The goal is not necessarily to be the absolute lowest-priced retailer, but rather to offer consistent, easy-to-understand value.
Leaning into Ecommerce and Retail Media
Digital sales represent a major bright spot for the grocery chain. During the first quarter, adjusted ecommerce sales increased by 19%, driven heavily by delivery services, and the ecommerce business turned profitable ahead of the company’s internal schedule.
This digital expansion feeds directly into Kroger Precision Marketing, the company’s retail media network. Because the grocer ties the vast majority of its sales to loyalty cards, it can offer consumer brands highly accurate, closed-loop advertising data. This high-margin retail media business saw profit grow more than 20% in Q1, positioning it as a crucial driver of future earnings.
Navigating Economic Pressures
Implementing this strategy will require careful financial discipline. High gasoline prices and reduced SNAP benefits continue to squeeze household budgets, Foran said. Customers are shopping with specific intent, which has led to a slight deceleration in food-at-home spending growth.
To help consumers navigate these pressures, Kroger is intentionally investing in price reductions and promotional offers. However, leadership stressed that every dollar invested in lowering prices will be fully funded by internal cost savings. The company is leaning heavily into direct sourcing, tougher supplier negotiations, and artificial intelligence to operate more efficiently.
Since Foran took over as CEO of Kroger in February, four senior executives have departed the company.
Foran replaced Interim CEO Ron Sargent, who remained with the company as Chairman of the Board.
Rodney McMullen, Kroger’s former CEO, who served for 11 years, resigned in March 2025 following an internal investigation that revealed that his personal conduct, “while unrelated to the business, was inconsistent with Kroger’s Policy on Business Ethics,” according to a statement shared by the company.
