Grocery retail giant Kroger (NYSE: KR) missed Wall Street’s revenue expectations in Q4 CY2025 as sales only rose 1.2% year on year to $34.73 billion. Its GAAP profit of $1.35 per share was 5.7% above analysts’ consensus estimates.
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Kroger (KR) Q4 CY2025 Highlights:
- Revenue: $34.73 billion vs analyst estimates of $35.02 billion (1.2% year-on-year growth, 0.8% miss)
- EPS (GAAP): $1.35 vs analyst estimates of $1.28 (5.7% beat)
- Adjusted EBITDA: $1.34 billion vs analyst estimates of $1.94 billion (3.9% margin, 30.9% miss)
- EPS (GAAP) guidance for the upcoming financial year 2026 is $5.20 at the midpoint, in line with analyst estimates
- Operating Margin: 3.6%, in line with the same quarter last year
- Free Cash Flow Margin: 4.8%, up from 1.5% in the same quarter last year
- Same-Store Sales rose 2.4% year on year, in line with the same quarter last year
- Market Capitalization: $43.03 billion
Company Overview
With a sprawling network of over 2,400 locations offering digital pickup services, Kroger (NYSE: KR) operates supermarkets, pharmacies, and fuel centers across 35 states, offering customers groceries, household items, and private-label products.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $147.6 billion in revenue over the past 12 months, Kroger is a behemoth in the consumer retail sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because there are only a finite number of places to build new stores, making it harder to find incremental growth. For Kroger to boost its sales, it likely needs to adjust its prices or lean into foreign markets.
As you can see below, Kroger struggled to increase demand as its $147.6 billion of sales for the trailing 12 months was close to its revenue three years ago. This was mainly because it didn’t open many new stores.
This quarter, Kroger’s revenue grew by 1.2% year on year to $34.73 billion, falling short of Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 1.8% over the next 12 months. While this projection implies its newer products will catalyze better top-line performance, it is still below average for the sector.
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Store Performance
Number of Stores
A retailer’s store count influences how much it can sell and how quickly revenue can grow.
Kroger has kept its store count flat over the last two years while other consumer retail businesses have opted for growth.
When a retailer keeps its store footprint steady, it usually means demand is stable and it’s focusing on operational efficiency to increase profitability.
Note that Kroger reports its store count intermittently, so some data points are missing in the chart below.
Same-Store Sales
The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales gives us insight into this topic because it measures organic growth for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year.
Kroger’s demand rose over the last two years and slightly outpaced the industry. On average, the company’s same-store sales have grown by 2.3% per year. Given its flat store base over the same period, this performance stems from not only increased foot traffic at existing locations but also higher e-commerce sales as demand shifts from in-store to online.
In the latest quarter, Kroger’s same-store sales rose 2.4% year on year. This performance was more or less in line with its historical levels.
Key Takeaways from Kroger’s Q4 Results
It was good to see Kroger narrowly top analysts’ gross margin expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its revenue fell slightly short of Wall Street’s estimates. Overall, this quarter was mixed. The stock remained flat at $67.47 immediately following the results.
Kroger’s earnings report left more to be desired. Let’s look forward to see if this quarter has created an opportunity to buy the stock. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
