Kroger keeps forecasts soft as new CEO bets on growth by keeping prices down

Adds CEO comment in paragraph 4, analyst comment in paragraph 6, updates shares in paragraph 3

By Savyata Mishra

March 5 (Reuters) - Supermarket chain operator Kroger KR.N forecast muted annual sales and profit on Thursday, as new CEO Greg Foran looks to boost market share by focusing on more affordable fresh food and nimbler delivery service for budget-conscious customers.

The results were the first under Foran, who delivered 20 straight quarters of comparable-sales growth as former Walmart U.S. chief. Wall Street analysts had last month cheered his appointment.

Kroger said it plans to aggressively reinvest savings from tighter sourcing, streamlined processes and lower costs into sharper everyday prices and better service, helping its shares reverse course to gain 2% in early trading.

"When you combine competitive prices with strong fresh (food offering) in a well‑run store, you drive traffic, you grow baskets and you gain share," Foran said on an earnings call.

Walmart CEO John Furner too had kicked off his tenure with a conservative annual outlook, reflecting the fragile state of the U.S. consumer.

"Foran's decision to sharpen Kroger's focus on value should help it stay competitive as shoppers become increasingly price sensitive," eMarketer analyst Zak Stambor said.

Kroger expects 2026 identical sales, excluding fuel, to grow in the 1% to 2% range, whose midpoint is below expectations of a 2% growth.

It forecast adjusted profit per share between $5.10 and $5.30, largely below market expectations of $5.29, according to data compiled by LSEG.

LEADERSHIP RESET

The company ousted CEO Rodney McMullen in March 2025 after a board investigation found that he violated company policies, leaving the retailer without a permanent leader for nearly a year until Foran's appointment in February.

In the interim, chairman Ron Sargent pushed premium private‑label brands and leaned more on promotions to counter rising pressure from Walmart WMT.O and Amazon AMZN.O, which have been winning more spending across income groups with faster delivery and lower prices.

Kroger is planning to spend between $3.8 billion and $4 billion in fiscal 2026. It has spent $3.86 billion so far in 2025.

The company's ecommerce business is aiming for profitability next year by using more stores as fulfillment hubs. Foran said the hybrid model, which combines in‑store picking with delivery partners like Instacart, DoorDash and Uber Eats, will lower last‑mile costs and gets orders to customers faster.

Kroger's digital sales rose 20% in the fourth quarter.

The retailer posted sales of $34.73 billion for the quarter, missing analysts' estimates of $35.06 billion. It earned $1.28 per share on an adjusted basis, beating expectations of $1.20.

(Reporting by Savyata Mishra in Bengaluru; Editing by Arun Koyyur)

((Savyata.Mishra@thomsonreuters.com;))