Kroger Planning to Close 60 Stores as It Reports Q1 ID Sales Uptick
In reporting its financial performance for the first quarter of 2025 ended May 24, The Kroger Co. disclosed the planned closing of about 60 of its stores across the country over the next 18 months. As a result of these store closures, the company said that it expected a modest financial benefit, adding that it would reinvest those savings back into the customer experience. The company also noted that it will offer jobs at other locations to all employees now at stores slated to close. Kroger recognized an impairment charge of $100 million in relation to the action, which is being taken to simplify operations.
The grocer also reported a Q1 identical sales (without fuel) increase of 3.2%, excluding adjustment items; operating profit of $1,322 million; earnings per share (EPS) of $1.29; adjusted FIFO operating profit of $1,518 million; adjusted EPS of $1.49; and an e-commerce sales increase of 15%.
“Kroger delivered solid first-quarter results, with strong sales led by pharmacy, e-commerce and fresh,” said Kroger Chairman and CEO Ron Sargent. “We made good progress in streamlining our priorities, enhancing customer focus and running great stores to improve the shopping experience.”
Added Sargent: “Our commitment to driving growth in our core business and moving with speed positions us well for the future. We are confident in our ability to build on our momentum, deliver value for customers, invest in associates and generate attractive returns for shareholders.”
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Total company sales were $45.1 billion in Q1,versus $45.3 billion for the same period last year, which included $917 million from Kroger Specialty Pharmacy sales. Excluding fuel, Kroger Specialty Pharmacy and adjustment items, sales rose 3.7% compared with the year-ago period.
Gross margin was 23.0% of sales for Q1, compared with 22.0% last year. The company attributed the improvement in gross margin primarily to the sale of Kroger Specialty Pharmacy, lower shrink and lower supply chain costs, partly offset by the mix effect from growth in pharmacy sales, which have lower margins.
Kroger’s FIFO gross margin rate, excluding rent, depreciation and amortization, fuel and adjustment items rose 79 basis points from the same period last year. According to the company, this improvement was attributable mainly to the sale of Kroger Specialty Pharmacy, lower shrink and lower supply chain costs, partly offset by the mix effect from growth in pharmacy sales, which have lower margins.
The operating, general and administrative rate, excluding fuel, and adjustment items, rose 63 basis points compared with the year-ago period. Kroger attributed this increase primarily to the sale of Kroger Specialty Pharmacy and an accelerated contribution to a multi-employer pension plan, partly offset by improved productivity, adding that multi-employer pension contributions drove a 29-basis- point increase in Q1.
The company affirmed that it remains committed to investing in its business to spur long-term sustainable net earnings growth.
Kroger also updated its full-year 2025 guidance with regard to its ID sales without fuel, which are now in the 2.25%-3.25% range, while reaffirming the rest of its guidance, including capital expenditures of $3.6 billion-$3.8 billion.
“Our strong sales results and positive momentum give us confidence to raise our identical sales without fuel guidance, to a new range of 2.25% to 3.25%,” noted Kroger CFO David Kennerly. “While first-quarter sales and profitability exceeded our expectations, the macroeconomic environment remains uncertain, and as a result, other elements of our guidance remain unchanged. We continue to believe that our strategy focusing on fresh, Our Brands and e-commerce will continue to resonate with customers, and our resilient model positions us well to navigate the current environment.”
Cincinnati-based Kroger employs nearly 420,000 associates who serve more than 11 million customers daily through a digital shopping experience and retail food stores under a variety of banner names. The grocer is No. 4 on The PG 100, Progressive Grocer’s 2025 list of the top food and consumables retailers in North America. PG also named the company among its Retailers of the Century.
