Who's involved
- Kroger
- One of America's largest retailers, known for its grocery stores
- Greg Foran runs it. Sales at its established stores barely grew last quarter, and it lowered its sales forecast for the year. Yet it stood by its profit forecast.
- Kroger Precision Marketing
- Kroger's own advertising business
- It sells brands ways to reach Kroger shoppers, using what those shoppers buy. Its profit grew 24% last quarter.
What changed
Shoppers barely spent more at Kroger's grocery stores in the three months that ended August 15. At stores Kroger could compare fairly with a year earlier, sales rose just 0.2%. For one of America's largest retailers, with more than 11 million customers shopping its stores and website every day, that is barely a change.
Kroger calls that number identical sales. It leaves out gas, and it leaves out any store that opened, grew or moved in the past five full quarters. So it shows whether the same stores are selling more, not whether the chain simply added stores.
Kroger says that 0.2% already includes a drag of about 1.4 percentage points from a federal law, the Inflation Reduction Act, so it would have been higher without the law. Kroger doesn't explain how. In the same September 11 report, Kroger lowered this year's forecast for the number, to growth between 0.2% and 0.8%, a forecast carrying a similar drag from the law. Yet it stood by its forecast for profit per share, adjusted for items it lists separately. So how does a grocer keep its profit forecast when shoppers barely spend more?
What's at Stake
How much profit grew last quarter at Kroger's business that sells brands ads. Sales at Kroger's established stores grew 0.2% in the same quarter.
Market intelligence
The read: Kroger is up 4.1% today, ahead of the S&P 500's −0.5%. Over the past month, Kroger is up 6.4%.
Prices move for many reasons. This shows where they stand, not what caused it.
Prices: Yahoo Finance.
By the Numbers
How We Got Here
- The quarter closes
Kroger's second quarter closes with its ad business's profit up 24% from a year earlier.
- Kroger reports
Kroger tells investors sales at its established stores rose just 0.2%, and its adjusted online sales grew 20%.
- The sales forecast comes down
Kroger lowers this year's forecast for established-store sales to growth of 0.2% to 0.8%, and keeps its profit forecast.
- Kroger says a meeting is coming
In the same release, Kroger says it will host an investor meeting on October 20, 2026, to share longer-term financial targets.
The System Underneath
Shoppers buy groceries at Kroger. Their purchases add to a record of what millions of households buy. Brands pay Kroger to use that record to reach the right shoppers, and that ad business grew its profit 24% last quarter.
The People
- Shoppers buy groceriesThey shop at Kroger's stores and website. Sales at established stores rose just 0.2% last quarter.
- their purchases add toA record of what households buyKroger's ad business says it draws on purchase data from more than 62 million households.
- brands pay to use it forAds aimed at the right shoppersBrands pay Kroger's ad business to reach households that fit what they sell, then check the results against store sales.
- and that business grows itsAd profit up 24%Kroger says the ad business grew its profit 24% last quarter, but it doesn't say how much it earns.
So when you shop at Kroger, you're a customer and, for the brands paying Kroger, an audience too.
Why it matters
Part of the answer is a business inside Kroger that doesn't sell food at all. It's called Kroger Precision Marketing, and it sells brands ways to reach Kroger shoppers. It says it draws on purchase data from more than 62 million households. A cereal maker, for example, could pay to show its ads to households that buy cereal, then check whether store sales went up.
That business grew its profit 24% in the quarter. Kroger doesn't say how much money the ad business makes, so the 24% shows which way it's heading, not how big it is. If the business is still small, fast growth there may not move the whole company much.
The ad business also changes what a shopping trip is. At the register, you're a customer buying groceries. But what shoppers buy also helps Kroger sell brands a way to reach them. So a Kroger shopper is two things at once: a customer, and an audience brands pay to reach.
The ad business isn't working alone. Kroger's adjusted online sales grew 20% in the quarter, a figure that leaves out businesses it closed or sold. When Kroger explained its profit margins, it credited better online profits and media, its pharmacy, how it buys products and refunds of import taxes called tariffs. Its finance chief also credited cost savings and strong results from pharmacy and gas.
Who's Accountable
Kroger's goal of improving sales momentum, which he calls a top priority, and the longer-term targets Kroger says it will share on October 20, 2026.
Improving sales momentum remains a top priority.Photograph: The Kroger Co.
What to watch
Kroger has set an investor meeting for October 20, 2026, where it says it will share longer-term financial targets. It hasn't said whether it will reveal how much the ad business earns. If it does, investors will see how much of Kroger's profit comes from selling brands a way to reach shoppers, not just from groceries.
The lesson reaches past the grocery aisle. When a company's sales stall but its profit forecast holds, don't stop at the sales number. Ask what else it's selling. At Kroger, part of the answer is the chance to reach you, sold to brands.
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