KR

Defensive

Kroger

Price Chart

Market Data

Financials

XBRL · SEC EDGAR

2008–2025(18yr)

Revenue

Net Income

Free CF

Metric	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$70.3B	$76.1B	$76.6B	$82.0B	$90.3B	$96.6B	$98.4B	$108.5B	$109.8B	$115.3B	$122.7B	$121.2B	$122.3B	$132.5B	$137.9B	$148.3B	$150.0B	$147.1B	-1.9%
Gross Profit	$16.6B	$17.6B	$17.8B	$18.2B	$18.8B	$19.9B	$20.2B	$23.0B	$24.3B	$25.8B	$26.9B	$26.1B	$27.0B	$30.9B	$30.3B	$31.8B	$33.4B	$33.4B	+0.1%
Gross Margin	23.6%	23.1%	23.2%	22.2%	20.8%	20.6%	20.6%	21.2%	22.2%	22.4%	21.9%	21.5%	22.1%	23.3%	22.0%	21.4%	22.2%	22.7%	+0.5pp
Operating Income	$2.4B	$2.5B	$1.1B	$2.2B	$1.3B	$2.8B	$2.7B	$3.1B	$3.6B	$3.4B	$2.1B	$2.6B	$2.3B	$2.8B	$3.5B	$4.1B	$3.1B	$3.8B	+24.3%
Operating Margin	3.4%	3.2%	1.4%	2.7%	1.4%	2.9%	2.8%	2.9%	3.3%	3.0%	1.7%	2.2%	1.8%	2.1%	2.5%	2.8%	2.1%	2.6%	+0.6pp
Net Income	$1.2B	$1.2B	$70.0M	$1.1B	$602.0M	$1.5B	$1.5B	$1.7B	$2.0B	$2.0B	$1.9B	$3.1B	$1.7B	$2.6B	$1.7B	$2.2B	$2.2B	$2.7B	+23.2%
Net Margin	1.7%	1.6%	0.1%	1.4%	0.7%	1.5%	1.5%	1.6%	1.9%	1.7%	1.6%	2.6%	1.4%	2.0%	1.2%	1.5%	1.4%	1.8%	+0.4pp
Free Cash Flow	$455.0M	$747.0M	$625.0M	$1.4B	—	—	—	—	$1.6B	$573.0M	$604.0M	$1.2B	$1.5B	$4.0B	$3.6B	$1.4B	$2.9B	$1.8B	-38.4%
FCF Margin	0.6%	1.0%	0.8%	1.8%	—	—	—	—	1.4%	0.5%	0.5%	1.0%	1.3%	3.0%	2.6%	1.0%	1.9%	1.2%	-0.7pp
EPS (Diluted)	$1.73	$1.89	$0.11	$1.74	$1.01	$2.77	$2.90	$3.44	$2.06	$2.05	$2.09	$3.76	$2.04	$3.27	$2.17	$3.06	$2.96	$3.67	+24.0%

Total Debt$15.9B

Cash & Equiv.$4.0B

Net Debt$11.9B

4 min read

1. THE BIG PICTURE

Kroger is attempting a fundamental shift in the grocery business model by leveraging 20 years of data science to create "alternative profit businesses." Instead of relying solely on thin retail margins, Kroger uses its massive customer traffic to sell high-margin advertising and data analytics, which in turn provides the capital to keep grocery prices competitive (10-K Item 1).

2. WHERE THE RISKS HIT HARDEST

Kroger’s primary differentiator — its data-driven personalization — is directly threatened by its dependence on complex IT systems. With over 95% of transactions tied to loyalty cards, a major cyber-attack or data breach would not only disrupt operations but also destroy the trust required for its high-margin Kroger Precision Marketing business (10-K Item 1, Item 1A). Furthermore, Kroger’s vertical integration, supported by 33 owned food production plants, is a cost-saving strength that faces rising climate-related costs. Specifically, Kroger must fund significant capital expenditures to replace refrigerant infrastructure to meet federal HFC phasedown requirements, potentially offsetting the margin gains from its "make or buy" strategy. Finally, the goal of maintaining affordable pricing is constantly at odds with labor market pressures, as nearly two-thirds of the workforce is covered by collective bargaining agreements that can lead to work stoppages or rising benefit costs (RISKS, COMPETITIVE POSITION).

3. WHAT THE NUMBERS SAY TOGETHER

The financial data reveals a company returning massive amounts of capital to shareholders despite razor-thin margins. Kroger leads its peer group with a 9.9% buyback yield, yet it ranks last in FCF margin at 0.5% (XBRL, PEER BENCHMARKING). This suggests management is prioritizing share repurchases even as the business operates with an operating margin of just 0.1%. While TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth was negative at -1.9%, the most recent quarter showed a recovery, with identical sales (excluding fuel) rising 2.4% (8-K). This divergence suggests that while the total top-line has been pressured, the core grocery business is regaining momentum through its "Our Brands" portfolio and digital "seamless" ecosystem. With short interest at 5.2% of the float, market sentiment remains cautious but not overwhelmingly bearish (Yahoo Finance).

4. IS IT WORTH IT AT THIS PRICE?

At a 12.9x Forward P/E, Kroger trades at a modest discount to the peer median of 16.7x. The market-implied growth rate for Kroger is just 0.5%, reflecting skepticism about its ability to expand margins in a competitive environment (CAPM analysis). This valuation is justified by Kroger’s 0.1% operating margin, which trails significantly behind Target’s 5.0% and Costco’s 3.7% (PEER BENCHMARKING). However, the price appears resilient if Kroger can hit its FY2026 guidance of 1.0% to 2.0% identical sales growth. If Kroger were to achieve a growth rate closer to the GDP pace of 2.5%, the justified multiple would rise to 19.1x (CAPM analysis). The primary factor keeping the valuation suppressed is the $13.4 billion in net debt paired with the legal uncertainty surrounding the Albertsons merger and opioid litigation (RISKS, XBRL).

5. WHAT WOULD CHANGE THIS VIEW?

Cautious if identical sales growth falls below the 1.0% guidance floor, suggesting that "Our Brands" is losing its ability to capture value-conscious consumers.
Constructive if eCommerce reaches profitability as projected by CFO David Kennerley, which would signal that the "seamless ecosystem" is no longer a drag on retail margins (8-K).
Constructive if the Albertsons litigation is resolved, removing a major capital allocation and regulatory cloud.

6. BOTTOM LINE

Structural Advantage: A proprietary data science engine (84.51°) integrated with 33 owned manufacturing plants and a loyalty program covering 95% of transactions. Bottom Line: Kroger is a low-margin value play whose aggressive share buybacks and data-monetization strategy offer upside, provided it can navigate intense labor and legal headwinds.

Source: Synthesis · LLM Analysis

4 min read

1. Top 5 Material Risks

Competitive Environment: Kroger operates in a market with intense competition from online retailers, mass merchants, club stores, and deep discounters. The proliferation of third-party delivery services and the need to adapt to evolving customer preferences for digital and in-store shopping create risks that, if not managed, could adversely affect sales and profitability.
Employee Matters: With approximately 350 collective bargaining agreements covering nearly two-thirds of its associates, Kroger faces the risk of work stoppages. Additionally, the inability to control rising healthcare, pension, and wage costs—or a failure to recruit and retain qualified staff—could increase operating expenses.
Data and Technology: Kroger is increasingly dependent on complex IT systems. The risk of cyber-attacks, data breaches, or the failure to successfully modernize legacy systems could lead to significant losses, business interruptions, and regulatory fines.
Legal and Regulatory Proceedings: Kroger is subject to various ongoing inquiries and litigation, including opioid-related matters and litigation involving Albertsons. Adverse outcomes in these proceedings could result in substantial losses.
Economic Conditions: Inflation, interest rate volatility, and changes in consumer spending power (such as fluctuations in government benefits like SNAP/EBT) can increase merchandise costs and operating expenses, potentially reducing gross margins and sales growth.

2. Company-Specific Risks

Alternative Profit Strategy: Kroger’s business model relies on monetizing traffic and data insights to create "margin-rich" revenue streams. Failure to successfully implement this strategy could adversely affect business growth.
Multi-Employer Pension Obligations: Kroger participates in multi-employer pension plans where the present value of actuarially accrued liabilities generally exceeds trust assets. Kroger bears the investment risk and acts as the named fiduciary for two of these plans, meaning poor investment performance could require additional funding contributions.
Fuel Center Exposure: Kroger operates 1,702 fuel centers. These are subject to risks including environmental regulation, climate change concerns, and retail price volatility, all of which can impact financial results.
Integration of Strategic Alliances: Mergers and acquisitions, such as the integration of new businesses, carry risks related to cultural alignment, coordination of geographically separate organizations, and the realization of anticipated synergies.

3. Regulatory/Legal Risks

Data Privacy and Security: Kroger must comply with a complex web of regulations including the FTC Act, the California Consumer Privacy Act (CCPA), the Health Insurance Portability and Accountability Act (HIPAA), and the EU General Data Protection Regulation (GDPR). Non-compliance or data governance failures could lead to material fines, penalties, and litigation.
ESG and Sustainability: Increasing societal and governmental attention to ESG matters creates reputational risk. Kroger faces potential criticism from both sides of the "anti-ESG" debate, and failure to meet publicly announced sustainability goals could result in regulatory enforcement actions.
Product Safety: Kroger faces potential liability from product recalls, contamination, or spoilage. Any safety issue—whether involving "Our Brands" or third-party CPG products—could lead to litigation and damage Kroger's reputation.

4. Financial Impact Map

Competitive Environment → Sales and Profitability → Failure to adapt to customer preferences or competitive strategies could adversely affect these metrics.

Employee Matters → Operating Costs → Inability to control healthcare, pension, and wage costs could increase operating expenses and adversely affect results of operations.

Data and Technology → Financial Condition and Results of Operations → Cyber-attacks or data breaches could result in material fines, remediation costs, and loss of business, impacting the bottom line.

Legal and Regulatory Proceedings → Financial Condition and Results of Operations → Adverse outcomes in litigation or regulatory inquiries could result in significant liability in excess of accrued amounts.

Economic Conditions → Gross Margins and Operating Expenses → Inflationary pressures and economic downturns can increase merchandise costs and operating, general and administrative expenses, while simultaneously slowing sales growth.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
8-K	Mar 2026	—
10-Q	Dec 2025	Nov 2025
14A	May 2025	—
10-K	Apr 2025	Feb 2025