The news: Kroger raised its full-year core sales forecast for the second time this year, citing strong demand for lower-cost essentials from budget-conscious shoppers.The grocer now expects same-store sales, excluding fuel, to rise 2.7% to 3.4%, up from its prior range of 2.25% to 3.25%.The revision came after Kroger topped analysts’ expectations for Q2 comparable sales and adjusted earnings, driven by gains in fresh food, ecommerce, and pharmacy.

The numbers:

• Revenues were $33.94 billion, up from $33.91 billion, but short of $34.15 billion analysts expected.
• Adjusted earnings per share came to $1.04, up 11.8% YoY, and ahead of the $1.00 analysts expected.
• Same-store sales, excluding fuel, rose 3.4%, a big jump from 1.2% last year, and ahead of the 2.8% gain expected.

Our first take: Since abandoning its planned merger with Albertsons, Kroger has sharpened its focus on profitability.It has shuttered underperforming stores, cut about 1,000 corporate jobs, and pushed to improve margins in its online business, which grew 16% in the quarter.

At the same time, the grocer has doubled down on value and promotions, including hosting a Boost Bonus Days event in July that sought to drive enrollment in its membership program by offering access to a range of discounts on groceries, $10 off a Kroger delivery order of at least $75, and 50% off the membership cost for new sign-ups (current members could receive half off for extending their membership). It has also lowered prices on many items and expanded its private-label lineup to attract cost-conscious consumers.

That playbook mirrors moves by Publix and Sprouts to grab market share—and is critical to fend off fast-growing value-oriented rivals like Aldi, Trader Joe’s, and Lidl, which have leaned into their broad, differentiated private-label portfolios to stand out from traditional grocers.

This is our immediate perspective. We’re actively developing this story throughout the day with more research and data from the EMARKETER database. Our in-depth analysis will be included in our client-only Briefings. Non-clients can click here to get a demo of our full platform and coverage.

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