Kroger's shares rise as grocer says shoppers seek lower prices, cook more at home

Core Viewpoint - Kroger's shares increased by approximately 9% following the company's raised full-year sales outlook, driven by consumer demand for lower-priced store brands and alternatives to dining out [1] Group 1: Sales Performance - Kroger now anticipates identical sales, excluding fuel, to rise by 2.25% to 3.25% year-over-year, an increase from the previous forecast of 2% to 3% [2] - For the fiscal first quarter ending May 24, Kroger reported net sales of $866 million, or $1.29 per share, with identical sales, excluding fuel, growing by 3.2% year-over-year [3][4] - E-commerce sales experienced a year-over-year growth of 15% [4] Group 2: Company Changes and Leadership - Kroger has undergone significant changes, including the resignation of longtime CEO Rodney McMullen and the hiring of a new CFO, David Kennerley, previously of PepsiCo Europe [5][6] - The company is currently searching for a new CEO, with the board collaborating with a search firm [14] Group 3: Competitive Landscape - Kroger faces increased competition from Walmart and Costco, particularly as consumers are more price-conscious due to tariff uncertainties [6] Group 4: Consumer Behavior and Strategy - The company is focusing on value-oriented shoppers by simplifying promotions and lowering prices on over 2,000 products [7] - Kroger's private label brands have outperformed national brands for seven consecutive quarters, with Simple Truth and Private Selection being the top performers [8] - The company plans to launch 80 new protein products under the Simple Truth line to capitalize on health trends [9] Group 5: Cost Management and Store Operations - Kroger is reviewing its costs to modernize its business and improve e-commerce profitability, which is currently not profitable [12] - The company plans to close about 60 stores over the next 18 months, resulting in a $100 million impairment charge in the first quarter [12] - Despite store closures, Kroger intends to open new locations in higher-growth areas, with plans to accelerate openings in 2026 [13]