Kroger: A Solid First Quarter

Core Insights - Kroger reported solid earnings for Q1 2025, with earnings per share (EPS) of $1.49, exceeding analysts' expectations by three cents, while revenue fell slightly short at $45.12 billion [2][3] - E-commerce sales showed significant growth, increasing by 15% year over year, indicating a positive trend in this segment of the business [4] - The company reaffirmed its full-year EPS guidance in the range of $4.60 to $4.80, which is slightly below analysts' expectations, while raising its same-store sales guidance [5] Financial Metrics - Revenue for Q1 2025 was $45.12 billion, a 0% change from Q1 2024, which was $45.27 billion [2] - Adjusted EPS increased by 4.2% from $1.43 in Q1 2024 to $1.49 in Q1 2025 [2] - Gross margin improved by 100 basis points from 22% in Q1 2024 to 23% in Q1 2025 [2] - The debt-to-adjusted EBITDA ratio rose by 35% from 1.25 in Q1 2024 to 1.69 in Q1 2025 [2] Market Reaction - The initial market reaction to Kroger's earnings report was neutral, with the stock up by less than 0.5% shortly after the announcement [7] - The market response may change following management's quarterly earnings call, which was scheduled for later that morning [8] Future Outlook - CFO David Kennerley highlighted the uncertain macroeconomic environment as a reason for not raising guidance for earnings and free cash flow, despite beating expectations in Q1 [9] - Tariffs on imported products are a key factor to monitor, as they could impact future earnings [9] - Kroger plans to maintain and increase its dividend over time and is on track to complete its $5 billion accelerated share repurchase program by Q3 [6]