Kroger’s latest earnings report turned into a full‑on stress test for its stock.
On December 4, 2025, The Kroger Co. (NYSE: KR) reported fiscal Q3 2025 results, took a multibillion‑dollar impairment charge on its automated fulfillment network, raised the lower end of its full‑year earnings outlook – and watched its shares sell off sharply anyway. [1]
Around mid‑session, KR was trading close to $62 per share, down roughly 6% on the day, after having closed above $67 on December 3. Real‑time market data from several platforms showed intraday quotes between about $61.98 and $62.62, corresponding to a decline of roughly 5–6%. [2]
Despite the sell‑off, Wall Street’s fundamental view on Kroger remains broadly constructive, while short‑term technical models have turned notably cautious. Here’s how today’s news, guidance revisions and fresh forecasts stack up.
1. Kroger stock today: price action and recent performance
As of late morning U.S. trading on December 4, 2025, KR shares were changing hands a little above $62, down about 6% on the session after the Q3 release. [3]
From a broader lens:
- According to Barchart, KR is down about 14–15% from its 52‑week high of $74.90. [4]
- Over the past three months, the stock has fallen roughly 5.7%, underperforming the Consumer Staples Select Sector SPDR ETF (XLP), which is down about 2.3% over the same period. [5]
- On a year‑to‑date basis, Kroger is still up around 4–5%, and about 6–7% over the last 12 months, outperforming the consumer staples sector, which is slightly negative over the year.
Technically, Barchart notes that KR has traded below its 200‑day moving average since mid‑September, a sign that momentum has weakened even though long‑term returns remain positive.
2. Q3 2025 earnings: GAAP loss vs. underlying profitability
Kroger’s fiscal third quarter 2025 (ended November 8, 2025) was one of those “headline ugly, underlying okay” situations.
Headline numbers
From Kroger’s official earnings release:
- Total sales: $33.9 billion, up slightly from $33.6 billion a year ago. Excluding fuel and the sold Kroger Specialty Pharmacy business, sales rose 2.6%.
- Identical sales (ex‑fuel): +2.6% year‑over‑year.
- GAAP operating result:Operating loss of $1.54 billion, versus a profit of $828 million in Q3 2024.
- GAAP EPS:–$2.02 per share, versus +$0.84 a year earlier.
- Adjusted EPS:$1.05, up from $0.98 in the prior‑year quarter and slightly above consensus expectations around $1.03.
- Adjusted FIFO operating profit: $1.09 billion, up from $1.02 billion a year ago.
- eCommerce sales: up 17% year‑over‑year.
The huge gap between GAAP and adjusted results comes down to one thing: a $2.6 billion impairment and related charges tied to Kroger’s automated fulfillment network, which translated to roughly $3.00 per share of losses.
Margin trends
Kroger actually improved profitability on an adjusted basis:
- Gross margin as a percentage of sales rose to 22.8% from 22.4% a year earlier.
- The FIFO gross margin rate (excluding fuel, rent, depreciation and amortization) improved by 49 basis points, helped by:
- The sale of the lower‑margin Kroger Specialty Pharmacy business
- Lower supply chain costs
- Lower shrink (losses from theft, damage, etc.)
- Strength in private‑label “Our Brands”
These positives were partially offset by growth in pharmacy (a lower‑margin mix) and ongoing price investments.
On the cost side, the Operating, General & Administrative (OG&A) rate rose, reflecting higher wages and benefits, as well as an accelerated contribution to multi‑employer pension plans that management says should reduce future obligations.
Sales miss and shopper behavior
While profit metrics outperformed expectations, sales fell short:
- Revenue of $33.9 billion trailed analyst estimates near $34.3 billion, with identical sales growth of 2.6% vs expectations closer to 2.9%.
According to Reuters and Investing.com, the shortfall reflects:
- Soft spending among low‑income shoppers, particularly after cuts to food‑stamp (SNAP) benefits and a brief lapse in November during the federal shutdown. Kroger gets roughly 6% of its total sales from transactions involving SNAP benefits, making it especially exposed to these changes.
- Aggressive pricing by rivals like Walmart and Target, which have cut prices on staples to retain value‑oriented customers. Kroger responded by lowering prices on around 3,500 items, including meat and fresh produce.
In short: Kroger is defending share in a tougher spending environment by cutting prices, and it’s using cost savings and portfolio tweaks to protect margins.
3. Strategic reset: impairing automation, reshaping eCommerce
The $2.6 billion impairment charge is not just an accounting footnote; it’s a recognition that Kroger’s original automation strategy is being scaled back.
- Reuters notes that Kroger is reducing its push into automated fulfillment centers built with British partner Ocado, closing three of eight sites and shifting toward a hybrid model that leans more on third‑party services like Instacart, DoorDash and Uber Eats.
- Kroger’s own statements say management has completed its strategic review and expects the eCommerce operation to turn profitable in 2026 – a key milestone, given how thin online grocery margins have been historically.
This reset also overlaps with other network changes:
- Separate reporting and the company’s public filings highlight closures of distribution facilities in Florida, Wisconsin and Maryland, alongside a decision to end most Kroger‑branded delivery in Florida while expanding partnerships with third‑party delivery platforms in other regions.
Layer in earlier merger‑related litigation costs and the aborted Albertsons deal (more on that below), and you get a business that’s been through a multi‑year period of heavy strategic experimentation, now moving toward a more focused, asset‑light digital model.
4. Updated 2025 guidance: sales narrowed, EPS floor raised
Despite the softer top line, Kroger tightened and partially raised its full‑year 2025 outlook. From the company’s guidance table:
- Identical sales (ex‑fuel):
- Previous: 2.7%–3.4%
- New: 2.8%–3.0%
- Adjusted EPS:
- Previous: $4.70–$4.80
- New: $4.75–$4.80 (raising the lower end)
- Adjusted operating profit: unchanged at $4.8–$4.9 billion.
- Free cash flow:$2.8–$3.0 billion, unchanged.
- Capex:$3.6–$3.8 billion, unchanged.
So Kroger is signaling:
- Slightly slower sales growth than the prior optimistic top of the range
- But better earnings efficiency, thanks to margin improvements and cost discipline
Reuters points out that the midpoint of Kroger’s new identical‑sales guidance (about 2.9%) is still below Wall Street expectations around 3.1%, which likely contributed to the muted stock reaction.
5. Capital returns: dividend growth and massive buybacks
Income‑oriented investors have two key levers to watch: the dividend and buybacks.
Dividend
On September 18, 2025, Kroger’s board declared a quarterly dividend of $0.35 per share, paid on December 1 to shareholders of record as of November 14.
Management highlights that:
- The quarterly dividend has grown at about a 13% compound annual growth rate (CAGR) since reinstatement in 2006.
- The company “expects,” subject to board approval, to continue increasing the dividend over time.
At a roughly $62 share price, that $0.35 quarterly dividend implies an annualized yield in the ballpark of 2.2–2.3%, though the exact yield will move with the stock.
Share repurchases
Kroger has also leaned hard into buybacks:
- The company completed a $5 billion accelerated share repurchase (ASR) program, part of a $7.5 billion authorization.
- It plans to finish the remaining $2.5 billion in open‑market repurchases by the end of fiscal 2025, which is already baked into its full‑year outlook.
Kroger’s net total debt to adjusted EBITDA ratio stands at about 1.73, up from 1.21 a year ago but still comfortably below the company’s targeted range of 2.30–2.50, suggesting room for continued investment and shareholder returns.
6. Analyst ratings and price targets: fundamental view still positive
Across several research aggregators, the fundamental view on Kroger remains notably more upbeat than today’s price action suggests.
Street consensus
According to StockAnalysis:
- 14 analysts currently cover KR.
- The consensus rating is “Buy.”
- The average 12‑month price target is about $73.79, implying roughly 19% upside from around $62.
MarketBeat, which tracks a somewhat larger group, shows:
- 19 analysts issuing targets.
- An average target of about $74.39.
Barchart reports:
- A consensus “Moderate Buy” rating from 21 analysts.
- A mean price target near $77.50, roughly 17% above current levels (because the base price they use is slightly higher than today’s intraday quote).
So while different services slice the data slightly differently, the broad message is similar: mid‑teens upside over the next year, if analyst estimates prove correct.
Recent analyst moves
StockAnalysis highlights several recent actions:
- Telsey Advisory Group reaffirmed a Buy rating with an $82 target on December 1, 2025.
- JPMorgan maintained a Hold while trimming its target from $75 to $73 in late November.
- Evercore ISI kept a Buy rating, nudging its target from $82 to $80 in October.
- Roth MKM upgraded Kroger from Hold to Strong Buy in September, lifting its target from $66 to $75.
Taken together, that’s a backdrop of cautious optimism: analysts see value, but they’re also trimming targets at the margins in response to the new strategic and macro environment.
7. Independent valuation models: modest undervaluation, long‑term focus
Beyond traditional analyst research, several independent platforms are publishing fresh views on Kroger’s intrinsic value.
Simply Wall St: DCF‑driven upside
A December 2 Simply Wall St piece frames the Kroger investment narrative as centered on:
- Margin improvement through cost control
- Digital growth
- Expansion of private‑label “Our Brands”
The article highlights a scenario in which:
- Kroger’s revenue grows to about $158.1 billion and earnings to $3.3 billion by 2028, implying roughly 2.5% annual revenue growth and a ~$0.7 billion earnings increase from current levels.
- Under that scenario, their model yields a fair value of about $75.73 per share, representing roughly 13% upside to Kroger’s recent price at the time of writing.
- Simply Wall St’s community valuations range from $75.73 to $88.71, suggesting some investors see as much as 30%+ upside potential if growth and margins track their optimistic cases.
They also emphasize risks around labor costs and persistently thin eCommerce margins, echoing concerns raised by regulators and unions around the company’s competitive and labor practices.
Ownership structure
A separate analysis from Simply Wall St, syndicated via Yahoo Finance, notes that roughly 77% of Kroger’s shares are held by institutional investors, indicating the stock is heavily dominated by professional money managers such as mutual funds, pension funds and hedge funds.
Heavy institutional ownership can cut both ways:
- It often correlates with deep fundamental coverage and relatively efficient pricing.
- But it can amplify moves – both up and down – when institutions rebalance in sync.
8. Technical and quantitative forecasts: short‑term signals turn cautious
If fundamental analysts are mostly constructive, quantitative and technical services are more divided.
Intellectia: “Strong Sell” near term
Technical analytics platform Intellectia currently assigns Kroger a “Strong Sell” label for the next few days to weeks, citing:
- Multiple bearish moving‑average signals:
- The share price has fallen below its 20‑day simple moving average (SMA).
- The 5‑day SMA has crossed below the 60‑day and 250‑day SMAs, reinforcing a falling‑trend pattern.
- A negative MACD (moving average convergence divergence) reading and negative short‑term momentum.
At the same time, several oscillators point to an oversold/contrarian‑bullish setup:
- A 20‑day Commodity Channel Index (CCI) below –100.
- A deeply oversold Williams %R below –80.
- A positive “Awesome Oscillator” reading.
Intellectia’s similarity‑based model, which compares KR’s chart to stocks with historically similar patterns, even projects a 1‑month price around $82.52, corresponding to a potential ~23% move from prior levels at the time of analysis – while still cautioning that the near‑term trend is down and risk is elevated.
In other words: their algorithms see technical weakness right now, but also acknowledge the possibility of sharp counter‑trend rallies if sentiment shifts.
Barchart: outperformer over 12 months, laggard in recent months
Barchart’s analysis underscores the split:
- Over the last 12 months, KR has outperformed the consumer defensive sector (up ~6–7% vs a decline in XLP).
- Over the last three months, it has underperformed, falling about 5.7% vs XLP’s ~2.3% drop.
- The stock’s slide below its 200‑day moving average since mid‑September confirms a loss of momentum, even as fundamentals remain stable.
9. Regulatory and strategic backdrop: the ghost of Albertsons
The Kroger story in 2025 is still shadowed by its abandoned merger with Albertsons, once pitched as a $24–25 billion deal that would reshape U.S. grocery retail.
Key milestones:
- In early 2024, the FTC sued to block the merger, arguing it would harm competition for both shoppers and unionized grocery workers.
- In December 2024, U.S. courts blocked the deal, expressing doubts that proposed store divestitures to C&S Wholesale Grocers would preserve competition.
- By January 2025, an FTC statement described the outcome as a major win for competition and labor markets.
Kroger’s filings show ongoing merger‑related litigation and settlement charges, which are among the adjustment items excluded from non‑GAAP earnings.
For investors, the key takeaway is that:
- The mega‑merger path is effectively closed for now.
- Kroger’s growth strategy must rely more on organic initiatives, digital expansion, and smaller‑scale deals, rather than transformational M&A.
10. What to watch next: key issues for KR shareholders
Putting all of this together, the December 4, 2025 picture of Kroger stock looks like this:
- Fundamentals:
- Modest sales growth but improving gross margins.
- Strong adjusted profitability and raised EPS floor for 2025.
- Big one‑time impairment as Kroger pivots away from capital‑intensive automation to a more flexible eCommerce model.
- Capital allocation:
- A growing dividend with a double‑digit historical CAGR.
- Aggressive share repurchases, but also rising leverage (still within a conservative target range).
- Valuation and forecasts:
- Analyst price targets in the mid‑$70s, implying mid‑teens upside from current levels.
- Independent models (like Simply Wall St) also suggest low‑double‑digit upside based on long‑term cash‑flow assumptions.
- Technical picture:
- A stock that has outperformed over 12 months but lost momentum in the last quarter, sitting below key moving averages and flagged as a near‑term “Strong Sell” by some technical algorithms.
- Macro and competitive risks:
- Price‑sensitive shoppers, SNAP‑related volatility, and intense competition from big‑box rivals cutting prices on essentials.
- Ongoing labor and regulatory scrutiny following the failed Albertsons merger, and continuing union and wage pressures.
For investors and traders scanning Google News or Discover today, the story is nuanced:
- Long‑term fundamentals – cash flow, dividend growth, and digital scale – still look solid enough that many analysts call KR a buy at current levels.
- Short‑term sentiment and technicals, however, are fragile after a run‑up earlier in 2025 and a fresh batch of macro and competitive headwinds.
References
1. www.prnewswire.com, 2. stockanalysis.com, 3. stockanalysis.com, 4. www.barchart.com, 5. www.barchart.com
