US Consumers Keep Spending, But Retailers See Diverging Results! Grocery Giant Kroger (KR.US) Reports a Decline in Same-Store Sales

According to Zhitong Finance APP, US retail giant Kroger (KR.US) released its quarterly earnings data and outlook before the US market opened on Friday. The financial report shows that the company is experiencing simultaneous sales growth pressure and profit improvements. The company has lowered its full-year same-store sales growth guidance, excluding fuel, from 1%-2% to 0.2%-0.8%. In the second quarter, same-store sales excluding fuel grew by only 0.2% year-on-year, far below last year’s 3.4% and also missing Wall Street’s consensus estimate of 0.9% compiled by LSEG.

Kroger CEO Rodney McMullen is working to win over consumers through price reductions, improved service, investment in the workforce, and e-commerce development. However, whether these measures can continue to drive traffic and market share growth remains to be seen in future performance. In addition, the company claims that the latest sales guidance includes an approximately 140 basis point drag from prescription drug pricing policy. Therefore, the slowdown in sales growth is also related to competition, consumer behavior, and changes in drug prices, and cannot be fully attributed to a decrease in American consumers’ purchase quantities and spending.

The Battle for the Shopping Cart Heats Up: Kroger Lowers Sales Expectations Amidst Fierce Competition Among Retail Giants for Consumers' “Shopping Cart”

Kroger has lowered its full-year sales guidance, indicating the intense competition for consumer grocery spending is pressuring this retailer.

The management now expects the range for same-store comparable sales growth, excluding fuel, to reach a maximum of about 0.8%, below Wall Street analysts’ previous consensus peak of 2%. This metric tracks the cumulative sales performance at stores open for at least 15 months.

The downward revision in outlook puts more pressure on CEO Rodney McMullen, who is seeking to gain market share through price cuts, better in-store service, and greater investment in the workforce. Kroger is also looking to boost online sales.

Wall Street remains somewhat skeptical: By Thursday’s US market close, Kroger’s stock had fallen about 9% year-to-date, compared to an 11% rise in the S&P 500 index. After the earnings release, the stock was down nearly 5% in premarket trading on Friday.

In the quarter ended August 15, Kroger’s same-store comparable sales metric missed Wall Street’s consensus expectations, but adjusted earnings exceeded estimates, driven by improved e-commerce profitability, tariff refunds, and other factors.

Although US consumers overall are still showing resilience, after years of high inflation, they have become more discerning in their shopping. Americans buy discounted groceries, prefer retailers’ own brands with lower prices, and are willing to compare prices between stores or wait for the best price.

In recent months, the Iran war has driven up gasoline prices, further straining consumer budgets, especially impacting low-income families who also face cuts in government food assistance. Meanwhile, a summer parasitic outbreak suppressed demand for fresh produce, with some consumers avoiding leafy greens and berries. This situation is expected to improve in the coming months.

Food inflation has remained relatively stable, but some companies warn that prices may rise further in the second half of the year, partly due to rising energy costs being passed on to consumers. Some items, such as beef, remain a pain point for consumers due to their high prices.

Walmart, Albertsons, and other retailers have stated their intentions to keep food prices competitive to attract price-sensitive consumers and expand market share.

CEO Rodney McMullen, who took over Kroger in February this year, has signaled significant changes. The company has agreed to acquire Giant Eagle to expand its presence in the US Northeast and appointed several new senior executives, including some with past experience at Walmart like McMullen himself.

Kroger operates grocery supermarkets as its core business, offering fresh produce, packaged foods, and daily necessities, along with pharmacies and gas stations, primarily serving families’ frequent everyday purchases.

By contrast, Walmart, America’s largest retail giant, is a comprehensive retailer offering groceries, clothing, appliances, and more, attracting a broad customer base through bulk purchasing, low-price strategies, and omnichannel operations, and also operates Sam’s Club; Costco focuses on a paid membership-based warehouse retail model, offering value through a streamlined product range, bulk sales, and low markups, with membership fees being a key profit source. Thus, the three focus on supermarket groceries, comprehensive low-cost retail, and membership-based warehouse retail, respectively.

US Consumers Continue to Spend, But Retail Giants’ Stock Prices and Core Performance Are Diverging

In the second quarter of fiscal year 2027, Kroger's revenue rose 2% year-on-year to $34.62 billion, slightly below Wall Street’s consensus estimate of $34.64 billion compiled by LSEG. Net profit was about $641 million, up from $609 million a year earlier. Adjusted earnings per share came in at $1.09, surpassing the expected $1.06. The company maintained its full-year EPS guidance of $5.10 to $5.30 and repurchased about $1 billion in shares during Q2. Improved e-commerce profitability and tariff refunds show that Kroger’s slower revenue and same-store sales growth has not yet translated into lower profit guidance.

The results among US retail giants indicate that consumer spending—making up about 70% of US GDP—remains highly resilient. US consumers continue their strong spending trajectory, though growth is clearly concentrating on companies with better pricing, convenience, and channel advantages. Walmart’s Q2 2027 total revenue grew 5.9% year-on-year, with US ex-fuel same-store comparables up 2.6% and US e-commerce growing 24%. The company also pointed out that prescription drug pricing policy cut about 125 basis points from same-store comparables growth.

Target's second-quarter (fiscal 2026) sales were up 5.3%, with same-store comps up 3.8% and traffic up 3.6%, indicating that improving merchandise and store operations can still attract consumers, though profits were also boosted by a roughly $994 million pre-tax tariff refund. Amazon’s North American sales grew 16% in Q2 to about $116.2 billion, with strong e-commerce demonstrating continued expansion in online consumer spending. However, Amazon’s segment revenues and supermarket same-store comps are not directly comparable, and the advanced timing of Prime Day to June affected quarterly sales distribution. All these data bolster the narrative that "consumer spending is highly resilient while retail companies are diverging more sharply."

Data from the US Bureau of Economic Analysis shows personal consumption expenditures (PCE) in July rose 0.2% month-on-month, but after removing price changes, real consumption was almost flat, rising less than 0.1%. Real disposable income rose by 0.4% and the personal savings rate was 3.0%. Meanwhile, US retail sales fell 0.6% month-on-month, partly affected by promotional timing and changes in gasoline prices.

US employment is still providing support: Nonfarm payrolls increased by 162,000 in August, and initial jobless claims for the week ended September 5 were 206,000, with layoffs still low. Therefore, a soft-landing scenario still has income and employment foundations, and overall US consumer spending remains very resilient, though demand is clearly being redistributed and differentiated between goods, services, and different channels.

On September 9, Barclays raised its S&P 500 year-end target from 7,800 to 7,950, with key factors including that 86% of the 492 S&P 500 companies reporting Q2 earnings beat expectations, and with resilient consumer spending, corporate profits are expected to continue to outperform. Add in the ongoing AI investment boom, and it’s clear that, for retail stocks, the market’s screening focus and growth expectations are shifting further toward traffic, sales volumes, market share, and operating profits after excluding special gains: companies that can support low-price strategies with greater efficiency stand a better chance to grow faster as consumer cautiousness rises.