NYSE:KR
KROGER CO
Kroger is a premier U.S. supermarket chain offering fresh food, household goods, and pharmacy services to millions of customers with a strong focus on digital grocery delivery.
Key Metrics
Investment Thesis
Bull Case
Kroger offers an attractive investment case due to its dominant market position, robust cash generation capabilities evidenced by $5.79B in operating cash flow, and a proven track record of returning capital via buybacks and dividends. The company's private label strategy provides a defensive moat against inflationary headwinds that often affect pure commodity sales.
Bear Case
Investors should be cautious regarding the potential for margin erosion from aggressive discounting strategies and the high exposure to volatile input costs like meat and dairy. With total liabilities reaching $44.34B, the company faces substantial debt obligations that could limit financial flexibility during prolonged periods of high interest rates.
About KROGER CO
Kroger Co. operates as a leading supermarket chain serving approximately 48 million customers across the United States with a diverse portfolio of retail food stores and e-commerce services. The company generates revenue primarily through the sale of groceries, household essentials, and pharmacy products while leveraging its extensive supply chain for competitive pricing.
Analysis
Management Discussion
Management successfully navigated a challenging economic environment by delivering revenue of $147.12B in 2025, which slightly dipped from the prior year but supported a net profit increase to $2.67B. The company generated strong operating cash flow of $5.79B while returning significant capital to shareholders through $4.16B in share repurchases and $883M in dividends.
Industry Overview
The U.S. grocery industry is characterized by low margins but high volume, creating a battle between traditional brick-and-mortar giants and agile discounters and online-only players. Success in this sector increasingly depends on digital integration, as consumers demand seamless shopping experiences that combine the freshness of physical stores with the convenience of home delivery.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | $148.26B | $150.04B | $147.12B |
| Cost of Revenue | $116.48B | $116.67B | $113.72B |
| Gross Profit | $31.78B | $33.36B | $33.40B |
| Operating Expenses | $27.65B | $30.27B | $29.55B |
| Operating Income | $4.13B | $3.10B | $3.85B |
| Stock-Based Comp | $190.0M | $172.0M | $175.0M |
| D&A | $2.96B | $3.12B | $3.25B |
| Amortization | $52.0M | $42.0M | $30.0M |
| Non-Operating Income | $-1.22B | $-260.0M | $-507.0M |
| Interest Expense | $535.0M | $441.0M | — |
| Interest Income | — | — | $311.0M |
| Pre-Tax Income | $2.90B | $2.84B | $3.34B |
| Income Tax | $653.0M | $667.0M | $670.0M |
| Continuing Ops | $2.25B | $2.17B | $2.67B |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $2.25B | $2.17B | $2.67B |
| Minority Interest | $5.0M | $5.0M | $7.0M |
| Net to Common | $2.24B | $2.16B | $2.67B |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Current Assets | $12.67B | $12.95B | $15.27B |
| Cash & Equivalents | $1.01B | $1.88B | $3.96B |
| Prepaid Expenses | $734.0M | $609.0M | $769.0M |
| Other Current Assets | $10.92B | $10.46B | $10.54B |
| Long-Term Assets | $36.95B | $37.56B | $37.34B |
| Intangibles | $899.0M | $899.0M | $834.0M |
| Goodwill | $2.92B | $2.92B | $2.67B |
| Operating Leases | $6.66B | $6.69B | $6.84B |
| Other LT Assets | $26.48B | $27.05B | $27.00B |
| Total Assets | $49.62B | $50.51B | $52.62B |
| Current Liabilities | $17.24B | $16.06B | $15.94B |
| Accounts Payable | — | — | $10.12B |
| Current Debt | $1.15B | $25.0M | $104.0M |
| Current Leases | $662.0M | $670.0M | $599.0M |
| Other Current Liab | $15.42B | $15.36B | $5.11B |
| Long-Term Liabilities | $22.37B | $22.85B | $28.39B |
| Long-Term Debt | $10.14B | $10.16B | $15.80B |
| LT Operating Leases | $6.37B | $6.35B | $6.58B |
| Other LT Liab | $5.86B | $6.33B | $6.01B |
| Total Liabilities | $39.61B | $38.90B | $44.34B |
| Shareholders' Equity | $10.01B | $11.60B | $8.28B |
| Retained Earnings | $25.60B | $26.95B | $28.72B |
| AOCI | $-632.0M | $-489.0M | $-621.0M |
| Total L&E | $49.62B | $50.51B | $52.62B |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Net Income (CFO) | $2.25B | $2.17B | $2.67B |
| Non-Cash Adjustments | $1.01B | $6.05B | $2.72B |
| Working Capital Changes | $1.24B | $-1.43B | $403.0M |
| Cash from Operations | $4.50B | $6.79B | $5.79B |
| Cash from Investing | $-3.02B | $-3.75B | $-3.23B |
| Debt Issuances | — | $15.0M | $10.50B |
| Share Buybacks | $993.0M | $62.0M | $4.16B |
| Dividends Paid | $682.0M | $796.0M | $883.0M |
| Cash from Financing | $-2.29B | $-2.17B | $-490.0M |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $-806.0M | $868.0M | $2.08B |
| Beginning Cash | $1.82B | $1.01B | $1.88B |
| Ending Cash | $1.01B | $1.88B | $3.96B |
Frequently Asked Questions
How does KROGER CO make money?
The company's revenue is driven by three main segments: Food & Beverage sales (fresh produce, meat, dairy, pantry staples), General Merchandise (household essentials, health beauty, electronics), and Pharmacy Services (prescriptions and wellness products).
What are the main risks for KR?
Intense price competition from discount retailers like Aldi and Walmart compresses gross margins, rising operational costs including labor and energy impact net income, inflationary pressures on food commodity prices squeeze consumer spending power, and reliance on third-party delivery partners increases logistics complexity.
What is KR's competitive advantage?
Kroger possesses a deep private-label product portfolio that drives higher margins, an industry-leading omnichannel network with same-day delivery capabilities, and a highly efficient supply chain that minimizes waste and costs.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.