Kroger Co.

Strong profit delivery despite weak top-line; EPS up ~5% - Kroger delivered Adjusted EPS of $1.09, ~5% growth YoY, and reiterated full-year profit guidance. - Identical sales excluding fuel (IS/F) grew 0.2%, but sales were softer than planned across the industry.

Key headwinds to sales: cyclospora, pharmacy/drug pricing changes, and egg deflation - Cyclospora late in the quarter: about a 35 bps headwind to company IDs ex-fuel, mainly produce; customers responded more broadly across produce afterward. - Pharmacy headwinds: ~140 bps impact on sales due to lower drug prices and brand-to-generic shifts tied to the Inflation Reduction Act. - Egg deflation: ~30 bps headwind. - Management framed these together as a major part of the ~265 bps drag to comparable sales ex-fuel (on a like-for-like basis).

Good: value, ecommerce, and retail media momentum; measurable engagement improvements - Ecommerce adjusted sales grew 20% and Kroger delivered its second consecutive quarter of profitable ecommerce growth. - Retail media grew 24% (best since 2021) with media up 88 bps; collaboration/optimization and inventory expansion drove visibility and conversion. - “Customer value plan” underway: simplifying promotions and improving shelf-price/value perception (details to come in October). - Operational improvements were highlighted: record shelf availability and best-ever pickup perfect orders.