Shares of The Kroger Co. rose by more than 9 percent during the June 20 trading, after the Cincinnati-based grocery store chain raised its yearly outlook and said it would only raise prices as a last resort in response to higher tariffs and inflation.
“We’re off to a solid start in 2025, and we are optimistic about the rest of the year. While the broader environment continues to be uncertain, we’re focused on serving our customers with great stores,” Sargent said.
In highlighting the company’s revamped growth strategy, Sargent said Kroger is reviewing its non-core assets and actively seeking ways to reduce costs across the business. He mentioned that the company plans to reinvest those savings into lower prices, extended store hours, and better pay for employees so they can serve customers more effectively.
For the rest of 2025, Sargent said Kroger plans to complete 30 major store projects and aims to speed up new store openings in 2026 and beyond in high-growth areas, adding more square footage and creating new jobs.
Along with opening new stores nationwide, Kroger recorded an impairment charge of $100 million in the first quarter due to the planned closure of about 60 stores over the next 18 months. Newly hired Kroger Chief Financial Officer David Kennerley said the company expects a small financial benefit from the store closures and plans to reinvest the savings to improve the customer experience.
As a result of the better-than-expected first-quarter results, Kroger raised its annual identical sales outlook to between 2.25 percent and 2.35 percent, up from its previous target of 2 percent to 3 percent. In the first quarter, the national grocery store chain reported identical sales growth of 3.2 percent at company-owned stores. Kroger also reaffirmed earnings guidance to be in the range of $4.60–$4.80 per share.
Noting that consumers are spending more cautiously in the current “uncertain economic environment” and cutting back on discretionary spending, Sargent said Kroger customers are becoming more value-conscious and cooking more meals at home.
To support shoppers at all income levels, he said, Kroger is offering higher-quality products at lower prices and simplifying its promotions to make it easier for customers to save on in-store products and gasoline through its fuel rewards program.
“Kroger is well-positioned to support our customers’ changing shopping habits,” Sargent said, adding that the grocery store chain has lowered prices on more than 2,000 items in 2025.
In addition, Sargent said Kroger is monitoring the changing environment around tariffs. So far, tariffs haven’t had a significant impact on Kroger’s operations, and he does “not expect them to going forward,” he said.
“Our business model is flexible to respond to those kinds of shifts, and as a domestic food retailer, we expect a smaller business impact than some of our competitors. Where we do see potential tariff impact, we are proactively looking for ways to avoid raising prices for our customers, and we consider price changes as a last resort,” he said.
Along with managing tariffs and the current economic environment, Sargent has also been tasked with stabilizing the company’s operations after the sudden resignation of longtime Kroger Chairman and CEO Rodney McMullen in early March.
On Feb. 21, the Kroger board of directors was informed of “certain personal conduct” by McMullen and immediately hired outside independent counsel to investigate.
Following the internal investigation, McMullen resigned on March 3 due to personal conduct that Kroger stated was inconsistent with the company’s business ethics policy. At that time, the board appointed Sargent as chairman and interim CEO. McMullen had served as CEO of the nation’s third-largest general retailer for nearly a decade.
Following McMullen’s resignation, the Kroger board formed a search committee and hired a nationally recognized firm to find the company’s next CEO. Sargent, the former CEO of Staples Inc. and Kroger’s previous lead director, told analysts that the search is underway and that he will continue in the interim role until a new CEO is chosen. He is 69.
