Analysts adjust Kroger stock price targets after mixed earnings report | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Ron Sargent says the retail business really isn’t that complicated.

“Retail always starts with the customer,” the interim CEO of Kroger (KR) told analysts during the company’s first-quarter-earnings call. “It’s pretty simple. Our strategies are focused on our resources, which should be dedicated to how we can make the biggest impact on serving our customers.”

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Sargent, who had been chief executive at Staples, took over at the U.S.’s largest supermarket chain in March after Rodney McMullen resigned following an internal investigation that found his personal conduct was “inconsistent with the company’s Policy on Business Ethics.”

“Many customers want more value, and as a result they’re buying more promotional products and more of our brands’ products,” Sargent said. “They’re also eating more meals at home.”

Private-label brands are indeed becoming more popular as consumers get more price-conscious.

Kroger recently beat Wall Street’s first-quarter-earnings forecast but came up short on revenue. Photo: Daniel Acker/Bloomberg via Getty Images

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Kroger CEO: Company watching tariffs

Nearly 80% of respondents to an Ipsos consumer survey said they were willing to purchase private-label brands, especially if their usual brands were unavailable. And consumers reportedly are cooking at home at the highest levels since early 2020.

Kroger “is well-positioned to support our customers’ changing shopping habits,” Sargent said.

“We offer compelling promotions and fuel rewards, outstanding Our Brands products, and personalized promotions that offer families better savings on the products they use the most. We’re simplifying our promotions to make it easier for customers to save and to see clear value at the shelf.”

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Kroger lowered prices on more than 2,000 additional products this year and “we’re also watching the changing environment around tariffs,” he said.

Back in April, President Donald Trump unveiled his tariff agenda and the policy has evolved since then.

“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,” Sargent said.

“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 added that tariffs have not materially affected Kroger’s business so far, “and given what we know today, we do not expect them to going forward.”

Kroger was recently named by Newsweek as one of “America’s Most Trustworthy Companies.”

The Cincinnati company has also been accused of price-gouging following an investigation by Consumer Reports, the Guardian and the Food & Environment Reporting Network.

Kroger said that “while any error is unacceptable, the characterization of widespread pricing concerns is patently false.”

Analyst: Kroger making progress

For the quarter the company beat Wall Street’s expectations for earnings and same-store sales but came in slightly under revenue projections.

Kroger said it would take a $100 million impairment charge to close 60 stores over the next 18 months. The website says the chain currently operates more than 2,700 stores in 35 states.

The company’s stock is up nearly 20% this year and up 46% since this time in 2024.

Analysts issued research reports following Kroger’s earnings release.

Morgan Stanley raised its price target on KR shares to $76 from $71 and affirmed an equal-weight rating, according to The Fly.

Revenue growth is accelerating as Kroger gains market share and its pharmacy unit grows, the investment firm said. Momentum for both revenue and profit should continue, though the macroeconomic environment and sharper industry competition remain risks, MS said.

Guggenheim boosted its target on Kroger to $78 from $73 and maintained a buy rating.

Kroger is succeeding with efforts to restore food-volume growth and reduce e-commerce losses, though it still has work to do to close the revenue gap with key mass/club competitors, the investment firm said.

Guggenheim’s “longstanding” buy rating is supported by Kroger’s defensive positioning amid macroeconomic uncertainty and $6 billion of share buyback authority during the next 18 months.

And Jefferies analysts raised the price target on Kroger to $83 from $75 and maintained a buy rating on the shares.

Kroger posted “a solid Q1,” the firm’s analysts said, adding that they came away incrementally positive on the outlook given management’s comments about increasing focus on the consumer and efficiency.

Faster store openings, closures of less-efficient stores, review of noncore assets, reassessment of capital allocation strategies, and restructuring of e-commerce, all in the name of lowering prices for consumers, highlight new management’s “desire to compete,” Jefferies said.