MW Supermarket giant Kroger says egg prices jumped 70% - but it'll handle inflation from tariffs better than others

By Steve Gelsi

Company's fiscal 2025 projection falls short of estimates, with Kroger the latest big chain to warn of headwinds

Kroger Co.'s stock rose Thursday after the supermarket giant said it's better suited than others to handle the impact of trade tariffs, since many of its wares come from domestic sources.

It's also the latest big retail chain to issue a conservative outlook in the face of inflation and other expected headwinds such as higher egg prices.

Kroger's stock $(KR)$ rose 2.1% while the broader U.S. equities market was falling on Thurday.

The Cincinnati-based company said consumers are "adjusting their spending habits [and] responding to ongoing macroeconomic factors," while spending from less budget-conscious households has been more resilient.

The bird-flu outbreak caused a 70% increase in the price of eggs during the fourth quarter, it noted.

Despite Kroger's forecast for inflation of 1.5% to 2.5% in 2025 - a projection that does not include the potential impact of tariffs - the company said it sees a path to keep prices low for consumers. The inflation prediction for this year outpaces the 1% rate the company reported for full-year 2024.

"We have less exposure to some of the international tariffs that some of our peers will see," Kroger Interim Chief Financial Officer Todd Foley told Wall Street analysts.

Kroger has a "small single-digit" exposure to China products overall, while its Fresh produce business has about mid-single-digit exposure to Mexico and Canada, Foley said.

It's been working to diversify its supplier base for the Fresh unit and the actual impact on profit is expected to be minimal, he added.

For fiscal 2025, Kroger is projecting earnings of $4.60 to $4.80 a share, below the consensus analyst estimate of $4.82 a share.

The company's profit projection doesn't include a potential boost from its recently announced customer-service pact with pharmacy-benefit manager Express Scripts $(CI)$.

Kroger also said it's moving ahead with its search for a new chief executive and that it's considering internal and external candidates. It is postponing its planned investor day in April while it continues the search, the company said.

"Inflationary pressures are not new to our business, and we're confident in our ability to navigate any inflationary environment," Foley said. "We will remain focused on keeping prices low for our customers."

Also read: Trump's tariffs worry companies. Here's what they're saying about the uncertainty.

The earnings update came just a few days after Kroger named its board chairman, Ronald Sargent, as interim chief executive after the departure of longtime CEO Rodney McMullen, who had led the company for 10 years. The company cited an investigation of McMullen's personal conduct but did not provide any details.

Also read: Kroger CEO Rodney McMullen resigns following probe of personal conduct

For the fourth quarter, Kroger's adjusted earnings of $1.14 a share beat the consensus analyst estimate of $1.11 a share.

"Kroger is operating from a position of strength, delivering fourth-quarter results that came in ahead of expectations due to the strength of our model and the disciplined execution of our teams," the company said.

Fourth-quarter revenue fell to $34.31 billion from $37.06 billion, and came in a little below the analyst estimate of $34.57 billion.

The company has also named David Kennerley its new chief financial officer; he will succeed Foley on April 3. Kennerley previously worked in a variety of senior roles at PepsiCo Inc. $(PEP)$, including as financial chief for Europe since 2020.

Kroger's attempt to buy smaller rival Albertsons Cos. Inc. $(ACI)$ earlier this year for $25 billion ended in December, when Kroger announced a $7.5 billion share-buyback program.

The Federal Trade Commission and several state attorneys general had opposed the deal, arguing it would stifle competition and cause prices to rise for already stretched consumers.

Albertsons retaliated by suing Kroger and seeking billions of dollars, alleging that Kroger failed to put its full effort into getting the deal done. Kroger said the lawsuit was "baseless and without merit."

-Steve Gelsi

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March 06, 2025 13:02 ET (18:02 GMT)

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