MW Consumer spending habits are changing in this key way, Kroger says

By James Rogers

Kroger says tariff-related price changes would be a last resort for the supermarket giant

With consumers still facing uncertainty over tariffs and the overall economic environment, many are choosing to dine at home rather than eat out, according to supermarket giant Kroger Co.

That helped Kroger beat profit and sales for its fiscal first quarter and sent its stock toward its biggest gain in more than three years.

Speaking during a conference call to discuss Kroger's $(KR)$ first-quarter results Friday, the company's chief executive, Ron Sargent, said that customers are continuing to spend cautiously as they look to stretch their food budgets.

"Many customers want more value," Sargent said, and as a result, they are buying more promotional products and more products from the company's Our Brands private label. "They're also eating more meals at home," he said.

Kroger is not the only company to identify this trend. Earlier this month food giant Campbell's Co. $(CPB)$ noted a boost in its meals-at-home business. In contrast, restaurant chains such as McDonald's Corp. $(MCD)$ and Chipotle Mexican Grill Inc. $(CMG)$ have been wrestling with falling foot traffic.

"At-home food consumption seems to be benefiting from channel shift away from restaurants and is insulated from much of the potential tariff inflation," Roth Capital Partners analyst Bill Kirk wrote in a note released Friday. He noted that at-home dining sits favorably in times of consumer stress but said he still sees increased competition as a threat to Kroger.

Kroger's stock shot up 9.7% in afternoon trading, enough to pace the S&P 500 index's SPX gainers. It was headed for its biggest one-day gain since it rallied 11.6% on March 3, 2022.

The stock has rallied 17.2% since Dec. 11, the day Albertsons Cos. $(ACI)$ called off a deal to buy Kroger. Over the same period, the S&P 500 has slipped 1.8%.

During the quarterly earnings conference call, Sargent said that Kroger is watching the changing environment around tariffs. "Our business model is flexible to respond to those kinds of shifts," he said, according to a FactSet transcript. "And as a domestic food retailer, we expect a smaller business impact than some of our competitors where we do see potential tariff impact."

The company, Sargent added, is proactively looking for ways to avoid raising prices for its customers and considers price changes to be a last resort. "Tariffs have not had a material impact on our business so far, and given what we know today, we do not expect them to going forward," he said.

Kroger lowered prices on an additional 2,000 items during the quarter, according to the CEO.

On an adjusted basis, Kroger earned $1.49 a share during the first quarter, above the $1.45 consensus estimate of analysts surveyed by FactSet.

The company's revenue was $45.12 billion, down from $45.27 billion in the prior year's quarter. Analysts surveyed by FactSet were expecting sales of $45.16 billion. Same-store sales rose 2.5%, above the 2.4% FactSet consensus estimate.

-James Rogers

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June 20, 2025 13:37 ET (17:37 GMT)

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