Kroger Lowers Annual Sales Forecast Amid Cautious Consumer Spending

Kroger Co. has lowered its full-year sales forecast, signaling that persistent inflation and economic uncertainty are causing consumers to pull back on spending, even for essentials. The grocery giant's shares fell about 3% in premarket trading following the announcement, which was accompanied by second-quarter sales results that missed analyst expectations.

Revised Forecast and Q2 Performance

The company now expects full-year identical sales, excluding fuel, to increase in the range of 0.2% to 0.8%. This marks a significant reduction from its prior forecast of a 1% to 2% rise. The updated guidance reflects a slowdown in consumer activity.

This revision follows a weaker-than-expected second quarter, where identical sales grew just 0.2%. According to data compiled by LSEG, this figure fell short of analyst estimates of 0.9% growth and represents a sharp deceleration from the 3.4% growth reported in the same period a year ago.

Ad

Consumer Caution and Policy Headwinds

Kroger's downgrade underscores a broader trend of cautious consumer spending, as middle- and lower-income households increasingly prioritize value purchases in the face of macroeconomic pressures. The source material noted that U.S. consumer sentiment weakened in August and retail sales unexpectedly declined in July.

Beyond general economic conditions, Kroger also attributed part of the revision to a specific policy change. The company said its updated sales forecast includes a headwind of roughly 140 basis points from the Inflation Reduction Act, which lowered prescription drug prices for Medicare beneficiaries and directly impacted revenue at its pharmacies.