Kroger’s E-Commerce Turns a Profit for the First Time as Digital Sales Jump 19% and Retail Media Grows 20%, but Store Comps Lag

Key Takeaways

• E‑commerce profit achieved first time, sales +19% YoY
• Half of e‑commerce growth from sub‑hour deliveries
• Retail media revenue up over 20% in quarter
• Identical sales excluding fuel fell to 1% growth
• CEO says 60% of stores need performance upgrades

Pulse Analysis

Kroger’s first‑time e‑commerce profit marks a turning point for a retailer that has poured billions into online fulfillment. The 19% jump in digital sales was anchored by a surge in home‑delivery orders and a rapid‑fulfillment model that delivers within an hour, now accounting for roughly half of online growth. This shift mirrors broader consumer expectations for speed and convenience, positioning Kroger to capture market share from pure‑play players like Amazon Fresh while leveraging its extensive brick‑and‑mortar network for last‑mile efficiency.

The company’s retail media arm, which sells advertising space on its digital platforms, expanded by more than 20% in the quarter. This growth reflects advertisers’ appetite for data‑rich, grocery‑focused audiences and provides Kroger with a high‑margin revenue stream that can offset thin grocery margins. As brands seek to influence purchase decisions at the point of sale, Kroger’s media capabilities could become a strategic differentiator, especially against rivals such as Walmart Connect and Instacart’s advertising offerings.

Despite digital gains, comparable‑sales performance at physical stores lagged, slipping to 1% growth after a 3.2% rise a year earlier. The decline stems partly from reduced federal prescription‑drug reimbursements and a consumer shift toward generic medications, which compress margins. CEO Greg Foran, a former Walmart executive, flagged that roughly 60% of Kroger’s locations require operational upgrades, underscoring the need for store‑level productivity improvements. The firm’s reaffirmed guidance of 1%‑2% comparable‑sales growth suggests confidence in its turnaround plan, but sustained success will hinge on marrying online profitability with revitalized in‑store experiences.