Story Stocks^®

Kroger shares are trading higher after the company named a new CEO and reaffirmed its FY26 guidance. While grocery chains are not typically viewed as exciting investments, Kroger stands out due to strong capital returns, improving operational focus, and a clearer strategic path following the termination of the Albertsons merger.

• Kroger appointed Greg Foran as CEO, effective immediately; Foran brings 40+ years of experience leading large consumer businesses through transformation and digital adoption.
• Most notably, Foran previously led Walmart U.S. for six years, overseeing a major turnaround and accelerating online ordering, pickup, and retail media initiatives; most recently served as CEO of Air New Zealand, leading an end-to-end digital transformation. He is known as a hands-on manager.
• The overhang from the proposed Albertsons merger was removed after the deal was terminated in Dec 2024 following regulatory and court opposition.
• Even prior to the CEO transition, Kroger has been cutting costs, closing unprofitable stores, reducing corporate administrative headcount, and reviewing non-core assets.
• Procurement is a key focus area, with management targeting savings across cost of goods sold and goods not for resale. Kroger is increasing its use of technology and AI, including plans to roll out agentic shopping capabilities, starting with Instacart's AI-powered Cart Assistant. Kroger has also consolidated regional divisions and closed underperforming stores.
• The company is also accelerating store expansion, breaking ground on 14 new stores in Q4 (Jan) and announcing additional growth for Harris Teeter, including expansion in the Southeast and entry into Jacksonville.
• Kroger recently joined our YIELD rankings, supported by a 12.6% buyback yield and a 2.1% dividend yield, resulting in a total shareholder yield of 14.7%.

Briefing.com Analyst Insight:

Kroger continues to quietly execute on multiple fronts, making it an increasingly attractive investment despite grocery being a low-excitement industry for investors. The appointment of Greg Foran adds credibility to the company's long-term transformation efforts, particularly around digital engagement, cost discipline, and operational efficiency. With the Albertsons merger no longer clouding the outlook, investors can focus on Kroger's strong cash returns, aggressive share repurchases, and improving execution. The recent stock buybacks suggest management sees compelling value at current levels. We look forward to Kroger's Q4 (Jan) earnings on March 5 before the open, where we expect greater clarity on the new CEO's strategic priorities going forward.