FILE PHOTO: Kroger logo is seen in this illustration taken, February 11, 2025. REUTERS/Dado Ruvic/Illustration/File Photo

By Anuja Bharat Mistry and Sanskriti Shekhar

Kroger on Thursday raised its annual core sales forecast for the second straight time, banking on resilient demand for fresh produce and other essentials from cautious Americans cutting back on eating out.

The company has focused on promotions and maintaining low prices to meet rising customer demand for value. On Thursday, Kroger said it had lowered prices on more than 3,500 products this year, up from the more than 2,000 it disclosed in June.

"Low- and middle-income households are really looking for deals ... And they're buying more private label products. They're also eating out less," interim CEO Ron Sargent said on a post-earnings call.

Peers Walmart and Dollar General have raised their annual sales forecasts, indicating wealthier U.S. shoppers were also flocking to their stores worried about the effects of tariffs on prices.

"Food-at-home sits favorably in times of consumer stress and in terms of tariff exposure, and Kroger has opened FY'25 with consecutive guidance increases," said Bill Kirk, analyst with Roth Capital Partners.

Kroger, which is relatively less exposed to U.S. tariffs, now expects full-year comparable sales to increase in the range of 2.7% to 3.4%, versus its prior forecast of a 2.25% to 3.25% rise.

It also raised the lower-end of its annual per share profit forecast to $4.70 from $4.60, while retaining the upper-end at $4.80.

Kroger also said on Thursday it expects to increase store openings by 30% in 2026, after laying out plans in June to cut costs by closing underperforming stores.

Identical sales, without fuel, increased 3.4% in the second quarter, compared with analysts' estimates of 2.84%, according to data compiled by LSEG.

Kroger, which is in the middle of a legal battle with Albertsons after their $25 billion deal collapsed, posted a better-than-expected adjusted profit of $1.04 per share.

Quarterly gross margin was 22.5% of sales, compared to 22.1% a year earlier, partly due to lower supply chain costs.

Shares of the company were up about 2% in midday trading.

(Reporting by Anuja Bharat Mistry and Sanskriti Shekhar in Bengaluru; Editing by Sriraj Kalluvila)