Kroger's identical sales guide carries a 130 basis point drag disclosed only in a footnote
Kroger will publish second-quarter results and host an investor call at 8:00 a.m. ET on Friday, Sept. 11, before the market opens, the company said in a scheduling release. The quarter ended Aug. 15, 2026. Nothing about it has been reported yet, which makes this a good moment to look closely at the guidance the results will be measured against, because that guidance is built almost entirely out of non-GAAP measures.
The outlook table published with Kroger's first-quarter release on June 18 sets six figures for fiscal 2026: identical sales without fuel of 1.0% to 2.0%, FIFO operating profit of $5.0 billion to $5.2 billion, EPS of $5.10 to $5.30, free cash flow of $2.7 billion to $2.9 billion, capital expenditure of $3.8 billion to $4.0 billion, and a tax rate of 23%.
Those row labels are not the whole story. The column they sit under is headed "Adjusted Metric" with an asterisk, and the asterisk resolves to a footnote that begins "Without adjusted items, if applicable" before continuing: "Kroger is unable to provide a full reconciliation of the GAAP and non-GAAP measures used in 2026 guidance without unreasonable effort because it is not possible to predict certain of our adjustment items with a reasonable degree of certainty. This information is dependent upon future events and may be outside of our control and its unavailability could have a significant impact on 2026 GAAP financial results."
That last clause is the operative one. Kroger is telling readers not merely that it will not reconcile the outlook, but that the unreconciled items could have a significant impact on the GAAP result. The profit and per-share ranges above are therefore not forecasts of what will appear on the income statement.
A second footnote, attached to the identical sales line, does something different and arguably more useful: it discloses that the 1.0% to 2.0% range "includes approximately 130 basis points unfavorable impact from the Inflation Reduction Act." The drag runs through pharmacy, where the law's drug pricing provisions reduce the dollars recorded on the same volume of scripts.
The arithmetic that follows is straightforward and is not presented in the table. Adding that 130 basis points back implies underlying identical sales growth of roughly 2.3% to 3.3%, more than double the headline range at the low end. Anyone comparing Kroger's guided top line to a competitor without the same pharmacy exposure is comparing two different things.
The starting point is not comfortable. First-quarter identical sales without fuel rose 1.0%, exactly the bottom of the full-year band, on total sales of $46.1 billion. Holding the range requires acceleration over the balance of the year, and Friday's print is the first real test of whether it has arrived.
The first-quarter reconciliation tables show how far the adjusted figures travel from the reported ones. GAAP operating profit was $1,407 million. Kroger first adds back a $52 million LIFO charge to reach FIFO operating profit of $1,459 million, itself a non-GAAP step, then adds $25 million of merger-related litigation costs and $62 million of transformation costs, less $2 million of other items, to arrive at adjusted FIFO operating profit of $1,544 million.
That is $137 million, or 9.7%, above the GAAP operating profit line. On a per-share basis the distance is narrower: GAAP EPS of $1.46 becomes adjusted EPS of $1.58 after adding $0.08 for transformation costs, $0.03 for merger-related litigation and $0.01 for a loss on investments, a gap of $0.12 or 8.2%.
The scale of what can sit in the adjustment column is worth registering. Kroger's rolling four-quarter disclosures in the same release include a fulfillment network impairment of $2,497 million and opioid settlement adjustments of negative $28 million. An item of the first magnitude does not appear in adjusted FIFO operating profit or adjusted EPS at all, while flowing straight through the GAAP statements.
Those are the ranges Kroger still has on the table going into Friday, which raises the stakes: a second consecutive quarter at the bottom of the identical sales band would leave the back half carrying the entire range. Chief executive Greg Foran, addressing his arrival at the company in that release, said, "I joined Kroger because I believe it represents the best opportunity in retail."
The external backdrop has not simplified matters. Fuel is a meaningful part of Kroger's revenue and margin mix, and oil has been rising: Investrade reported Brent crude advancing $0.92 to $97.92 a barrel and WTI up $1.55 to $93.03 on Tuesday, the last completed session, following attacks on Saudi facilities. Higher pump prices lift fuel revenue but typically compress the cents-per-gallon margin, and the guided identical sales figure excludes fuel entirely.
Rates and policy add a further layer. Investrade put the 10-year Treasury yield at 4.796% and the two-year at 4.394% at Tuesday's close, with the S&P 500 finishing down 0.58% at 7,673 and the Russell 2000 down 0.52% at 2,960, ahead of a Federal Reserve meeting on Sept. 15 and 16.
For Friday, three things are worth isolating. Whether identical sales without fuel moved off 1.0%, and how much of any movement is pharmacy rather than grocery. Whether the adjusted FIFO operating profit and adjusted EPS ranges are reaffirmed, narrowed or moved. And, because the outlook table will not tell you, what the GAAP operating profit and GAAP EPS lines actually did, and how large the bridge between them and the adjusted figures has become.
