Citi has opened a short-term downside catalyst watch on Kroger ahead of its second-quarter results on Sept. 11, warning that intensifying price competition from Walmart could pressure the grocer's comparable sales and margins. The bank highlighted Walmart's roughly $3 billion tariff refund, largely invested in food and grocery prices to gain market share, a figure that compares to Kroger's overall EBIT of $5 billion. Analyst Paul Lejuez noted the competitive dynamic seems more pronounced than in the first quarter and may not be short-term, as Walmart hopes vendors will help fund price investments beyond the third quarter. Citi expects roughly in-line results, modeling identical sales up 1% and earnings of $1.05 per share, but anticipates management cutting full-year comp guidance and guiding earnings to $5.00-$5.20. The bank lowered its full-year estimate to $5.05 from $5.22, cut its 2027 forecast, and reduced its price target to $57 from $61, citing a more cautious gross margin view and persistent competition.
Kroger CompanyCiti warns Walmart's price war and tariff refund investments will pressure Kroger's sales and margins.
Walmart Inc.Walmart's aggressive price investments are gaining share at Kroger's expense, benefiting Walmart.
Citigroup Inc.