Kroger Targets Faster Growth With $5B Value Push, 110 New Stores Through 2029

Key Points

• Kroger plans to invest $5 billion in customer value by 2029, shifting toward lower everyday prices and simpler promotions while targeting roughly 3% comparable sales growth in 2029 and 7%–11% adjusted EPS growth from 2027–2029.
• The retailer expects to open approximately 110 new stores by 2029, potentially generating $7 billion in annualized sales at maturity, while expanding private-label products, fresh food and e-commerce fulfillment.
• Kroger is targeting about $4 billion in annualized structural cost savings and an additional $500 million in e-commerce EBITDA by 2029 through automation, direct sourcing, digital tools, retail media and operational modernization.

Kroger NYSE: KR outlined a new long-term strategy at its 2026 investor update, targeting higher sales and earnings growth through customer value investments, digital expansion, operational modernization and a stepped-up new-store development program.

Chief Executive Officer Greg Foran said the company’s ambition is to become “America’s favorite grocer” by improving store execution, simplifying promotions, expanding e-commerce and reducing costs. He said Kroger had identified shortcomings in recent performance, including inconsistent store experiences, costs rising faster than sales, a value proposition that did not keep pace and capital investments that fell short of expected returns.

“We lost share. We own that,” Foran said. “The good news is that Kroger can address these issues.”

New financial framework

Kroger set financial targets for fiscal 2027 through 2029, including approximately 3% comparable sales growth in 2029, excluding fuel and pharmacy. The company also targeted adjusted EBITDA compound annual growth of 3% to 6% and adjusted net earnings per share growth of 7% to 11% over the 2027-2029 period.

Chief Financial Officer David Kennerley said the company expects performance to build over time, with adjusted EBITDA growth in 2027 below the three-year target range before accelerating in later years. Kroger will begin reporting comparable sales excluding fuel and pharmacy in fiscal 2027, while also including sales from relocations and major store remodels in that metric.

Kennerley said the revised EPS target represents a higher ambition than Kroger’s previous total shareholder return framework because the new target measures earnings growth before dividend payments.

Value investments and store expansion

Kroger plans to invest $5 billion in customer value by 2029, funded through cost savings and a reduction in lower-return, complex promotions. Mary Ellen Adcock, Kroger’s executive vice president and chief merchandising and marketing officer, said the retailer will shift some promotional spending into lower everyday prices, while retaining promotions that customers find valuable.

The company said its promotions had become too complex, with shoppers sometimes facing multiple price points and purchase requirements. Kroger is testing simpler signage, more visible everyday pricing and streamlined offers across stores and online.

According to Adcock, stores that had operated under the value strategy for one year generated top-line sales growth 230 basis points above the enterprise while gaining dollar and unit share. Kroger expects to have value investments in about 250 stores by the end of the current year and add approximately 450 more stores in the following year.

The company also plans to open about 110 new stores by 2029 and expects approximately $7 billion in annualized incremental sales at maturity from those locations. Kennerley said the stores are expected to generate four-wall EBITDA margins of 6% to 7% at maturity. The company plans three store formats, ranging from approximately 50,000 to 99,000 square feet, with more space devoted to fresh food, meal solutions and e-commerce fulfillment.

• Grow penetration of Kroger’s Our Brands products from 35% to 40%.
• Introduce more than 100 meal offerings over the next year.
• Expand Smart Way with 1,000 items over the next three years.
• Target more than 15% annual growth through 2029 for the Private Selection brand.

Digital growth and retail media

Chief eCommerce Officer Nate Faust said Kroger’s $18 billion e-commerce business could ultimately represent 30% of the company’s business. The retailer plans to increase online adoption among existing shoppers, noting that only one in seven Kroger store customers currently shops online with the company.

Kroger aims to make its digital experience “fresh, fast, and personal,” Faust said, supported by its approximately 2,700-store network and loyalty data. The company said 60% of store-based delivery orders were delivered in less than two hours in the second quarter, including 23% delivered in less than one hour. Express delivery grew more than 50% during the quarter.

The company expects to generate an additional $500 million of e-commerce EBITDA by 2029, excluding retail media. Kroger is also expanding its Kroger Precision Marketing business, using loyalty data tied to approximately 95% of sales to help advertisers target and measure campaigns.

Faust said repeat users of Kroger’s AI-powered Shopping Assistant spend 11% more, driven by more frequent trips. The tool is available across all company banners.

Cost savings, technology and capital allocation

Kroger expects approximately $4 billion in annualized structural cost savings by 2029. The savings plan includes direct sourcing, improved procurement, lower indirect spending and a new Kroger Capability Center in Bengaluru, India, which will centralize and automate certain above-store work. Kennerley said the new operating model is expected to affect roughly 3,000 associates who perform above-store roles.

The company plans to increase direct sourcing to more than 10% of purchases from less than 1% currently. Kroger cited an example of importing grapes directly from Peruvian growers, with about 40% of imported grape volume for the November 2026 season secured directly from growers.

Operations Chief Mark Ibbotson said Kroger is deploying digital shelf labels, RFID, robotics and artificial intelligence to improve availability, reduce waste and simplify store work. The company has installed more than 36 million digital shelf labels across 1,100 stores and expects to expand them to more than 2,400 stores by 2029. It also expects to increase its robot fleet from about 900 units to more than 2,100.

Kroger is targeting approximately $500 million in waste-reduction savings by 2029. In bakery RFID pilots, the company said it observed inventory counts nearly 70% faster, waste roughly 50% lower, sales lift of about 200 basis points and category share gains of nearly 50 basis points.

For capital allocation, Kroger expects capital expenditures to reach approximately $5 billion in 2029, primarily supporting new stores, e-commerce, retail media and supply-chain automation. The company said it intends to maintain an investment-grade credit rating and target a combined dividend and share repurchase yield of 5% to 6%, subject to board approval.

Kennerley also said Kroger’s planned acquisition of Giant Eagle remains on track to close in 2027, subject to regulatory approval, and is expected to be accretive to adjusted diluted EPS in the second full year following closing, excluding one-time transaction and integration costs.

About Kroger (NYSE:KR)

The Kroger Co is a U.S. food and grocery retailer headquartered in Cincinnati, Ohio. Founded by Bernard Kroger in 1883, the company operates supermarkets under banners that include Kroger, Ralphs, Fred Meyer, King Soopers, Fry's, Harris Teeter and Smith's, among others.

Kroger's business includes the sale of fresh food, groceries, general merchandise, household products and health and beauty items. Many of its stores also provide pharmacy services and fuel centers. The company offers digital shopping, pickup and delivery services, loyalty programs and a range of private-label products, including Simple Truth, Private Selection and Kroger-branded products.

Kroger primarily serves customers across the United States, with stores concentrated in the Midwest, South, West and parts of the Mid-Atlantic region.

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