Kroger digital sales growth once again outpaced that of total and identical sales in its fiscal Q2 2025, which ended Aug. 16.
In Q2, Kroger total sales were nearly flat. They increased 0.08%, to $33.94 billion in Q2 2025 from $33.91 billion the year before. Identical sales, or those from the same stores and online channels that existed the year before, increased 3.4%, the company said, not including fuel sales. That 3.4% growth is more than Kroger had expected, interim CEO Ronald Sargent told investors on the retailer’s Q2 earnings call. It’s also the sixth straight quarter that identical sales (excluding fuel) have increased, he said.
The main growth drivers for Kroger’s Q2 sales were ecommerce, pharmacy and fresh products, Sargent said. Those three categories “continue to outpace center-store sales and reflect the growing demand for healthier options,” he added.
Kroger ranks No. 6 in Digital Commerce 360’s Top 2000 Database. The database ranks North America’s largest online retailers by their annual ecommerce sales. Furthermore, Kroger is No. 1 in the database’s Food & Beverage category, though it competes with Mass Merchants — Walmart and Target — that rank higher in the Top 2000 for online grocery sales.
Kroger’s ecommerce growth comes as online grocery sales in the United States reached a new high in August. During the month, online grocery sales had grown about 14% year over year to reach $11.2 billion, according to a previous Digital Commerce 360 report.
Kroger cost-cutting and lawsuits
Kroger began the process in its previous quarter of closing about 60 stores it deems unprofitable, according to Sargent. And in August, Kroger laid off “nearly 1,000 associates” from its corporate administrative team, he told investors.
“We recently put an issue behind us by reaching a legal settlement with C&S Wholesale Grocers,” Sargent added.
Kroger said in a brief statement announcing the settlement that its terms are confidential. However, both Kroger and competitor Albertsons, who sought to merge before legislators blocked them, had planned to sell stores to C&S Wholesale Grocers. Kroger and Albertsons had expanded in April 2024 the number of stores they had planned to sell to C&S Wholesale.
In December 2024, a federal judge blocked the Kroger-Albertsons merger.
Kroger had put together a nearly $25 billion proposal to buy Albertsons. The deal has spent almost two years winding its way through the regulatory and judicial systems.
In the end, Adrienne Nelson, the judge presiding over the case in the U.S. District Court in Oregon, ruled in the Federal Trade Commission’s favor that a merger between the two companies would harm consumers and workers. The same day, shortly thereafter, a Washington State judge also ruled to block the deal.
Albertsons also filed a lawsuit against Kroger for allegedly not offering an adequate divestiture package and repeatedly ignoring regulators’ concerns, causing the merger with Albertsons to be blocked.
Albertsons ranks No. 18 in the Top 2000 Database and is the second-largest in the Food & Beverage category. C&S Wholesale Grocers does not currently rank in the database.
Kroger digital sales in Q2
In its fiscal Q2 2025, Kroger ecommerce sales increased 16% year over year.
“Ecommerce also continues to be an important and growing part of our business,” Sargent told investors, adding that digital sales remain “a top priority.”
Delivery and on-time performance led Kroger’s digital sales growth in Q2, he said. Chief financial officer David John Kennerley noted that Kroger fulfilled orders both from its stores and centralized fulfillment centers. And Kroger saw sequential improvements in pickup and delivery performance in Q2.
Kroger is also making progress on two ecommerce-centered objectives, according to Sargent:
- Improving the customer experience by using stores to deliver groceries faster.
- Improving profitability while reducing Kroger’s cost to serve.
Sargent called physical stores Kroger’s “most important asset.” When it uses them to full online orders, it keeps inventory closer to customers and lowers last-mile delivery costs, he said.
“As demand for convenience grows, we can leverage our store footprint to reach new customer segments and expand rapid delivery capabilities without significant capital investments,” Sargent said.
Kennerley said Kroger can offer delivery in less than two hours from 97% of its stores. He attributed that, to an extent, to its partnership with Instacart.
“We are seeing a clear trend of customers opting for faster delivery times,” Kennerley said.
The quarter’s digital sales growth “directly fuels” Kroger’s retail media network, he said.
How Kroger is using AI
“While we are growing our physical footprint, we’re also modernizing our business to operate more efficiently and serve customers better,” Sargent said. “Artificial intelligence is one of the key tools to help us get there.”
He referred to accelerating Kroger’s AI efforts as “a natural step” for the retailer, citing its use of machine learning.
“Where we’ve implemented AI in different parts of the organization, we’re seeing results with more competitive pricing, shrink improvements and faster fulfillment, which enables two-hour pickup for customers,” he added.
Kroger factors in tariffs
Kennerley told investors Kroger continues to “keep a close watch on the changing tariff environment.”
As a domestic food retailer, he said, Kroger expects “a smaller impact than some of our competitors.” Nonetheless, he said Kroger is proactively addressing tariff exposure where it exists.
“Our approach remains to raise prices as a last resort to ensure that we keep prices as low as possible for our customers,” Kennerley said. “Tariffs have not had a material impact on our business thus far and as of now, do not expect them to going forward.”
Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s our last update on Kroger digital sales.
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