Kroger digital sales and improved ecommerce profitability helped the retailer offset a mix of higher fuel sales and transportation costs, as well as egg deflation in its fiscal Q1 2026.

CEO Gregory Foran told analysts on Kroger’s Q1 earnings call that ecommerce and retail media are two businesses “that are increasingly central to how we win and how we grow.” Kroger’s ecommerce business turned profitable in Q1, Foran said. That includes its retail media network, Kroger Decision Marketing.

Chief financial officer David John Kennerley said Kroger achieved ecommerce profitability “ahead of schedule.”

“Most of the growth in grocery today is happening online,” Foran told analysts. “That’s where the customer is moving and that’s where we have to lead.”

Identical sales, not including fuel, increased 1.0% year over year in Kroger’s fiscal Q1 2026, which ended May 23. Those sales include purchases consumers made at locations Kroger operated for the two periods it compares, as well as online.

Meanwhile, total Kroger sales increased about 2.2% year over year in its fiscal Q1. Kroger’s total Q1 sales reached $46.12 billion in 2026, versus about $45.12 billion in 2025.

He noted that Kroger’s omnichannel customers — those who purchase in physical stores and online — spend about 2.5 times more than in-store-only customers.

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 digital sales in Q1 2026

In its fiscal Q1 2026, Kroger digital sales grew 19% year over year. The retailer said its ecommerce sales exclude the effect of fulfillment center exits in areas where Kroger does not operate stores. They also do not include Kroger’s sale of Vitacost or the discontinuation of Ship Marketplace.

Foran said delivery led Kroger’s digital sales growth in Q1. It improved its perfect order rates by 8%, he said. Additionally, Kroger brought in a record number of new households, he said without quantifying the amount.

“What gives me confidence this is sustainable is the work behind it, particularly our shift to more store-based fulfillment, which is improving the economics of the business as we scale,” Foran said. “Our intent is to grow this business faster than the market over time.”

Within delivery, orders that Kroger fulfilled in less than an hour led digital sales growth. They represented about half of growth, according to Kennerley. Kroger’s third-party partnerships with DoorDash and Uber Eats allowed the retailer to leverage its physical stores, he said. That enabled faster delivery and for Kroger to reach new customers, he added. Kennerley said Kroger gained share across every third-party platform on which it operates.

“As part of the continued evolution of our hybrid fulfillment model, we closed three fulfillment centers at the end of the last quarter,” Kennerley said. “In markets where we have a store presence, we retained nearly all of those households and successfully converted them to store-based delivery and pickup.”

How Kroger is using its retail media network

Foran said a strong ecommerce business empowers a retail media network. He said Kroger Precision Marketing is a high-margin business that it built on first-party data.

Kroger Decision Marketing grew 20% year over year in Q1, Kennerley said.

“95% of all transactions are tied to a loyalty card backed by over 20 years of history,” according to Foran. “That means we can measure actual purchase behavior, not just intent. And that’s increasingly valuable to brands and advertisers.”

He said Kroger operates the technology layer closest to the customer. That gives the retailer “a distinct advantage” in engaging with and monetizing those relationships, he added.

“As data and direct customer relationships become the most valuable currency in advertising, those with scale and trusted customer connections will be the long-term winners,” Foran said. “And that gives us real confidence in our ability to lead. Over time, this will become an even more important driver of both growth and margin.”

Kennerley said Kroger deepened relationships with Google’s Display and Video 360 platform. Advertisers using Kroger Precision Marketing can now use its retail signals to reach audiences on YouTube and YouTube TV with SKU-level conversion reporting, he said. That’s a new offering, he noted.

Kroger Precision Marketing is also preparing to launch self-service work with TikTok, Kennerley said.

“Looking ahead, we are expanding our AI-powered capabilities to support real-time optimization, predictive budget allocation and faster audience creation, positioning AI as a key enabler of both performance and scalability,” Kennerley said. “We’re encouraged by the progress we are seeing in media and believe we remain in the early stages of a long-term growth opportunity.”

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.

Do you rank in our databases? 

Submit your data and we’ll see where you fit in our next ranking update.

Sign up

Stay on top of the latest developments in the online retail industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News. Follow us on LinkedIn, X (formerly Twitter), Facebook and YouTube. Be the first to know when Digital Commerce 360 publishes news content.