Kroger (KR) official guidance

We expect cost-saving initiatives to build through the second half, along with pharmacy margin contribution.

Further improvement in e-commerce profitability and continued growth in our media business.

Despite a lower sales outlook, we are maintaining our full-year guidance for adjusted FIFO operating profit of $5 billion to $5.2 billion and adjusted net earnings per diluted share of $5.10 to $5.30.

Through the back half of the year, we expect consistent year-over-year earnings growth between the third and fourth quarters.

We continue to expect our FIFO gross margin rate to be positive on a full year basis as cost savings initiatives ramp throughout the balance of the year.

The important thing for us is we expect gross margin to be positive through the second half of the year. We have assumed that we will get some incremental headwinds from diesel and freight costs through the balance of the year, but that is embedded in the outlook of positive FIFO gross through the balance of year and on a full year basis.

Despite a lower sales outlook, we are maintaining our full-year guidance for adjusted FIFO operating profit of $5 billion to $5.2 billion and adjusted net earnings per diluted share of $5.10 to $5.30.

We are lowering our full-year identical sales without fuel guidance to a new range of 0.2%-0.8% from our initial range of 1%-2%.

In the opening weeks of the third quarter, we continue to see lingering impacts from Cyclospora. Trends are improving, but we have taken a cautious view of how long the impact may last, and our outlook assumes some headwinds to sales without fuel in the quarter.

We expect additional sales headwinds in the fourth quarter.

| **Cap Ex** | **$3.8 - $4.0 billion** | **$3.8 - $4.0 billion** |

| **Tax Rate\*\*\*** | **23%** | **23%** |

| **Free Cash Flow** | **$2.7 - $2.9 billion** | **$2.7 - $2.9 billion** |

Through the balance of this year, we expect the savings that we'll get out of the initiatives that are broad-based, as Greg said, we expect them to ramp over the course of this year, and they will endure over a multi-year period.

We expect profitability to accelerate through the remainder of this year and continue improving beyond 2026 as we scale store-based fulfillment, expand media, and reduce our cost to serve.

We expect adjusted net earnings per diluted share to be in line with last year in the second quarter, with growth accelerating in the back half as our cost-saving initiatives continue to ramp.

The first is, we are expecting FIFO gross margins to be better.

We are expecting our OG&A investments to be a little bit higher as we go through the year.

For the second quarter, we expect identical sales without fuel to be roughly in line with the first quarter.

We expect capital expenditures of $3.8 billion-$4 billion, with increased investments in new store growth.