Citi flags Kroger downside amid Walmart $3B price war
Citi has placed Kroger Co (NYSE: KR) under a short‑term downside catalyst watch ahead of its second‑quarter earnings scheduled for September 11, citing escalating price competition from Walmart. Citi points to Walmart’s approximately $3 billion tariff refund, which the retailer is channeling into lower food and grocery prices to capture additional market share, and compares this amount with Kroger’s total EBIT of about $5 billion.
Analyst Paul Lejuez noted that the competitive dynamic appears more pronounced than in the first‑quarter management commentary and may extend beyond the short term, with Walmart expecting vendors to continue supporting price reductions beyond the third quarter.
Citi’s model assumes Kroger’s Q2 comparable sales will rise 1% year‑over‑year, delivering earnings of $1.05 per share. For the full year, Citi projects earnings in the range of $5.00 to $5.20 and has reduced its own full‑year earnings estimate to $5.05 from $5.22, reflecting a more cautious gross‑margin outlook. The firm also lowered its price target on Kroger to $57 from $61.
Foot‑traffic data from Citi’s traffic tracker shows Kroger’s store visits decelerated to 0.4% growth in the quarter, down from 1.7% in the prior period, indicating the impact of Walmart’s pricing actions.
Citi expects Kroger’s management to adopt a more conservative stance for the second half of the year and to cut its full‑year comparable sales guidance.