The Kroger Co. (KR): History, Ownership, Mission, How It Works & Makes Money

How does a grocery giant like The Kroger Co. (KR), which posted an annual net income of approximately $2.67 billion for fiscal year 2025, manage to thrive in a razor-thin-margin industry? Despite a slight dip in overall annual revenue to about $147.12 billion, the company's core business is accelerating, with identical sales (excluding fuel) rising 3.4% in the second quarter and eCommerce sales surging 16%, demonstrating a clear path to profitability that goes far beyond just selling groceries. This deep dive will unpack the century-old history, the mission to achieve Zero Hunger | Zero Waste, and the sophisticated business model-including the nearly $37 billion 'Our Brands' private label portfolio-that keeps it relevant against competitors like Walmart and Amazon.

The Kroger Co. (KR) History

The Kroger Co.'s Founding Timeline

The Kroger Co.'s origin story is a classic American tale of a single entrepreneur betting his life savings on a simple, better idea. Bernard Kroger, or Barney, started with a clear motto: Be particular. Never sell anything you would not want yourself. That simple focus on quality and value is still what drives the company today.

Year established

1883

Original location

Cincinnati, Ohio, at 66 Pearl Street in downtown Cincinnati.

Founding team members

Bernard Kroger (Barney Kroger). He initially partnered with B.A. Branagan under the Great Western Tea Company banner, but Kroger quickly bought out his interest to gain full control.

Initial capital/funding

Bernard Kroger invested his entire life savings, an amount of just $372, to open his first store.

The Kroger Co.'s Evolution Milestones

Kroger's history isn't just about opening more stores; it's a history of retail innovation. The company constantly reshaped the grocery experience, moving from clerk-service to self-service and integrating manufacturing to control costs and quality. That's a defintely smart way to build a supply chain.

The Kroger Co.'s Transformative Moments

The company's trajectory was defined by a few key, high-stakes decisions that moved it beyond a regional chain into a national powerhouse. The focus was always on vertical integration and strategic mergers.

The initial move into manufacturing-baking its own bread and processing its own meat-was a game-changer. It allowed the company to control the entire process, from farm to shelf, which directly translated to lower prices and better quality for customers. This early vertical integration is why Kroger's private-label brands are so powerful today.

In the late 20th century, a wave of strategic acquisitions truly transformed the company's footprint and financial scale. The 1999 merger with Fred Meyer, Inc. was the biggest, but the 2014 acquisition of Harris Teeter also significantly enhanced its presence in the Mid-Atlantic states. These moves weren't just about size; they were about gaining strong regional banners and leveraging synergies (cost savings from combining operations).

The latest transformative moment is the aggressive shift to digital. The 2018 partnership with Ocado Group plc is a massive investment in automated fulfillment centers, what we call 'sheds,' to handle the explosion of online grocery demand. This digital push is paying off, with the company projecting fiscal year 2025 Adjusted FIFO Operating Profit to be between $4.7 billion and $4.9 billion, showing the core business is healthy even with major capital expenditures planned at $3.6 billion to $3.8 billion.

• Pioneering Private Label: Started in 1901 by baking its own bread, establishing a model of self-supply to ensure freshness and cut costs.
• Fending Off a Takeover: Preserved its independence in 1988 by successfully fighting a leveraged buyout bid from Kohlberg Kravis Roberts & Co.
• The Albertsons Proposal: The proposed merger with Albertsons Companies, Inc. in 2022, if approved, would reshape the entire U.S. grocery landscape, creating a true national competitor to Walmart and Amazon.
• Digital Acceleration: The massive investment in the Ocado-powered fulfillment network is the company's bet on the future of grocery, driving the strong Q2 2025 eCommerce sales growth.

For a deeper dive into who is investing in Kroger and their motivations, check out: Exploring The Kroger Co. (KR) Investor Profile: Who's Buying and Why?

The Kroger Co. (KR) Ownership Structure

The Kroger Co. (KR) is a publicly traded company on the New York Stock Exchange (NYSE), meaning its ownership is highly dispersed among a vast number of institutional and individual investors, not concentrated in a single family or private entity.

This structure means the company is primarily governed by its Board of Directors, which is influenced by the interests of its largest institutional shareholders-firms like BlackRock and Vanguard-who collectively control the majority of the stock.

The Kroger Co.'s Current Status

As of November 2025, The Kroger Co. remains a key player in the US grocery sector, trading under the ticker KR on the NYSE. The company's market capitalization is approximately $44.65 billion, reflecting its scale as one of the largest food and drug retailers in the country.

The company's strategic direction is currently focused on leveraging its 'Restock Kroger' plan, plus integrating its digital capabilities, which is defintely a core driver for its fiscal year (FY) 2025 performance. For example, the company is guiding for adjusted FIFO operating profit to be between $4.8 billion and $4.9 billion for FY 2025, showing a clear focus on margin improvement. If you want to dive deeper into the numbers, you should check out Breaking Down The Kroger Co. (KR) Financial Health: Key Insights for Investors.

The Kroger Co.'s Ownership Breakdown

The majority of The Kroger Co.'s shares are held by institutional investors, a common trait for a large-cap company. This institutional dominance means that major asset managers, rather than individual retail investors, hold the most sway in shareholder votes and governance matters.

Here's the quick math on who owns the company, based on the most recent filings:

The Kroger Co.'s Leadership

The company's strategy is steered by a seasoned executive team. The leadership structure as of November 2025 is focused on operational excellence, supply chain efficiency, and growth in the 'Our Brands' private-label division.

The key leaders driving this strategy are:

• Ron Sargent: Chairman and Chief Executive Officer (CEO). He is the central figure guiding the company's overall strategy and performance, having commented on the strong Q2 2025 results.
• David John Kennerley: Executive Vice President and Chief Financial Officer (CFO). He manages the financial strategy, including the capital expenditure plans set between $3.6 billion and $3.8 billion for FY 2025.
• Ed Oldham: Head of Sourcing. Appointed in August 2025, his role is crucial for cost management and supply chain stability, bringing over 25 years of experience.
• Ann Reed: Group Vice President of Our Brands. Promoted in August 2025, she oversees the company's high-margin private-label products, a major growth engine.

The leadership team is clearly focused on execution, which is what matters most to investors right now.

The Kroger Co. (KR) Mission and Values

Kroger's purpose goes far beyond selling groceries; it's centered on a powerful, human-focused mission to uplift communities and eliminate systemic issues like food waste and hunger. This core commitment, backed by clear values, is the cultural DNA that drives every operational decision, from pricing to supply chain management. Exploring The Kroger Co. (KR) Investor Profile: Who's Buying and Why? will show you how this translates into investor confidence.

Honestly, a company's non-financial goals often map directly to its long-term financial stability. It's a simple truth: happy communities and associates mean more loyal customers.

Given Company's Core Purpose

The company's overarching purpose is simple but profound: To Feed the Human Spirit™. This isn't just a marketing phrase; it's the lens through which Kroger views its role for its more than 400,000 associates and the over 11 million customers served daily.

The most concrete expression of this purpose is the Zero Hunger | Zero Waste initiative, which sets a high bar for corporate responsibility. This program aims to end hunger in the communities Kroger serves and eliminate waste across the entire company by 2025.

Official mission statement

Kroger's formal mission is two-fold, encompassing both market leadership and social impact. The first part is about operational excellence and customer loyalty, but the second part shows where the company is defintely putting its money and effort:

• To be a leader in the distribution and merchandising of food, pharmacy, health and personal care items, seasonal merchandise, and related products and services.
• To earn the long-term loyalty of our customers and associates.
• To end hunger in our communities and eliminate waste across our company by the end of 2025.

Here's the quick math on that social mission: Kroger is targeting a cumulative total of 3.9 billion meals donated since 2017 by the end of 2025. This is a massive logistical and charitable undertaking.

Vision statement

The vision is focused on the day-to-day experience of the customer and the broader impact on the nation. It's about being an active part of American life, not just a transaction point.

• To serve America through food inspiration and uplift.

This vision is supported by core values that govern internal conduct and external relationships. For instance, the company's commitment to Diversity and Inclusion extends to its supply chain, with an annual spend target of $3.1 billion with certified diverse-owned businesses for 2025.

Given Company slogan/tagline

Kroger's most recognizable tagline captures its commitment to quality and accessibility, but it's the underlying values-Honesty, Integrity, and Safety-that make the promise real.

• Slogan: Fresh for Everyone™

The core values, which include Honesty, Integrity, Respect for Others, Diversity, Safety, and Inclusion, are the framework. They guide everything from how associates are treated-with over $100 million spent on employee training and development in 2024-to how food safety is managed.

The Kroger Co. (KR) How It Works

Kroger operates as a massive, integrated food and drug retailer, using its immense scale and proprietary data engine to offer a personalized, omnichannel shopping experience that is both convenient and affordable for the everyday American consumer.

The company's core value proposition is simple: a one-stop shop for groceries, health, wellness, and fuel, backed by a powerful private-label portfolio that drives customer loyalty and boosts profit margins. This model helped deliver an Adjusted FIFO Operating Profit of $1.091 billion in the second quarter of 2025.

Given Company's Product/Service Portfolio

Kroger's product mix is intentionally diversified, covering everything from fresh produce to financial services, ensuring they capture a high share of a household's total spending. The real margin power, though, is in their 'Our Brands' portfolio.

Given Company's Operational Framework

The operational framework is built on a 'Restock Kroger' strategy, now focused on simplifying the organization and accelerating profitable digital growth. Honestly, it's a massive logistics machine disguised as a grocery store.

• Centralized Sourcing & Manufacturing: Kroger procures raw materials and finished goods globally, but a key differentiator is its in-house manufacturing, which produces roughly 30% of its private-label volume. This vertical integration helps control costs and product quality.
• Data-Driven Personalization: The Kroger Plus loyalty program captures massive amounts of customer data. This data is fed into an artificial intelligence (AI) engine to optimize competitive pricing, manage inventory shrink, and deliver personalized promotions that drive customer retention.
• Hybrid Fulfillment Model: The company is pivoting its eCommerce strategy, expanding relationships with third-party delivery providers like Instacart and DoorDash. This is a pragmatic shift, as evidenced by the November 2025 decision to close some automated fulfillment facilities, resulting in a Q3 2025 impairment charge of approximately $2.6 billion, to focus on a more capital-light approach.
• Store Optimization: Kroger is actively managing its store footprint, planning to close approximately 60 underperforming stores while accelerating new store projects, with 30 major projects on track for 2025.

Here's the quick math: a 3.4% increase in identical sales without fuel in Q2 2025, plus a 16% jump in eCommerce, shows the digital and core business engines are defintely working in tandem.

Given Company's Strategic Advantages

Kroger's market success isn't just about having a lot of stores; it's about leveraging its scale and data to create a moat (a sustainable competitive advantage) against giants like Walmart and Amazon.

• Scale and Bargaining Power: With annual revenue around $147 billion, Kroger is the largest supermarket operator in the US, giving it significant leverage over suppliers, which translates directly into lower merchandise costs.
• Private-Label Strength: The 'Our Brands' portfolio, with over 14,000 items, outpaces national brands in sales growth. This portfolio offers higher margins than national brands, effectively subsidizing the price investments made on other items and supporting the company's raised Adjusted FIFO Net Operating Profit guidance of $4.8 billion to $4.9 billion for the full year 2025.
• The Loyalty/Data Engine: The sheer volume of customer data from the Kroger Plus program is a powerful asset. It allows for hyper-targeted marketing and pricing strategies that keep customers coming back-a critical advantage in a low-margin business.
• The 'Seamless' Omnichannel Experience: By integrating its physical stores (for pickup) with third-party delivery, Kroger offers a convenient, low-cost path to the customer's door. This hybrid approach is a smart way to compete in the expensive last-mile delivery race. You can read more about the company's core principles here: Mission Statement, Vision, & Core Values of The Kroger Co. (KR).

The Kroger Co. (KR) How It Makes Money

The Kroger Co. primarily makes money through the high-volume sale of groceries and general merchandise across its nearly 2,800 retail food stores, but its profitability is increasingly driven by high-margin segments like its Our Brands private labels, Pharmacy, and its Alternative Profit Businesses (like Kroger Precision Marketing and Kroger Personal Finance). This is a low-margin, high-turnover business, so the focus is on operational efficiency and driving higher-margin sales to lift the overall bottom line.

The Kroger Co.'s Revenue Breakdown

While the company reports its core sales as 'Identical Sales without fuel' to smooth out volatile gasoline prices, the revenue mix is a blend of low-margin, high-volume grocery and high-margin services. Total annual revenue for the fiscal year ending February 1, 2025, was approximately $147.12 billion.

Business Economics

The economic engine of a massive grocer like Kroger is built on razor-thin margins and massive scale. The core strategy is to use competitive pricing on staples to drive foot traffic, then maximize the profitability of each basket with higher-margin items.

• Private Label Margin Power: The Our Brands portfolio is a crucial margin enhancer. The company is launching over 900 new private label items in 2025 to capitalize on consumer price sensitivity, as these products generally carry higher gross margins than national brands.
• Strategic Pricing: Kroger is actively slashing prices on over 3,500 products in 2025. This isn't just a discount; it's a strategic price investment to retain value-focused customers and improve grocery volumes, which is a key indicator of business health.
• E-commerce Hybrid Pivot: The company is undergoing a major e-commerce shift as of November 2025, moving away from a capital-intensive automated fulfillment model in some areas. This resulted in a significant $2.6 billion impairment charge in the third fiscal quarter of 2025, but the new hybrid model is expected to improve e-commerce operating profit by approximately $400 million in 2026.
• Alternative Profit Businesses: High-margin revenue streams like Kroger Precision Marketing (media) and Kroger Personal Finance are essential. In fiscal year 2024, these businesses contributed $1.35 billion in operating profit, providing a crucial buffer against the low-margin nature of grocery sales.

You can see how this plays out in the market by Exploring The Kroger Co. (KR) Investor Profile: Who's Buying and Why?

The Kroger Co.'s Financial Performance

The company's performance in fiscal year 2025 shows resilience in core operations despite a challenging macroeconomic environment and the one-time costs of strategic restructuring.

• Sales Momentum: Identical Sales without fuel are projected to grow between 2.7% and 3.4% for the full fiscal year 2025, a raised guidance that signals strong underlying consumer demand, particularly in the pharmacy and fresh produce segments.
• Profit Outlook: The full-year 2025 guidance for Adjusted FIFO Operating Profit is between $4.8 billion and $4.9 billion. This metric, which excludes the Last-In, First-Out (LIFO) charge, is the clearest indicator of day-to-day operational effectiveness.
• Earnings Per Share (EPS): Adjusted Earnings Per Share (EPS) for FY 2025 is guided to be in the range of $4.70 to $4.80, reflecting strong Q2 results where the company reported $1.04 per share, beating analyst estimates.
• Balance Sheet Health: Kroger's net total debt to adjusted EBITDA ratio stood at 1.63 in Q2 2025, which is comfortably below its long-term target range of 2.30 to 2.50. This strong financial position allows for continued investment in the business and shareholder returns.
• Cash Generation: Adjusted Free Cash Flow is expected to be robust, projected between $2.8 billion and $3.0 billion for the full year 2025, providing capital for its planned $3.6 billion to $3.8 billion in capital expenditures.

Here's the quick math on profitability: the Gross Margin in Q2 2025 was 22.5% of sales, up from the prior year, showing that the focus on private label and supply chain efficiency is defintely paying off, even with price investments.

The Kroger Co. (KR) Market Position & Future Outlook

The Kroger Co. is the leading traditional supermarket operator in the U.S. grocery sector, but its future hinges on successfully pivoting its digital strategy and defending its 8.9% market share against aggressive mass-market and warehouse competitors.

Competitive Landscape

The U.S. grocery market is dominated by a few giants, with The Kroger Co. firmly holding the second-largest share, though a significant gap exists between it and the market leader. Honestly, this is a low-margin, high-volume fight where scale and operational efficiency are everything.

Opportunities & Challenges

The company is taking decisive action to improve its eCommerce profitability, which is a major opportunity, but this comes with a huge near-term financial hit. Here's the quick math on what's ahead, balancing growth levers against the real risks.

Industry Position

The Kroger Co. is the clear number two in the highly fragmented U.S. grocery market, right behind Walmart. While Walmart's 21.2% share is massive, Kroger's strength is its deep regional penetration and its position as the largest pure-play supermarket chain, operating over 2,700 stores.

The company is shifting its digital focus from capital-intensive automated fulfillment centers (CFCs) to a more capital-light, store-based fulfillment model, plus expanding its third-party delivery partnerships. This is defintely a necessary move to achieve its goal of approximately $400 million in eCommerce operating profit improvement in 2026. They are also doubling down on their 'Our Brands' private label portfolio, which already boasts over 14,000 items and is a key margin booster.

• Identical Sales without fuel grew 3.4% in Q2 2025, showing in-store resilience.
• Full-year 2025 Adjusted EPS guidance is strong, ranging from $4.70 to $4.80 per diluted share.
• The company is investing heavily, with projected Capital Expenditures for 2025 between $3.6 billion and $3.8 billion, primarily aimed at modernizing its supply chain and digital platforms.

What this estimate hides is the execution risk of this major eCommerce pivot and the ongoing threat from Costco's rapid growth, which is nearly neck-and-neck with Kroger's share. You can dig deeper into who is driving this stock's performance by Exploring The Kroger Co. (KR) Investor Profile: Who's Buying and Why?