Guggenheim Cuts Kroger Price Target to $66, Keeps Buy Rating Amid Sales Pressure

Guggenheim Securities lowered its price target on Kroger Co. (KR) to $66 from $71 while maintaining its Buy rating, citing food volume weakness and Kroger's reduced full-year comparable-sales guidance. The target cut comes even though Kroger beat second-quarter expectations, and it follows a separate report showing Kroger losing billions of dollars in customer spending to Walmart, Amazon and Costco, underscoring the intensity of competition in the grocery sector.

Amid the headwinds, Kroger's private-label portfolio demonstrated resilience: private label penetration rose by roughly 0.5 percentage points in the second quarter and the premium Private Selection line's sales grew more than 14%, as the retailer also added over 600 natural and organic items to its assortment. CEO Greg Foran framed the shift as shoppers focused on value rather than the company chasing sales through inflation.

Kroger's second-quarter earnings release confirmed the private-label strength alongside the broader sales challenges: the company cut its full-year identical-store sales growth guidance (excluding fuel) to 0.2%-0.8%, down from its prior guidance of 1%-2%, while leaving its full-year adjusted EPS guidance of $5.10-$5.30 unchanged.

Together, the lowered price target, the competitive loss of spend to larger rivals, and the trimmed sales outlook point to a cautious near-term picture for Kroger, even as Guggenheim's maintained Buy rating signals continued confidence in the stock's longer-term value. The private-label momentum could offer a partial offset to market-share erosion if Kroger keeps differentiating on value. Investors will be watching upcoming sales trends and any further analyst revisions for signs of how the balance between these pressures plays out.