03:18 PM EDT, 09/08/2025 (MT Newswires) -- Kroger ( KR ) is focusing on fresh offerings, pricing adjustments, and corporate streamlining, while contending with competition from Walmart ( WMT ) , Costco Wholesale ( COST ) , and Amazon ( AMZN ) , along with possible margin pressures from promotions and "tougher" comp comparisons, UBS Securities said in a note Monday.

According to the report, the company shows a relatively balanced risk-reward outlook as it approaches its Q2 earnings on Thursday.

The firm projects Q2 same-store sales excluding-fuel growth of 2.5%, slightly below the 2.8% consensus, with earnings per share of $1.01, above the $1.00 consensus, as gross margins may be supported by the sale of King Soopers Pharmacies, while labor and pricing investments could pressure operating margins.

Kroger ( KR ) is expected to maintain its 2025 guidance of EPS $4.60 to $4.80 due to the uncertain macro-environment, which implies around 5% growth in Q2 to Q4, with same-store sales ex-fuel of 2.25% to 3.25%. Analysts surveyed by FactSet expect $4.78.

UBS also sees adjusted first-in, first-out earnings before interest and taxes of $4.7 billion to $4.9 billion, capital expenditures of $3.6 billion to $3.8 billion, and adjusted free cash flow of $2.8 billion to $3.0 billion for 2025, the report said.

The brokerage points to e-commerce expansion, sales linked to GLP-1 products for weight loss and diabetes, as well as cost reductions tied to recent layoffs as key drivers that "should provide continuity and position the company more favorably for the eventual permanent CEO."

The firm has maintained a neutral rating on the stock, with a price target of $74.

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