Kroger Precision Marketing profit grows 24% as grocery sales stay flat

Kroger said on 11 September that profit at Kroger Precision Marketing grew 24 percent in its second quarter. The grocer’s retail media arm now grows far faster than the shops it sells ads for. Sales at those shops barely moved.

Kroger Precision Marketing profit grew 24 percent in the quarter to 15 August

The figure comes from Kroger’s own results statement. The quarter ended on 15 August. Kroger groups the ad business with its other so-called alternative profit businesses, which earn money outside the shop till.

Kroger did not give a revenue figure for the ad unit. It gave the profit growth rate only. That is worth keeping in mind before treating 24 percent as a measure of how much advertisers spent.

Identical sales rose 0.2 percent while e-commerce grew 20 percent

Total sales reached 34.6 billion dollars. Identical sales without fuel rose 0.2 percent. Adjusted e-commerce sales grew 20 percent.

So the two parts of Kroger that grew are the two that carry ads. Online baskets and the ad network feed each other: every online order is a search result, a sponsored slot and a piece of first-party data.

Kroger cut its full-year sales guidance to between 0.2 and 0.8 percent

The company lowered its full-year forecast for identical sales without fuel. The new range runs from 0.2 percent to 0.8 percent. The earlier range was 1 percent to 2 percent. Kroger kept its full-year earnings per share guidance unchanged.

Chief executive Greg Foran pointed to shop execution and online orders. His team “kept driving value for customers”, he said in the statement. Finance chief David Kennerley tied the earnings growth to cost savings, pharmacy, fuel and better online margins.

Why flat grocery sales still buy more ads

A grocer with flat sales and a growing ad arm is now a pattern rather than an exception. Media owners in the sector are selling attention, not extra volume. Toom started selling ads in Rewe Group shops on the same logic, and Ace Hardware added weather triggers to squeeze more out of a fixed shopper base.

The winners here are brands that already sell through Kroger and can buy against its online growth. The losers are suppliers who budgeted against shop footfall: with identical sales at 0.2 percent, a trade budget aimed at shelves is chasing a queue that is not getting longer, while the ad slots next to it get more expensive.