The news: Kroger raised its full-year core sales forecast for the second time this year, citing strong demand for lower-cost essentials from budget-conscious shoppers.

• The grocer now expects same-store sales, excluding fuel, to rise 2.7% to 3.4%, up from its prior range of 2.25% to 3.25%.
• The revision came after Kroger topped analysts’ expectations for Q2 comparable sales and adjusted earnings, driven by gains in fresh food, ecommerce, and pharmacy.

The numbers:

• Revenues were $33.94 billion, up from $33.91 billion but short of the $34.15 billion analysts expected.
• Adjusted earnings per share came to $1.04, up 11.8% YoY, and ahead of the $1.00 analysts expected.
• Same-store sales, excluding fuel, rose 3.4%, a big jump from 1.2% last year, and ahead of the 2.8% gain expected. That’s the retailer’s sixth consecutive quarter of identical sales without fuel improvement.

Our take: Since abandoning its planned merger with Albertsons, Kroger has sharpened its focus on profitability.It has shuttered underperforming stores, cut about 1,000 corporate jobs, and boosted efficiency in its online business by increasingly fulfilling orders from stores to reduce its last-mile costs. Online sales rose 16% in the quarter, and delivery orders outpaced pickup transactions for the first time.

At the same time, Kroger has doubled down on value to appeal to shoppers who are increasingly stressed about the cost of groceries and other everyday items.

• In July, it ran a “Boost Bonus Days” event to drive membership sign-ups, offering grocery discounts, $10 off delivery orders of $75 or more, and 50% off membership fees for new and renewing customers.
• It also simplified promotions and reintroduced paper versions of its weekly digital deals after getting feedback from shoppers with limited online access.
• The grocer cut prices on about 3,500 items and expanded its private-label lineup, which grew faster than national brands.

These efforts improved Kroger’s value perception among consumers across nearly all divisions and drove sequential share gains, CEO Ron Sargent said on the earnings call.

That playbook mirrors moves by Publix and Sprouts to grab market share—and is critical to fend off fast-growing value-oriented rivals like Aldi, Trader Joe’s, and Lidl, which have leaned into their broad, differentiated private-label portfolios to stand out from traditional grocers.