What CEOs Are Saying - 6.21.25

Insights you missed from yesterday's earnings calls.

Three major American retailers (Kroger, Darden Restaurants, and CarMax) held earnings calls yesterday. Each delivered strong quarterly results while revealing economic signals every CEO should understand. Read on for takeaways from each call, but I would summarize the major signals as:

• Consumer value-seeking across all income levels: Both high- and low-income consumers are choosing private label brands and promotions over premium options.

• Digital ops discipline: Kroger consolidated fragmented e-commerce under one leader while CarMax is leveraging AI for efficiency gains.

• Strategic portfolio pruning: All three companies made difficult decisions: Kroger closing 60 underperforming stores, Darden considering Bahama Breeze alternatives, CarMax mitigating loan risks.

Now onto the calls.

The Kroger Co. (KR) Earnings Call

Headquartered in Cincinnati, Kroger is the largest US grocery operator by revenue, running over 2,700 supermarkets under its flagship banner and others. The company reported a robust Q1 2025 with a 3.2% identical sales increase without fuel, announced plans to close 60 underperforming stores, and unified its e-commerce operations to sharpen its competitive edge.

1. Performance

Pharmacy and e-commerce fuel sales surge.

Kroger achieved 3.2% identical sales growth without fuel, excluding adjustment items, driven by strong pharmacy performance, including GLP-1 prescriptions, and 15% e-commerce growth. Adjusted net earnings per diluted share rose 4% to $1.49. Interim CEO Ron Sargent led with the positives:

“This morning, we announced solid first quarter results with strong sales in pharmacy, e-commerce and fresh.”

2. Strategy for the Future

Bold store network overhaul.

Kroger plans to close 60 underperforming stores over 18 months while accelerating new store openings in high-growth areas, targeting 30 major store projects in 2025. This strategic pruning aims to boost efficiency and market share. Sargent:

“We announced plans to close approximately 60 stores over the next 18 months . . . this will make the company more efficient.”

3. Major Decision

E-commerce unified under one leader.

In a pivotal move, Kroger consolidated its fragmented e-commerce operations under Chief Digital Officer Yael Cosset to drive growth and profitability. Sargent admitted past shortcomings:

“Before we consolidated everything under Yael, there were a lot of different parts of our business that we’re trying to optimize. That doesn’t work unless you have . . . one owner.”

4. Industry Insight

Value-seeking behavior spans all incomes.

High- and low-income shoppers alike are tightening belts, favoring Our Brands and promotions while cutting back on discretionary items like snacks and beverages. Sargent observed:

“We’re seeing both [low and high income] shopping more at Kroger stores and grocery stores compared to eating away . . . The average basket is less.”

5. Leadership Tone and Signals

Hungry for market share.

Leadership was candid about never settling for current market position, signaling relentless ambition to grow. Sargent stated bluntly:

“No good retailer is ever happy with their market share.”

“No good retailer is ever happy with their market share.”
—Kroger Interim CEO Ron Sargent

Darden Restaurants, Inc. (DRI) Earnings Call

Call date: June 20, 2025

Headquartered in Orlando, Darden operates casual dining brands like Olive Garden and LongHorn Steakhouse, alongside fine dining names such as Ruth’s Chris Steak House and The Capital Grille. This quarter, the company announced plans to explore strategic alternatives for its Bahama Breeze chain, including a potential sale, and reported strong same-store sales growth, particularly at Olive Garden.

1. Performance

Robust sales and earnings growth.

Darden delivered 10.6% year-over-year total sales growth, reaching $3.3 billion, with same-restaurant sales up 6.9% at Olive Garden and 6.7% at LongHorn Steakhouse. Adjusted diluted net earnings per share increased 12.5% to $2.98 from $2.65. CEO Rick Cardenas emphasized operational success: