Kroger Makes A Third Of Its Profit Selling Ads

For every $100 that went through a Kroger till in 2025, about 69 cents ended up as net profit. The company took $147.6 billion in sales and kept just over a billion of it. And yet roughly a third of what it earns before tax now comes from something other than food. Thin grocery margins are not a secret. What is less obvious is what a business does once its margin gets that thin: it starts looking around the shop for something else to sell. Kroger's answer is a set of businesses it calls, in its own results, the alternative profit businesses — advertising sold against its own shoppers, insight sold through the data company it owns, and financial services sold at the front of the store. In 2025 they produced $1.5 billion of operating profit, against $4.9 billion adjusted for the whole company. Using Kroger's fourth quarter and full-year 2025 results, this video follows $100 of grocery spending through the accounts: where the $76.70 paid to suppliers goes, why a $2.5 billion write-off on robotic warehouses was larger than the entire year's reported operating profit, why some advertising income never appears as revenue at all because it is netted against the cost of groceries, and why the company owes its suppliers about $3.6 billion more than the value of everything on its shelves. Where $100 of Kroger sales goes, 2025: Paid to suppliers: $76.70 Running the stores: $19.17 Rent: $0.59 Depreciation: $2.26 Operating profit (as reported): $1.28 Chapters: 0:00 Intro 0:19 One cent on the dollar 0:38 The thin margin story 2:51 Selling the shopper 5:57 Who pays for the data 8:19 Traffic is the asset 9:54 The loyalty card Sources: Kroger, fourth quarter and full-year 2025 results: https://ir.kroger.com/news/news-detai... Kroger, Alternative Profit Streams — Additional Detail (2019): https://www.thekrogerco.com/wp-conten... Kroger Form 10-K (SEC EDGAR): https://www.sec.gov/cgi-bin/browse-ed... 0:00 Intro 0:19 One cent on the dollar 0:38 The thin margin story 2:51 Selling the shopper 5:57 Who pays for the data 8:19 Traffic is the asset 9:54 The loyalty card Music: "Soft Ambient" by alex_makemusic, via Pixabay (Pixabay Content License, no attribution required).