The $2.6B Ocado Write-Off Clears the Deck and Flips E-Commerce to Profit in 2026, But a Decelerating Comp and a Still-Empty CEO Seat Keep Us at Hold

Results vs. Consensus

Q3 FY2025 Scorecard (12-week quarter ended Nov 8, 2025)

Year-Over-Year Comparison

The Comp Trajectory (the operative growth story)

The identical-sales trajectory is where the caution enters. After six straight quarters of improvement culminating in Q2's 3.4%, the comp decelerated to 2.6% in Q3, softening late in the quarter as the government shutdown and a pause in SNAP-benefit distributions hit the final weeks. Management notes the two-year stack still improved 20bp to 4.9%, and the deceleration also reflects a harder year-ago comparison (last year's Hurricane Helene and port-strike stock-up). The direction is nonetheless a break in the run.

Quality of Beat

Revenue: Total sales rose slightly to $33.9B but landed a touch below consensus, and the ID-sales figure was the soft spot. The composition matters: the deceleration was concentrated late in the quarter and tied to identifiable macro shocks (shutdown, SNAP pause) rather than to Kroger losing on the shelf; management reported that share trends, adjusted for store closures, still improved. Discretionary and general merchandise comped negative while food-at-home held up, which is the mix a defensive grocer would expect in a cautious-consumer environment.

Margins: The margin line remains the cleanest evidence for the self-help thesis. FIFO gross margin rate (ex-rent, D&A, fuel) rose 49bp reported and 24bp ex-KSP, aided by Our Brands, sourcing, and lower shrink, even as selling gross declined on price investment. The adjusted OG&A rate rose 27bp reported (9bp ex-KSP, of which 8bp was a deliberate accelerated pension contribution). Net of the pension prefunding, the cost structure is still improving underneath the divestiture and wage-investment noise.

EPS: The $1.05 adjusted is high quality but grew a slower 7% versus Q2's 12%, weighed by a $44M LIFO charge ($0.04 headwind, versus $4M a year ago) as inflation in beef and other commodities picked up. The buyback continues to shrink the share count. The GAAP loss is the impairment and nothing else; there are no other below-the-line surprises in the adjusted figure.

Segment & Driver Performance

As a single-segment retailer, Kroger's useful cut is by growth driver. Pharmacy and e-commerce again carried the quarter; fresh and Our Brands provided the margin backbone; the consumer and fuel were the drags.

E-Commerce — From Cash Drain to Profit Center

This is the defining segment of the quarter. Digital grew 17%, accelerating again, and now exceeds $14B in annual sales at 11% of the total, with six consecutive quarters of double-digit growth. The strategic reset is the story: closing three underperforming automated fulfillment centers, canceling a planned site, and unwinding the Ocado relationship, then leaning into store-based fulfillment plus an expanded roster of third-party partners (Instacart, DoorDash, Uber Eats) that enable delivery in as little as 30 minutes. Management put a number on it: roughly $400 million of incremental e-commerce operating profit in 2026, taking the business profitable for the first time, with the loss already cut in half quarter over quarter.

"We expect these decisions to contribute approximately $400 million in e-commerce profitability improvements in 2026, making our e-commerce business profitable in 2026." — Ron Sargent, Chairman & interim CEO

Assessment: This is a genuine inflection and the single most important disclosure of the quarter. The bear case on Kroger e-commerce, that it was a structural money-loser propped up by a capital-intensive automated-warehouse bet, was validated by the write-off and simultaneously neutralized by the pivot. Part of the $400M is simply the removal of loss-making sites (the low-quality half), but the incremental third-party volume and the media-sharing economics attached to it are real growth (the higher-quality half). We treat the 2026 profitability target as credible but back-end-dependent on execution of an entirely new fulfillment mix.

Pharmacy — Durable, With an Optical Q4 Wrinkle

Pharmacy again led the comp on core scripts and GLP-1 growth, with the mix drag on the reported margin rate that always accompanies pharmacy outgrowing the house. The new item is regulatory: beginning January 1, the Inflation Reduction Act cuts Medicare reimbursement 60–70% on the first 10 negotiated drugs, which lowers reported sales and will shave roughly 30–40bp off Q4 identical sales. Critically, manufacturers reimburse Kroger the difference through rebates recorded as an offset to cost of goods, so there is no margin or earnings impact.

Assessment: Pharmacy remains a high-quality, competitor-exit-driven share gainer. The IRA effect is an optical comp headwind investors must model correctly, subtracting from the reported ID-sales line without touching profit. It will make the Q4 and 2026 comp optically look worse than the underlying trend, and management flagged it early precisely to avoid that confusion.

Retail Media — New Fuel From the Delivery Partnerships

Retail media grew double digits again and, importantly, the new third-party delivery relationships were explicitly structured so Kroger participates in media opportunities that originate on the partners' platforms, not just its own. Management reports strong early interest from large CPG brands and expects the business to accelerate into Q4.

Assessment: The media-sharing construct is a smart, under-appreciated wrinkle in the e-commerce pivot: it lets Kroger monetize its first-party loyalty data across a wider distribution surface without owning the last mile. Retail media stays the most credible path to structurally higher through-cycle margins, and the partnership economics extend its runway.

Key Operating Metrics

Key Topics & Management Commentary

Overall Management Tone: Decisive and forward-leaning, a shift from Q2's steadier caretaker posture. Sargent led with the e-commerce write-off rather than burying it, framing the quarter as taking hard decisions to reset the business, and coupled it with a concrete profit target and a firmer CEO-search timeline. The tone on the consumer, by contrast, was notably more cautious than last quarter, with management explicit that the middle-income cohort is now cracking alongside the low end. The confidence is in the self-help levers; the wariness is on the macro.

1. The E-Commerce Strategic Review Resolves: Ocado Written Off

The review promised in Q2 landed as a decisive reset. Kroger is evolving to a "hybrid" model, automated fulfillment only where density supports it, otherwise store-based and third-party, and recorded a $2.6B impairment while closing three fulfillment centers and unwinding the Ocado partnership.

"Given the financial performance of our automated fulfillment network, and the closure of specific sites, we recorded an impairment and related charges of $2.6 billion in the third quarter." — David Kennerley, CFO

Assessment: Taking a $2.6B charge to unwind a strategy the prior regime championed is exactly the kind of hard, credibility-building decision an incoming leadership team should make, and it removes the single largest structural overhang on the stock. It also validates the bear thesis in the crudest possible terms: $2.6B of shareholder capital was impaired. We regard the net as a positive, because the forward economics improve and the uncertainty is resolved, but we do not wave away the capital that was destroyed.

2. E-Commerce Turns Profitable in 2026 (+$400M)

The reset funds a genuine profit inflection: roughly $400M of incremental e-commerce operating profit in 2026, split across operating-cost savings and depreciation, layered on top of already-halved losses and incremental third-party volume.

"We are significantly accelerating the profitability of our e-commerce business... we now expect our e-commerce business to be profitable in 2026." — David Kennerley, CFO

Assessment: A first-ever profitable e-commerce year, if delivered, changes the quality of Kroger's growth: the fastest-growing 11% of the business stops being a drag and starts contributing. Management was clear the $400M will be partly reinvested in price and partly flow to operating margin, so the net EPS accretion in 2026 is smaller than the gross figure. This is the item that could carry a Q4 upgrade if the 2026 guide quantifies the flow-through.

3. The Consumer Cracks Wider: Middle-Income Joins the Low End

Management's consumer read darkened materially. The late-quarter softness came from the government shutdown and the SNAP-benefit pause, and the structural observation was that middle-income households are now pulling back like lower-income ones, making smaller, more frequent trips and cutting discretionary spend.

"Spending from higher-income households continues strong, while middle-income customers are feeling increased pressure, similar to what we have seen from lower-income households over the past several quarters." — Ron Sargent, Chairman & interim CEO

Assessment: This is the most important negative on the call for the near-term thesis. A widening consumer pullback into the middle-income tier pressures exactly the discretionary and general-merchandise categories (and banners like Fred Meyer) that carry higher margins, and it makes the back-half comp harder to defend. It is a macro headwind, not a Kroger-specific one, but it caps how fast the comp can re-accelerate.

4. Margin Held the Line, Responsibly

Despite stepped-up price investment (another ~1,000 items lowered, plus late-quarter SNAP-driven promotions like a sub-$5-per-person Thanksgiving bundle), the underlying gross margin held: selling gross declined on price, offset by Our Brands mix, sourcing, and shrink.

"Selling gross itself actually declined as we invested in pricing, but we were able to offset that with mix on our brands, good sourcing improvements, shrink, and other supply chain costs." — David Kennerley, CFO

Assessment: The margin-neutral price-investment engine survived a quarter in which management leaned harder into promotions to protect struggling customers. That is the proof point that matters: the model can invest in value during a weak-consumer stretch without breaking margin, provided sourcing and mix keep funding it. Consistency here is the backbone of the bull case.

5. CEO Search: External Hire, Announcement Expected in Q1

The leadership question sharpened into a timeline. The board expects to appoint a new CEO during 2026, has confirmed the hire will be external, is working through several highly qualified candidates, and expects to announce in the first quarter.

"We have announced publicly that our next CEO will be external... we are getting closer, we are making good progress, and we expect that decision will be announced in the first quarter." — Ron Sargent, Chairman & interim CEO

Assessment: This is meaningful de-risking of the overhang: an external hire with a Q1 target date converts an open-ended vacancy into a datable catalyst. The criteria (retail transformation, customer proximity, scale operating experience, cultural fit) are sensible. Until the name lands, the market will keep discounting strategic commitments made under an interim mandate, but the discount should narrow as Q1 approaches.

6. Store Growth Accelerates; Harris Teeter Enters Jacksonville

Kroger is reallocating capital toward new stores: about four major projects completed and 14 groundbreakings in Q4, a 30% increase in new-store builds in 2026, and an expansion of Harris Teeter into Jacksonville, Florida. Management was candid that under-investment in new stores was a self-inflicted error of the prior capital-allocation regime.

"One of our biggest challenges over the last few years is we have not allocated enough capital to growing stores because we have allocated a lot of capital in other areas like fulfillment centers." — Ron Sargent, Chairman & interim CEO

Assessment: The pivot from automated warehouses to new stores is the correct ROIC reallocation and, in one sentence, indicts the strategy that just cost $2.6B. New units are a multi-year, back-loaded driver, but they also expand the store-fulfillment base underpinning the e-commerce reset, so the two initiatives reinforce each other.

7. Capital Allocation and M&A Optionality

The $5B accelerated repurchase completed in Q3 inside the $7.5B authorization, with the residual $2.5B running through open market by year-end. Net leverage of 1.73x sits well under the 2.3–2.5x target. And notably, despite the Albertsons debacle, management did not close the door on future M&A.

"We also have opportunities to grow through acquisition, and we have not ruled that out despite our last few years with Albertsons... we expect and plan to be a national retailer." — Ron Sargent, Chairman & interim CEO

Assessment: The buyback remains the reliable near-term EPS engine and the under-levered balance sheet is real downside support. The re-opened M&A door is a double-edged disclosure: it signals ambition and balance-sheet capacity, but a return to large-scale dealmaking is exactly the capital-allocation risk that an incoming CEO could pursue, and Kroger's last attempt ended in a blocked deal and litigation.

8. Cost and Sourcing: Still the Un-Sized Prize

Management again emphasized procurement (cost of goods and goods-not-for-resale) and "modernizing ways of working," including a return to five-days-a-week in-office, as multi-year cost levers, without sizing them.

"We see greater opportunities ahead by modernizing operations and ways of working across our organization from stores to support centers. We also see opportunities to improve procurement to unlock additional cost savings." — David Kennerley, CFO

Assessment: Sourcing remains the largest un-quantified lever in the model, and it is the fuel that keeps price investment margin-neutral. The un-sized nature is frustrating but understandable ahead of a new CEO; it stays the primary source of upside optionality to the margin thesis.

9. AI and Agentic Shopping

Kroger is deploying an AI-powered workforce-management platform for scheduling and plans to introduce agentic shopping via Instacart's AI cart assistant on Kroger's app in 2026.

"We plan to introduce new agentic shopping capabilities starting with Instacart's AI-powered cart assistant on The Kroger Co. website and mobile app in 2026." — Ron Sargent, Chairman & interim CEO

Assessment: Grounded, incremental AI use anchored to Kroger's data assets and the Instacart relationship. A supporting efficiency and engagement narrative, not a standalone driver.

Guidance & Outlook

Management narrowed the comp range (top down to 3.0%, floor up to 2.8%) and lifted the adjusted-EPS floor to $4.75–4.80, absorbing an incremental LIFO headwind now expected at $0.07 versus start-of-year. Two Q4 mechanics matter: management expects a slight OG&A-rate improvement to offset a slight FIFO gross-margin-rate decline, and the IRA drug-pricing change will optically reduce Q4 comps by 30–40bp with no earnings impact. Encouragingly, management reported Q4-to-date sales running slightly above the midpoint of the Q4 guide.

Implied Q4 ramp: The raised $4.75–4.80 full-year EPS floor against the ~$3.02 earned through three quarters implies a Q4 adjusted EPS of roughly $1.73–1.78, into the hardest year-ago comparison of the year (last year's weather and egg inflation) plus the optical IRA drag.

Street at: Consensus will converge toward the ~$4.78 midpoint; the more important debate shifts to the 2026 setup, where the +$400M e-commerce swing and the pharmacy IRA optics are the two swing factors management deferred to next quarter.

Guidance style: Consistent and conservative. Narrowing rather than cutting the comp after a soft late-quarter, while still nudging the EPS floor up, is the posture of a team confident in the profit levers even as the top line faces macro pressure.

Analyst Q&A Highlights

Store-Growth Cadence, Portfolio Pruning, and the National-Retailer Ambition

The opening question probed the accelerated store program and whether the digital review implies a broader portfolio reshaping. Management leaned into growth ambition, including an unprompted re-opening of the M&A door.

Q: "Can you talk to the accelerated store program, the cadence, and how you think about the portfolio you currently have, are there opportunities, do you exit some places, double down in others?"
— John Heinbockel, Guggenheim

A: "We have got a great long runway to grow stores... we also have opportunities to grow through acquisition, and we have not ruled that out despite our last few years with Albertsons... we expect and plan to be a national retailer." — Ron Sargent, Chairman & interim CEO

Assessment: The organic-growth pivot is clearly the priority and the ROIC logic is sound. But the volunteered M&A optionality is a tell worth flagging: this management team has not foreclosed a return to large-scale dealmaking, which after the Albertsons experience is the single capital-allocation path most likely to reintroduce risk. It will be a live question for whoever takes the permanent seat.

The Shape and Timing of the CEO Decision

Analysts pressed on the unusually long search and what specifically the board wants. The answer firmed the timeline to a specific quarter for the first time.

Q: "The CEO search has been one of the longest we have seen in a while. What are you and the board looking for, and what does the business need from that person?"
— John Heinbockel, Guggenheim

A: "Our next CEO will be external... we want a deep understanding of retail transformation, somebody very close to the customer, demonstrated success operating at scale... we expect that decision will be announced in the first quarter." — Ron Sargent, Chairman & interim CEO

Assessment: Converting an open-ended vacancy into a Q1 target with a defined profile is the most important continuity update on the call. An external hire brings both upside (fresh perspective, faster monetization of retail media) and risk (strategy reset). The catalyst is now datable, which is exactly what a Hold needs before it can become an Outperform.

Grocery Comp Health, Competition, and Margin Stability

A pointed line of questioning asked management to reconcile the soft comp, stepped-up price investment, and the goal of margin stability into an implied 2026 EBIT trajectory.

Q: "How should we think about the grocery ID trend and the competitive environment in the context of maintaining underlying gross-margin stability, and what you are implying for next year on EBIT margin?"
— Ed Kelly, Wells Fargo

A: "Sales came in a little lighter than we expected... increased caution and uncertainty among consumers, particularly in October and November... despite all that, our two-year stacked identical sales were up 20 basis points. Our focus remains on value and serving customers during a pretty uncertain time." — Ron Sargent, Chairman & interim CEO

Assessment: A candid acknowledgment of the soft top line, paired with a credible defense (two-year stacks, share gains, Q4-to-date above midpoint). Management is explicitly not calling a consumer recovery, and it is defending margin through mix and sourcing rather than pulling back on price. The honesty is reassuring; the demand backdrop is not.

Whether Leaning on Third Parties Cedes the Customer Relationship

A recurring concern was whether outsourcing more delivery to Instacart, DoorDash, and Uber hands away the customer relationship, and whether the 2026 e-commerce profitability is just the removal of losses.

Q: "How did you think about the risk of leaning so heavily on third-party providers... versus having that key function more in-house? And is profitability simply a function of the $400 million of losses going away, or are there other factors?"
— Michael Lasser, UBS

A: "The vast majority of our e-commerce sales come from The Kroger Co. website... In quarter three, we actually cut the losses that we have been making in half. You then take the $400 million... add in the highly incremental business from the new third parties... plus the media business, and that allows us to expect that we will make money in e-commerce next year." — Ron Sargent / David Kennerley

Assessment: The answer clarified the profit bridge honestly: part removal of losses, part incremental third-party volume, part media. Management's insistence that most orders still originate on Kroger's own properties partly addresses the customer-relationship worry, but a growing reliance on aggregators for the last mile is a real long-term strategic dependency, particularly for younger customers who enter through the partner apps.

Parsing Core Grocery From Pharmacy, and Where the E-Commerce Savings Go

Investors pushed to separate the pharmacy-driven comp from underlying core-grocery health, and to understand how the $400M e-commerce benefit will be split.

Q: "Can you help parse out the impact of pharmacy on the quarter... and going back to the reinvestment of the e-commerce savings, how much is planning to go toward price versus store standards?"
— Kelly Bania, BMO Capital Markets

A: "We did see a slight deceleration in our unit trends in Q3... discretionary categories were the most impacted, and meat due to higher inflation, but natural and organic held up really well... we have not yet declared how we are going to split that money up. We expect to use some to reinvest in pricing... and we are also committed to improve the operating margins of the business." — David Kennerley, CFO

Assessment: The unit deceleration in discretionary and meat is the honest read on core health: it softened, but defensively (organics and deli held). Management's refusal to pre-commit the $400M split is reasonable ahead of 2026 guidance, but it also means the net EPS accretion, the number that matters to the model, remains undefined.

Urgency Under the Interim Regime and Continuity Into a New CEO

A thoughtful question asked whether the pace of change has increased and whether a new CEO would disrupt execution given how much strategy is being set now.

Q: "Today's call sounded a little more urgent... and a new CEO should be very little interruption as far as execution goes because the plans are all being built today. Is that fair?"
— Simeon Gutman, Morgan Stanley

A: "I have been here about ten months, and my only objective is to set up the company for future success. We are going to do the right things even if some of the decisions are hard... I would not say there is more urgency, but I would say that there is plenty of urgency." — Ron Sargent, Chairman & interim CEO

Assessment: The framing that the plans are being built now, so a new CEO inherits momentum rather than a blank page, is the bull's answer to the leadership-risk bear. It is partly reassuring, but a new external CEO with a fresh mandate is precisely the person most likely to revisit a strategy set by a caretaker, so continuity is a hope, not a guarantee.

What They're NOT Saying

1. FY2026 guidance: Deferred to Q4. The two swing factors for 2026 (the net flow-through of the +$400M e-commerce benefit after reinvestment, and the pharmacy IRA optics) were both explicitly held back.
2. The CEO's name: Still unannounced, though now with a Q1 target. Until the name lands, every strategic commitment carries an interim-mandate discount.
3. The net EPS accretion from e-commerce: The gross $400M was quantified; the portion reinvested in price versus dropped to operating margin was not, so the accretive figure is undefined.
4. A dollar size for sourcing: Still described only qualitatively as a "significant opportunity." The largest margin lever remains un-sized after three quarters.
5. The Albertsons litigation: Again unmentioned. Albertsons's multi-billion-dollar breakup-fee and damages suit remains a live, unquantified tail.
6. The retail-media growth rate: "Double-digit," again without a specific number or margin contribution, even as management touts the new media-sharing deals.
7. The full cash cost of the CFC unwind: The ~$350M Ocado termination payment was disclosed, but the total cash outflow (severance, lease exits, decommissioning) versus the non-cash write-down was not broken out.

Market Reaction

• Pre-print setup: KR closed at $66.20 on Dec 3, up 8.3% YTD and 10.5% over the trailing twelve months, and up 3.8% over the trailing 30 days, having recovered from a late-October dip. The stock entered the print mid-range in its 52-week band ($57.77–$74.35).
• Reaction session (Dec 4, before-open report): Shares gapped down 4.0% to open at $63.55, traded as low as $60.96 (-7.9%) intraday, and closed at $63.14, down 4.6% (-$3.06). Volume was heavy at 22.8M shares versus a 6.2M 30-day average (3.7x). The S&P 500 was flat (+0.1%) on the day, so KR's decline was entirely idiosyncratic.

The 4.6% drop is the market voting on the headline GAAP loss and the comp deceleration rather than on the forward economics. Three things drove the tape lower: the $2.6B impairment reads, at first glance, as an admission of a failed multi-year strategy; the comp slipped to 2.6% and management's consumer commentary turned more cautious; and the profit-inflection payoff sits in 2026, too far out to reward the marginal buyer today. What the sell-off largely ignored is that the write-off is non-cash, the adjusted business beat, and e-commerce flips to profit next year. That gap between the reaction and the forward setup is precisely what makes this an interesting Hold rather than a Sell: the tape got more negative while the fundamentals got structurally cleaner. We are not chasing it, but we note the disconnect.

Street Perspective

Debate: Is the $2.6B Write-Off a Capitulation or a Clearing Event?

Bull view: The bull case is that the write-off is a classic new-regime clearing event: take the pain on a prior mistake, reset the asset base, and free e-commerce to be profitable. It is non-cash, the cash cost is a modest ~$350M, and it removes the market's biggest structural worry.

Bear view: The bear case is that $2.6B of shareholder capital was genuinely destroyed, that it proves management (even if a prior regime) badly misjudged a multi-year strategy, and that the pivot to third-party delivery trades a capital problem for a dependency problem.

Our take: Clearing event, on balance. The capital was spent years ago; the write-off just recognizes reality and improves forward economics. But the bears are right that it is not free: it validates the e-commerce-economics bear pillar and should temper any triumphalism about Kroger's capital allocation under prior leadership.

Debate: Is 2026 E-Commerce Profitability a Real Inflection or Accounting?

Bull view: The bull view is that this is a real inflection, halved losses already, plus $400M of savings, plus incremental third-party volume and media-sharing economics, turning the fastest-growing 11% of the business from a drag into a contributor.

Bear view: The bear view is that most of the $400M is simply the removal of loss-making sites, that "profitable" e-commerce grocery is notoriously fragile, and that leaning on aggregators compresses the long-run margin and customer ownership.

Our take: Both are partly right. Removing losers is the lower-quality half; the incremental partner volume and media are the higher-quality half. It is a genuine improvement in the quality of Kroger's growth, but the net EPS accretion, undisclosed pending the 2026 guide, is what will decide whether it is a re-rating catalyst.

Debate: Does the Imminent External CEO Hire De-Risk or Add Risk?

Bull view: The bull view is that a Q1 external hire ends the overhang, potentially brings a leader who accelerates cost-out and retail-media monetization, and lets the market finally underwrite the strategy with confidence.

Bear view: The bear view is that a fresh external CEO could reset strategy, guidance, or capital allocation, potentially reopening large-scale M&A, injecting new uncertainty just as the current plan gains traction.

Our take: Net de-risking, because a datable resolution is better than an open vacancy, and the plans are largely built. But the risk is real and asymmetric around the announcement: the name and the incoming CEO's stated priorities will matter more to the stock in Q1 than the numbers. That is a reason to wait for the catalyst rather than pre-position.

Model Update Needed

Valuation impact: At $63.14 and a ~$4.78 FY2025 adjusted-EPS midpoint, KR now trades at ~13.2x forward, down from ~14.2x at Q2, with a ~2.2% dividend yield and a ~7% buyback-driven share-count reduction. The de-rating plus the 2026 e-commerce profit swing improves the risk/reward at the margin. We hold fair value at roughly 13–15x $4.80–5.10 (folding in early 2026 accretion), or about $64–76, which places the current price near the low end. The cheaper multiple and the improved forward economics are why our Hold now leans constructive rather than neutral.

Thesis Scorecard Post-Earnings

We grade this quarter against the standing thesis established at initiation. The bull pillars largely held; the e-commerce bear pillar both materialized (the write-off) and improved (the 2026 profit path); the leadership bear pillar advanced toward resolution; and a new watch item, the widening consumer pullback, emerged.

Overall: Thesis modestly strengthened on structure, modestly pressured on the near-term top line. The two bear pillars that most weighed on the multiple, leadership and e-commerce economics, both moved toward resolution this quarter, which is the important development. The offset is a genuinely weaker consumer that caps how fast the comp can re-accelerate, and a permanent CEO who is expected but not yet named.

Action: Maintain Hold, with a constructive lean. We are explicitly one catalyst from an upgrade: name the CEO (expected Q1) and show the comp stabilizing against the Q4 macro, and the risk/reward tips to Outperform, especially at ~13x. We would move toward Underperform only if the consumer pullback accelerates into a genuine grocery price war or if the 2026 guide reveals the e-commerce "profitability" is thin after reinvestment. For now, the cheaper multiple, the cleared Ocado overhang, and the buyback support keep this a Hold we are increasingly warming to.