Kroger (NYSE: KR) shares declined 6% intra-day on Thursday after the supermarket chain reported third-quarter revenue that fell short of Wall Street forecasts, as lower-income consumers pulled back and competition from larger rivals intensified.

Revenue for the quarter rose to $33.9 billion but missed analyst expectations of $34.28 billion. The company said shoppers continued to trade down and reduce discretionary spending following reduced food-stamp benefits and a brief interruption in SNAP payments tied to the November federal shutdown.

Kroger also faced heightened competition from big-box peers such as Walmart, which leaned on aggressive pricing and private-label offerings to capture additional market share.

Despite the top-line shortfall, Kroger delivered stronger-than-expected profit, reporting adjusted earnings per share of $1.05, above the consensus estimate of $1.03. The company cited improved gross margins and a 17% increase in eCommerce sales as key contributors to the earnings beat.

Kroger reiterated that it expected its eCommerce business to reach profitability in 2026.

The company posted a third-quarter operating loss of $1.54 billion, or $2.02 per share, driven by $2.6 billion in previously announced impairment and related charges connected to its automated fulfillment network. Adjusted FIFO operating profit came in at $1.09 billion.

Gross margin improved to 22.8% from 22.4% in the prior-year quarter, helped by lower supply chain costs, the sale of Kroger Specialty Pharmacy and reduced shrink. The company's full-year earnings outlook of $4.75 to $4.80 per share remained ahead of analyst expectations.