Fourth Quarter Highlights
- Identical Sales without fuel decreased 0.8%; underlying
Identical Sales without fuel increased
0.1%(1)
- Operating Profit of $1,194
million; EPS of $1.01
- Adjusted FIFO Operating Profit of $1,307 million and Adjusted EPS of $1.34, which include a benefit of $187 million and $0.20 from the 53rd week,
respectively
- Executed its go-to-market strategy to deliver value for
customers
- Grew digital sales more than 10%, excluding the
53rd week
- Increased both loyal households and customer
visits
Fiscal 2023 Highlights
- Identical Sales without fuel increased 0.9%; underlying
Identical Sales without fuel increased
2.3%(1)
- Operating Profit of $3.1
billion; EPS of $2.96
- Adjusted FIFO Operating Profit of $5.0 billion and Adjusted EPS of $4.76, which include a benefit of $187 million and $0.20 from the 53rd week,
respectively
- Delivered Adjusted EPS growth of 8% excluding the 53rd
week
- Delivered $1.3B in
Operating Profit from Alternative Profit Businesses
- Increased associate wages resulting in average hourly
wage of nearly $19 and rate of nearly
$25 with comprehensive benefits
factored in, which is a 33% increase in rate in the last five
years
- Achieved strong Adjusted Free Cash Flow leading to a net
total debt to adjusted EBITDA ratio of 1.33, excluding the
53rd week
CINCINNATI, March 7,
2024 /PRNewswire/ -- The Kroger Co. (NYSE: KR)
today reported its fourth quarter and fiscal year 2023 results,
provided 2024 guidance and updated investors on how Leading with
Fresh and Accelerating with Digital continues to position
Kroger for long-term sustainable growth.
Comments from Chairman and CEO Rodney McMullen
"Kroger achieved strong 2023 results, in line with our
long-term growth model and built upon three consecutive years of
historic growth.
As customers manage macroeconomic pressures, we are
lowering prices and offering even more ways to save with
personalized promotions and rewards. Our unique seamless shopping
experience provides customers the products they want, when and how
they want them, with zero compromise on quality, convenience and
selection.
We respect and appreciate our associates who are
delivering a full, fresh and friendly customer experience. Over the
last five years, we've made historic investments in associate
wages, benefits and career development opportunities, including
significant investments to help stabilize associates' future
pension benefits.
We are increasing customer visits and growing loyal
households through the strength of our retail business, which
positions Kroger for more ways to drive sustainable future growth.
We expect to continue our momentum in 2024 by delivering value for
customers, investing in associates and generating attractive and
sustainable shareholder returns."
Fourth Quarter Financial Results
|
4Q23
($ in millions; except EPS)
|
4Q23
Excluding the 53rd
week
($ in millions; except EPS)
|
4Q22
($ in millions; except EPS)
|
ID Sales* (Table
4)(1)
|
(0.8) %
|
N/A
|
6.2 %
|
Earnings Per Share
|
$1.01
|
$0.81
|
$0.62
|
Adjusted EPS (Table 6)
|
$1.34
|
$1.14
|
$0.99
|
Operating Profit
|
$1,194
|
$1,007
|
$826
|
Adjusted FIFO Operating
Profit (Table 7)
|
$1,307
|
$1,120
|
$1,274
|
FIFO Gross Margin Rate*
|
Increased 13 basis points (excluding the
53rd week)
|
OG&A Rate*
|
Increased 40 basis points (excluding the
53rd week)
|
|
* Without fuel and
adjustment items, if applicable.
|
(1)
Identical Sales without fuel would have grown 0.1% in the
4th quarter of 2023 if not for the reduction in pharmacy
sales from the previously communicated termination of our agreement
with Express Scripts effective December 31, 2022.
|
Total company sales were $37.1
billion in the fourth quarter, including $2.7 billion from the 53rd week, compared to
$34.8 billion for the same period
last year. Excluding fuel and the 53rd week, sales decreased 0.5%
compared to the same period last year.
Gross margin was 22.7% of sales for the fourth
quarter. The FIFO gross margin rate, excluding fuel
and the 53rd week, increased 13 basis points compared
to the same period last year. The improvement in rate was primarily
attributable to strong Our Brands performance, sourcing
benefits and lower supply chain costs, partially offset by
increased price investments and higher shrink.
The LIFO credit for the quarter was $18 million, compared to a LIFO charge of
$234 million for the same period last
year. The credit was due to lower year over year product cost
inflation than expected.
The Operating, General & Administrative
rate increased 40 basis points, excluding fuel, the
53rd week and adjustment items, compared to the same
period last year. This increase in rate was driven by planned
investments in associate wages, an adjustment for self-insurance
expenses and the decision to contribute an additional $40 million to multi-employer pension plans,
helping stabilize associates' future benefits and reduce future
obligations, partially offset by continued execution of cost
savings initiatives and lower incentive plan costs.
Fiscal 2023 Financial Results
|
2023
($ in billions; except EPS)
|
2023
Excluding the 53rd
week
($ in billions; except EPS)
|
2022
($ in billions; except EPS)
|
ID Sales* (Table
4)(1)
|
0.9 %
|
N/A
|
5.6 %
|
Earnings Per Share
|
$2.96
|
$2.76
|
$3.06
|
Adjusted EPS (Table 6)
|
$4.76
|
$4.56
|
$4.23
|
Operating Profit
|
$3.1
|
$2.9
|
$4.1
|
Adjusted FIFO Operating
Profit (Table 7)
|
$5.0
|
$4.8
|
$5.1
|
FIFO Gross Margin
Rate*(2)
|
Increased 18 basis points (excluding the
53rd week)
|
OG&A Rate*(2)
|
Increased 21 basis points (excluding the
53rd week)
|
|
* Without fuel and
adjustment items, if applicable.
|
(1)
Identical Sales without fuel would have grown 2.3% in fiscal 2023
if not for the reduction in pharmacy sales from the previously
communicated termination of our agreement with Express Scripts
effective December 31, 2022. (2) In fiscal 2023, the
terminated agreement had a positive effect on the FIFO Gross Margin
Rate, excluding fuel, and a negative effect on the OG&A Rate,
excluding fuel and adjustment items. The overall net effect on
operating profit was slightly positive.
|
Total company sales were $150.0
billion in 2023 including $2.7
billion from the 53rd week, compared to
$148.3 billion for the same period
last year. Excluding fuel and the 53rd week, sales
increased 1.1% compared to the same period last year.
Gross margin was 22.2% of sales for 2023. The FIFO gross
margin rate, excluding fuel and the 53rd week, increased
18 basis points compared to the same period last year. This
improvement in rate was primarily attributable to strong Our
Brands performance, sourcing benefits, lower supply chain costs
and the effect of our terminated agreement with Express Scripts,
partially offset by increased price investments and higher
shrink.
The LIFO charge for 2023 was $113
million, compared to a LIFO charge of $626 million for the same period last year. This
was driven by lower product cost inflation compared to the same
period last year.
The Operating, General & Administrative rate increased
21 basis points, excluding fuel, the 53rd week and adjustment
items, compared to the same period last year. This increase in rate
was driven by planned investments in associates, investments in
strategic growth initiatives and the effect of our terminated
agreement with Express Scripts, partially offset by the continued
execution of cost savings initiatives and lower incentive plan
costs.
Capital Allocation Strategy
Kroger expects to continue to generate strong free cash
flow and remains committed to investing in the business to drive
long-term sustainable net earnings growth, as well as maintaining
its current investment grade debt rating. The Company expects to
continue to pay its quarterly dividend and expects this to increase
over time, subject to board approval. Kroger has paused its share
repurchase program to prioritize de-leveraging following the
proposed merger with Albertsons.
Kroger's net total debt to adjusted EBITDA ratio is 1.33,
excluding the 53rd week, compared to 1.56 a year ago
(Table 5). The company's net total debt to adjusted EBITDA ratio
target range is 2.30 to 2.50.
Full-Year 2024 Guidance*
- Identical Sales without fuel of 0.25% – 1.75%
- Adjusted FIFO Operating Profit of $4.6 – $4.8
billion
- Adjusted net earnings per diluted share of $4.30 – $4.50
- Adjusted Free Cash Flow of $2.5 – $2.7
billion**
- Capital expenditures of $3.4 – $3.6
billion
- Adjusted effective tax rate of 23%***
* Without adjusted
items, if applicable. Kroger is unable to provide a full
reconciliation of the GAAP and non-GAAP measures used in 2024
guidance without unreasonable effort because it is not possible to
predict certain of our adjustment items with a reasonable degree of
certainty. This information is dependent upon future events and may
be outside of our control and its unavailability could have a
significant impact on 2024 GAAP financial results.
|
** Adjusted free cash
flow excludes planned payments related to the restructuring of
multi-employer pension plans or payments related to opioid
settlements and merger related costs.
|
*** The adjusted tax
rate reflects typical tax adjustments and does not reflect changes
to the rate from the completion of income tax audit examinations
and changes in tax laws, which cannot be predicted
|
Comments from Interim CFO Todd
Foley
"Kroger's 2023 results provide another proof point of the
strength and resilience of our value creation model, which
supported another year of strong free cash flow and net earnings
growth.
In 2024, we expect to grow revenue by delivering value for
customers and enhancing our seamless shopping experience. We plan
to balance investments in our business, including lowering prices
and increasing associate wages, with productivity and cost savings
initiatives, improvement on long-term initiatives in gross margin
and growth in our alternative profit businesses.
This strength in our model gives us confidence in our
ability to deliver on our 2024 guidance and maintain our strong
track record of delivering for our customers, investing in our
associates and generating attractive and sustainable returns for
shareholders."
Fourth Quarter 2023 Highlights
Leading with Fresh
- Launched new Murray's Cheese monthly
subscription club
- Introduced more than 700 new Our Brands items in
2023, including expansion of Mercado and Smart Way
lines
- Innovated to make customer favorites even better
with reinvented deli and bakery items
Accelerating with Digital
- Grew digital business to $12
billion in annual sales
- Increased delivery sales by 24% over last year, excluding
the 53rd week, led by Kroger Boost and Customer
Fulfillment Centers
- Increased digitally engaged households by 18% compared to
last year
Associate Experience
- Invested approximately $500
million in incremental wages in 2023, for a total of
$2.4 billion in incremental
investments since 2018
- Named by Computerworld to the 2024 List of
Best Places to Work in IT
- Supported continuing education with almost 7,000
associates, 94% of whom are hourly, taking advantage of Kroger's
education assistance program in 2023
Live Our Purpose
- Recognized as one of Newsweek's "Most Responsible
Companies" for 2024
- Investing in innovation which enhances food recovery
through Zero Hunger | Zero Waste foundation grants to organizations
including Feeding America and The Farmlink Project
- Announced collaboration between Kroger
Health and Soda Health to provide more access to food,
health products, pharmacy and nutrition services
About Kroger
At
The Kroger Co.
(NYSE: KR), we are dedicated to our Purpose: to Feed the Human
Spirit™. We are, across our family of companies nearly half a
million associates who serve over eleven million customers daily
through a seamless digital shopping experience and retail food
stores under a variety of banner
names, serving America through food inspiration
and uplift, and creating #ZeroHungerZeroWaste communities by 2025.
To learn more about us, visit
our newsroom and investor
relations site.
Kroger's fourth quarter 2023 ended on February 3, 2024.
Note: Fuel sales have historically had a low gross margin
rate and operating expense rate as compared to corresponding rates
on non-fuel sales. As a result, Kroger discusses the changes in
these rates excluding the effect of fuel.
Please refer to the supplemental information presented in
the tables for reconciliations of the non-GAAP financial measures
used in this press release to the most comparable GAAP financial
measure and related disclosure. As noted above, Kroger is unable to
provide a full reconciliation of the GAAP and non-GAAP measures
used in its guidance without unreasonable effort because it is not
possible to predict certain of our adjustment items with a
reasonable degree of certainty. This information is dependent upon
future events and may be outside of our control and its
unavailability could have a significant impact on GAAP financial
results.
This press release contains certain statements that
constitute "forward-looking statements" about Kroger's financial
position and the future performance of the company. These
statements are based on management's assumptions and beliefs in
light of the information currently available to it. Such statements
are indicated by words or phrases such as "achieve," "committed,"
"continue," "create," "deliver," "expect," "future," "guidance,"
"model," "positions," "strategy," "target," "trends," and
variations of such words and similar phrases. Various uncertainties
and other factors could cause actual results to differ materially
from those contained in the forward-looking statements. These
include the specific risk factors identified in "Risk Factors" in
our annual report on Form 10-K for our last fiscal year and any
subsequent filings, as well as the following:
Kroger's ability to achieve sales, earnings, incremental
FIFO operating profit, and adjusted free cash flow goals may be
affected by: the risks relating to or arising from our proposed
nationwide opioid litigation settlement, including our ability to
finalize and effectuate the settlement, the scope and coverage of
the ultimate settlement and the expected financial or other impacts
that could result from the settlement; our proposed transaction
with Albertsons, including, among other things, our ability to
consummate the proposed transaction and related divestiture plan,
including on the terms of the merger agreement and divestiture
plan, on the anticipated timeline, with the required regulatory
approvals, and/or resolution of pending litigation challenging the
merger; labor negotiations; potential work stoppages; changes in
the unemployment rate; pressures in the labor market; changes in
government-funded benefit programs; changes in the types and
numbers of businesses that compete with Kroger; pricing and
promotional activities of existing and new competitors, and the
aggressiveness of that competition; Kroger's response to these
actions; the state of the economy, including interest rates, the
current inflationary environment and future potential inflationary,
disinflationary and/or deflationary trends and such trends in
certain commodities, products and/or operating costs; the
geopolitical environment including wars and conflicts; unstable
political situations and social unrest; changes in tariffs; the
effect that fuel costs have on consumer spending; volatility of
fuel margins; manufacturing commodity costs; supply constraints;
diesel fuel costs related to Kroger's logistics operations; trends
in consumer spending; the extent to which Kroger's customers
exercise caution in their purchasing in response to economic
conditions; the uncertainty of economic growth or recession; stock
repurchases; changes in the regulatory environment in which Kroger
operates; Kroger's ability to retain pharmacy sales from third
party payors; consolidation in the healthcare industry, including
pharmacy benefit managers; Kroger's ability to negotiate
modifications to multi-employer pension plans; natural disasters or
adverse weather conditions; the effect of public health crises or
other significant catastrophic events; the potential costs and
risks associated with potential cyber-attacks or data security
breaches; the success of Kroger's future growth plans; the ability
to execute our growth strategy and value creation model, including
continued cost savings, growth of our alternative profit
businesses, and our ability to better serve our customers and to
generate customer loyalty and sustainable growth through our
strategic pillars of fresh, our brands, personalization, and
seamless; and the successful integration of merged companies and
new partnerships. Our ability to achieve these goals may also be
affected by our ability to manage the factors identified above. Our
ability to execute our financial strategy may be affected by our
ability to generate cash flow.
Kroger's adjusted effective tax rate may differ from the
expected rate due to changes in tax laws, the status of pending
items with various taxing authorities, and the deductibility of
certain expenses.
Kroger assumes no obligation to update the information
contained herein unless required by applicable law. Please refer to
Kroger's reports and filings with the Securities and Exchange
Commission for a further discussion of these risks and
uncertainties.
Note: Kroger's quarterly conference call with investors
will broadcast live at 10 a.m. (ET)
on March 7, 2024
at ir.kroger.com. An
on-demand replay of the webcast will be available at approximately
1 p.m. (ET) on Thursday, March 7,
2024.
4th Quarter 2023 Tables
Include:
- Consolidated Statements of Operations
- Consolidated Balance Sheets
- Consolidated Statements of Cash Flows
- Supplemental Sales Information
- Reconciliation of Net Total Debt and Net Earnings
Attributable to The Kroger Co. to Adjusted EBITDA
- Net Earnings Per Diluted Share Excluding the Adjustment
Items
- Operating Profit Excluding the Adjustment
Items
- Adjusted Free Cash Flow
(1)
Identical Sales without fuel would have grown 0.1% in the
4th quarter of 2023 and 2.3% in fiscal 2023, if not for
the reduction in pharmacy sales from the previously communicated
termination of our agreement with Express Scripts effective
December 31, 2022. In fiscal 2023, the terminated agreement had a
positive effect on the FIFO Gross Margin Rate, excluding fuel, and
a negative effect on the OG&A Rate, excluding fuel and
adjustment items. The overall net effect on operating profit was
slightly positive.
|
Table
1.
|
|
THE KROGER
CO.
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
(in millions, except
per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOURTH
QUARTER
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES
|
|
|
|
$
37,064
|
|
100.0 %
|
|
$
34,823
|
|
100.0 %
|
|
$
150,039
|
|
100.0 %
|
|
$
148,258
|
|
100.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MERCHANDISE COSTS,
INCLUDING ADVERTISING,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WAREHOUSING AND
TRANSPORTATION (a),
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AND LIFO CHARGE
(b)
|
|
|
28,643
|
|
77.3
|
|
27,247
|
|
78.2
|
|
116,675
|
|
77.8
|
|
116,480
|
|
78.6
|
|
|
|
OPERATING, GENERAL AND
ADMINISTRATIVE (a)
|
|
|
6,278
|
|
16.9
|
|
5,847
|
|
16.8
|
|
26,252
|
|
17.5
|
|
23,848
|
|
16.1
|
|
|
|
RENT
|
|
|
|
220
|
|
0.6
|
|
197
|
|
0.6
|
|
891
|
|
0.6
|
|
839
|
|
0.6
|
|
|
|
DEPRECIATION AND
AMORTIZATION
|
|
|
729
|
|
1.9
|
|
706
|
|
2.0
|
|
3,125
|
|
2.0
|
|
2,965
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
PROFIT
|
|
|
|
1,194
|
|
3.2
|
|
826
|
|
2.4
|
|
3,096
|
|
2.1
|
|
4,126
|
|
2.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
|
|
(100)
|
|
(0.3)
|
|
(113)
|
|
(0.3)
|
|
(441)
|
|
(0.3)
|
|
(535)
|
|
(0.4)
|
|
|
|
NON-SERVICE COMPONENT
OF COMPANY-SPONSORED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PENSION PLAN
COSTS
|
|
|
6
|
|
-
|
|
2
|
|
-
|
|
30
|
|
-
|
|
39
|
|
-
|
|
|
|
(LOSS) GAIN ON
INVESTMENTS
|
|
|
(166)
|
|
(0.4)
|
|
(92)
|
|
(0.3)
|
|
151
|
|
0.1
|
|
(728)
|
|
(0.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS BEFORE
INCOME TAX EXPENSE
|
|
934
|
|
2.5
|
|
623
|
|
1.8
|
|
2,836
|
|
1.9
|
|
2,902
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX
EXPENSE
|
|
|
|
195
|
|
0.5
|
|
172
|
|
0.5
|
|
667
|
|
0.3
|
|
653
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS INCLUDING
NONCONTROLLING INTERESTS
|
|
739
|
|
2.0
|
|
451
|
|
1.3
|
|
2,169
|
|
1.5
|
|
2,249
|
|
1.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE
TO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONCONTROLLING INTERESTS
|
|
|
3
|
|
-
|
|
1
|
|
-
|
|
5
|
|
-
|
|
5
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
ATTRIBUTABLE TO THE KROGER CO.
|
|
$
736
|
|
2.0 %
|
|
$
450
|
|
1.3 %
|
|
$ 2,164
|
|
1.4 %
|
|
$ 2,244
|
|
1.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
ATTRIBUTABLE TO THE KROGER CO.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER BASIC COMMON SHARE
|
|
|
$
1.01
|
|
|
|
$
0.62
|
|
|
|
$
2.99
|
|
|
|
$
3.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE NUMBER OF
COMMON SHARES USED IN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC CALCULATION
|
|
|
719
|
|
|
|
716
|
|
|
|
718
|
|
|
|
718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
ATTRIBUTABLE TO THE KROGER CO.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER DILUTED COMMON SHARE
|
|
|
$
1.01
|
|
|
|
$
0.62
|
|
|
|
$
2.96
|
|
|
|
$
3.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE NUMBER OF
COMMON SHARES USED IN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED CALCULATION
|
|
|
725
|
|
|
|
724
|
|
|
|
725
|
|
|
|
727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIVIDENDS DECLARED PER
COMMON SHARE
|
|
|
$
0.29
|
|
|
|
$
0.26
|
|
|
|
$
1.13
|
|
|
|
$
0.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
Certain percentages may
not sum due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
The Company defines
First-In First-Out (FIFO) gross profit as sales minus merchandise
costs, including advertising, warehousing and
transportation, but
excluding the Last-In First-Out (LIFO) charge.
The Company defines FIFO gross margin as FIFO gross profit divided
by sales.
The Company defines FIFO operating profit as operating profit
excluding the LIFO charge.
The Company defines FIFO operating margin as FIFO operating profit
divided by sales.
The above FIFO financial metrics are important measures used by
management to evaluate operational effectiveness. Management
believes
these FIFO financial
metrics are useful to investors and analysts because they measure
our day-to-day operational effectiveness.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Merchandise costs
("COGS") and operating, general and administrative expenses
("OG&A") exclude depreciation and amortization
expense
and rent expense which
are included in separate expense lines.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
A LIFO credit of $18
and a LIFO charge of $234 were recorded in the fourth quarters of
2023 and 2022, respectively. For the year to
date
period, LIFO charges of
$113 and $626 were recorded for 2023 and 2022,
respectively.
|
|
|
|
|
|
|
|
|
|
Table
2.
|
THE KROGER
CO.
|
CONSOLIDATED BALANCE
SHEETS
|
(in
millions)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 3,
|
|
January 28,
|
|
|
|
|
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
$
235
|
|
$
336
|
|
|
Temporary cash
investments
|
|
|
1,648
|
|
679
|
|
|
Store deposits
in-transit
|
|
|
|
1,234
|
|
1,127
|
|
|
Receivables
|
|
|
|
|
2,136
|
|
2,234
|
|
|
Inventories
|
|
|
|
|
7,105
|
|
7,560
|
|
|
Prepaid and other
current assets
|
|
|
609
|
|
734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
|
|
12,967
|
|
12,670
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
25,230
|
|
24,726
|
|
Operating lease
assets
|
|
|
|
6,692
|
|
6,662
|
|
Intangibles,
net
|
|
|
|
|
899
|
|
899
|
|
Goodwill
|
|
|
|
|
2,916
|
|
2,916
|
|
Other assets
|
|
|
|
|
1,819
|
|
1,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
|
|
$
50,523
|
|
$
49,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREOWNERS' EQUITY
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt including obligations
|
|
|
|
|
|
|
under finance
leases
|
|
|
|
$
198
|
|
$
1,310
|
|
|
Current portion of
operating lease liabilities
|
|
670
|
|
662
|
|
|
Accounts
payable
|
|
|
|
10,399
|
|
10,179
|
|
|
Accrued salaries and
wages
|
|
|
1,323
|
|
1,746
|
|
|
Other current
liabilities
|
|
|
|
3,486
|
|
3,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
|
16,076
|
|
17,238
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
including obligations under finance leases
|
12,028
|
|
12,068
|
|
Noncurrent operating
lease liabilities
|
|
|
6,351
|
|
6,372
|
|
Deferred income
taxes
|
|
|
|
1,579
|
|
1,672
|
|
Pension and
postretirement benefit obligations
|
|
385
|
|
436
|
|
Other long-term
liabilities
|
|
|
|
2,503
|
|
1,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
|
38,922
|
|
39,609
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareowners'
equity
|
|
|
|
|
11,601
|
|
10,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Shareowners' Equity
|
|
$
50,523
|
|
$
49,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total common shares
outstanding at end of period
|
|
720
|
|
716
|
|
Total diluted shares
year-to-date
|
|
|
725
|
|
727
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
The Company
reclassified $3.1 billion of liabilities from other current
liabilities to accounts payable on the
Consolidated Balance Sheet for the year ended January 28, 2023 to
conform to the current year presentation.
This reclassification was made to the Consolidated Balance Sheet to
more accurately present these current
liabilities. A similar reclassification was made to the
Consolidated Statement of Cash Flows resulting in a
change to accounts payable and accrued expenses within net cash
provided by operating activities for the years
ended February 3, 2024 and January 28, 2023.
|
|
Table
3.
|
THE KROGER
CO.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(in
millions)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net earnings including
noncontrolling interests
|
|
$
2,169
|
|
$
2,249
|
|
|
Adjustments to
reconcile net earnings including noncontrolling
|
|
|
|
|
|
|
|
interests to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
3,125
|
|
2,965
|
|
|
|
|
Asset impairment
charges
|
|
|
69
|
|
68
|
|
|
|
|
Goodwill and fixed
asset impairment charges related to Vitacost.com
|
|
-
|
|
164
|
|
|
|
|
Operating lease asset
amortization
|
|
625
|
|
614
|
|
|
|
|
LIFO charge
|
|
|
|
113
|
|
626
|
|
|
|
|
Stock-based employee
compensation
|
|
172
|
|
190
|
|
|
|
|
Company-sponsored
pension plans benefit
|
|
(9)
|
|
(26)
|
|
|
|
|
Deferred income
taxes
|
|
|
(155)
|
|
161
|
|
|
|
|
Gain on the sale of
assets
|
|
|
(56)
|
|
(40)
|
|
|
|
|
(Gain) loss on
investments
|
|
|
(151)
|
|
728
|
|
|
|
|
Other
|
|
|
|
78
|
|
(8)
|
|
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Store deposits
in-transit
|
|
|
(107)
|
|
(45)
|
|
|
|
|
|
|
Receivables
|
|
|
14
|
|
(222)
|
|
|
|
|
|
|
Inventories
|
|
|
342
|
|
(1,370)
|
|
|
|
|
|
|
Prepaid and other
current assets
|
|
72
|
|
(36)
|
|
|
|
|
|
|
Accounts
payable
|
|
|
564
|
|
44
|
|
|
|
|
|
|
Accrued
expenses
|
|
|
(222)
|
|
(167)
|
|
|
|
|
|
|
Income taxes receivable
and payable
|
|
68
|
|
(190)
|
|
|
|
|
|
|
Operating lease
liabilities
|
|
|
(695)
|
|
(622)
|
|
|
|
|
|
|
Other
|
|
|
|
772
|
|
(585)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
6,788
|
|
4,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Payments for property
and equipment, including payments for lease buyouts
|
|
(3,904)
|
|
(3,078)
|
|
|
Proceeds from sale of
assets
|
|
|
101
|
|
78
|
|
|
Other
|
|
|
|
|
|
53
|
|
(15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used by
investing activities
|
|
|
(3,750)
|
|
(3,015)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Proceeds from issuance
of long-term debt
|
|
15
|
|
-
|
|
|
Payments on long-term
debt including obligations under finance leases
|
|
(1,301)
|
|
(552)
|
|
|
Dividends
paid
|
|
|
|
(796)
|
|
(682)
|
|
|
Financing fees
paid
|
|
|
|
-
|
|
(84)
|
|
|
Proceeds from issuance
of capital stock
|
|
50
|
|
134
|
|
|
Treasury stock
purchases
|
|
|
(62)
|
|
(993)
|
|
|
Other
|
|
|
|
|
|
(76)
|
|
(112)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used by
financing activities
|
|
|
(2,170)
|
|
(2,289)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE)
IN CASH AND TEMPORARY
|
|
|
|
|
|
|
CASH
INVESTMENTS
|
|
|
868
|
|
(806)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND TEMPORARY CASH
INVESTMENTS:
|
|
|
|
|
|
|
BEGINNING OF
YEAR
|
|
|
1,015
|
|
1,821
|
|
|
END OF YEAR
|
|
|
|
$
1,883
|
|
$
1,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
capital investments:
|
|
|
|
|
|
|
|
Payments for property
and equipment, including payments for lease buyouts
|
|
$
(3,904)
|
|
$
(3,078)
|
|
|
Payments for lease
buyouts
|
|
|
-
|
|
21
|
|
|
Changes in
construction-in-progress payables
|
|
344
|
|
(281)
|
|
|
|
Total capital
investments, excluding lease buyouts
|
|
$
(3,560)
|
|
$
(3,338)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disclosure of cash flow
information:
|
|
|
|
|
|
|
|
|
Cash paid during the
year for interest
|
|
$
488
|
|
$
545
|
|
|
|
Cash paid during the
year for income taxes
|
|
$
751
|
|
$
698
|
|
Table 4.
Supplemental Sales Information
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except
percentages)
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items identified below
should not be considered as alternatives to sales or any other GAAP
measure of performance. Identical sales is
an industry-specific measure, and it is important to review it in
conjunction with Kroger's financial results reported in accordance
with
GAAP. Other companies in our industry may calculate identical
sales differently than Kroger does, limiting the comparability of
the measure.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IDENTICAL SALES
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOURTH
QUARTER
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022 (b)
|
|
2023
|
|
2022 (b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXCLUDING
FUEL
|
|
$
33,157
|
|
$
33,423
|
|
$
131,748
|
|
$
130,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXCLUDING FUEL
(c)
|
|
(0.8) %
|
|
6.2 %
|
|
0.9 %
|
|
5.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Kroger defines
identical sales, excluding fuel, as sales to retail customers,
including sales from all departments at identical
supermarket
locations, Kroger
Specialty Pharmacy businesses, jewelry and ship-to-home
solutions. Kroger defines a supermarket as identical
when
it has been in
operation without expansion or relocation for five full
quarters. Kroger defines Kroger Specialty Pharmacy businesses
as
identical when physical
locations have been in operation continuously for five full
quarters and discontinued patient therapies are
excluded from the
identical sales calculation starting in the quarter of transfer or
termination. We define Kroger Delivery identical
sales
powered by Ocado
based on geography. We include Kroger Delivery sales powered
by Ocado as identical if the delivery occurs in an
existing Kroger
Supermarket geography. If the Kroger Delivery sales powered by
Ocado occur in a new geography, these sales are
included as identical
when deliveries have occurred to the new geography for five full
quarters.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
Identical sales for the
fourth quarter of 2022 and year-to-date 2022 were adjusted to a 13
and 53-week basis, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
Identical sales without
fuel would have grown 0.1% in the 4th quarter and 2.3% year-to-date
for 2023 if not for the reduction in pharmacy
sales from the
previously communicated termination of our agreement with Express
Scripts effective December 31, 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 5.
Reconciliation of Net Total Debt and
|
|
|
|
|
|
|
|
Net Earnings
Attributable to The Kroger Co. to Adjusted EBITDA
|
|
|
|
|
|
|
|
(in millions, except
for ratio)
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The items identified
below should not be considered an alternative to any GAAP measure
of performance or access to liquidity. Net total debt to
adjusted EBITDA is an important measure used by management to
evaluate the Company's access to liquidity. The items below
should be
reviewed in conjunction with Kroger's financial results reported in
accordance with GAAP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
provides a reconciliation of net total debt.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 3,
|
|
January 28,
|
|
|
|
|
|
|
|
|
|
|
|
2024
|
|
2023
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt including obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
under
finance leases
|
|
$
198
|
|
$
1,310
|
|
$
(1,112)
|
|
|
|
|
|
|
|
Long-term debt
including obligations under finance leases
|
|
12,028
|
|
12,068
|
|
(40)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
12,226
|
|
13,378
|
|
(1,152)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Temporary cash
investments
|
|
1,648
|
|
679
|
|
969
|
|
|
|
|
|
|
|
Less: Prepaid benefit
payments
|
|
-
|
|
125
|
|
(125)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net total debt
|
|
$
10,578
|
|
$
12,574
|
|
$
(1,996)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
provides a reconciliation from net earnings attributable to The
Kroger Co. to adjusted EBITDA, as defined in the Company's
credit agreement, for 2023 and 2022 on a 52-week basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
|
|
|
|
February 3,
|
|
January 28,
|
|
|
|
|
|
|
|
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co. on a 53-week basis in fiscal year
2023
|
|
$
2,164
|
|
$
2,244
|
|
|
|
|
|
|
|
|
|
LIFO charge
|
|
113
|
|
626
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
3,125
|
|
2,965
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
441
|
|
535
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
667
|
|
653
|
|
|
|
|
|
|
|
|
|
Adjustment for pension
plan withdrawal liabilities
|
|
-
|
|
25
|
|
|
|
|
|
|
|
|
|
Adjustment for (gain)
loss on investments
|
|
(151)
|
|
728
|
|
|
|
|
|
|
|
|
|
Adjustment for Home
Chef contingent consideration
|
|
-
|
|
20
|
|
|
|
|
|
|
|
|
|
Adjustment for merger
related costs (a)
|
|
316
|
|
44
|
|
|
|
|
|
|
|
|
|
Adjustment for opioid
settlement charges (b)
|
|
1,475
|
|
85
|
|
|
|
|
|
|
|
|
|
Adjustment for goodwill
and fixed asset impairment charges related to
Vitacost.com
|
|
-
|
|
164
|
|
|
|
|
|
|
|
|
|
53rd week EBITDA
adjustment
|
|
(187)
|
|
-
|
|
|
|
|
|
|
|
|
|
Other
|
|
(15)
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
7,948
|
|
$
8,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net total debt to
adjusted EBITDA ratio on a 52-week basis
|
|
1.33
|
|
1.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Merger related
costs primarily include third party professional fees and credit
facility fees associated with the proposed merger
with Albertsons Companies, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Opioid settlement
charges include settlements with the nationwide opioid settlement
framework and the States of West Virginia and
New Mexico.
|
|
|
|
|
|
|
|
|
|
Table 6. Net
Earnings Per Diluted Share Excluding the Adjustment
Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The purpose of this
table is to better illustrate comparable operating results from our
ongoing business, after removing the effects on net earnings per
diluted common share for certain items described below.
Adjusted net earnings and adjusted net earnings per diluted share
are useful metrics to investors and analysts because they present
more accurately year-over-year comparisons for net earnings and net
earnings
per diluted share because adjusted items are not the result of
normal operations. Items identified in this table should not
be considered alternatives to net earnings attributable to The
Kroger Co. or any other GAAP
measure of performance. These items should not be reviewed in
isolation or considered substitutes for the Company's financial
results as reported in accordance with GAAP. Due to the
nature of these items,
as further described below, it is important to identify these items
and to review them in conjunction with the Company's financial
results reported in accordance with GAAP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
summarizes items that affected the Company's financial results
during the periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOURTH
QUARTER
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
$
736
|
|
$
450
|
|
$
2,164
|
|
$
2,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for pension
plan withdrawal liabilities (a)(b)
|
|
-
|
|
19
|
|
-
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for loss
(gain) on investments (a)(c)
|
|
128
|
|
70
|
|
(116)
|
|
561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for Home
Chef contingent consideration (a)(d)
|
|
-
|
|
2
|
|
-
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for merger
related costs (a)(e)
|
|
115
|
|
19
|
|
268
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for opioid
settlement charges (a)(f)
|
|
-
|
|
-
|
|
1,163
|
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for goodwill
and fixed asset impairment charges related to Vitacost.com
(a)(g)
|
|
-
|
|
164
|
|
-
|
|
164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 and 2022
Adjustment Items
|
|
|
243
|
|
274
|
|
1,315
|
|
860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
excluding the
adjustment items above
|
|
$
979
|
|
$
724
|
|
$
3,479
|
|
$
3,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53rd week adjustment
(a)(h)
|
|
|
(144)
|
|
-
|
|
(144)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
excluding the
adjustment items above and the 53rd week
|
|
$
835
|
|
$
724
|
|
$
3,335
|
|
$
3,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
per diluted common
share
|
|
|
$
1.01
|
|
$
0.62
|
|
$
2.96
|
|
$
3.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for pension
plan withdrawal liabilities (i)
|
|
-
|
|
0.03
|
|
-
|
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for loss
(gain) on investments (i)
|
|
0.17
|
|
0.09
|
|
(0.17)
|
|
0.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for Home
Chef contingent consideration (i)
|
|
-
|
|
-
|
|
-
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for merger
related costs (i)
|
|
0.16
|
|
0.03
|
|
0.37
|
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for opioid
settlement charges (i)
|
|
-
|
|
-
|
|
1.60
|
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for goodwill
and fixed asset impairment charges related to Vitacost.com
(i)
|
|
-
|
|
0.22
|
|
-
|
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 and 2022
Adjustment Items
|
|
|
0.33
|
|
0.37
|
|
1.80
|
|
1.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co. per
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
diluted common share
excluding the adjustment items above
|
|
$
1.34
|
|
$
0.99
|
|
$
4.76
|
|
$
4.23
|
|
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|
|
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|
|
|
|
|
|
53rd week adjustment
(i)
|
|
|
(0.20)
|
|
-
|
|
(0.20)
|
|
-
|
|
|
|
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|
Net earnings
attributable to The Kroger Co. per diluted common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
excluding the
adjustment items above and the 53rd week
|
|
$
1.14
|
|
$
0.99
|
|
$
4.56
|
|
$
4.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
Average number of
common shares used in
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
diluted
calculation
|
|
|
725
|
|
724
|
|
725
|
|
727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 6. Net
Earnings Per Diluted Share Excluding the Adjustment Items
(continued)
|
(in millions, except
per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
(a)
|
The amounts presented
represent the after-tax effect of each adjustment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
The pre-tax adjustment
to OG&A expenses for pension plan withdrawal liabilities was
$25.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
The pre-tax adjustments
for loss (gain) on investments were $166 and $92 in the fourth
quarters of 2023 and 2022, respectively. The year-to-date
pre-tax adjustments for loss (gain) on investments were ($151) and
$728 in 2023 and 2022, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)
|
The pre-tax adjustment
to OG&A expenses for Home Chef contingent consideration was $2
in the fourth quarter of 2022. The year-to-date pre-tax
adjustment to OG&A expenses for Home Chef contingent
consideration were $20 in 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
|
The pre-tax adjustments
to OG&A expenses for merger-related costs were $138 and $25 in
the fourth quarters of 2023 and 2022, respectively. The
year-to-date pre-tax adjustments to OG&A expenses for
merger-related costs were $316 and $44 in 2023 and 2022,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f)
|
The year-to-date
pre-tax adjustments to OG&A expenses for opioid settlement
charges were $1,475 and $85 in 2023 and 2022,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(g)
|
The after-tax and
pre-tax adjustment to OG&A expenses for goodwill and fixed
asset impairment charges related to Vitacost.com was
$164.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(h)
|
The pre-tax adjustment
for the 53rd week was ($179).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The amounts presented
represent the net earnings (loss) per diluted common share effect
of each adjustment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
2023 Fourth Quarter
Adjustment Items include adjustments for the loss on investments
and merger related costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 Adjustment Items
include the Fourth Quarter Adjustment Items plus the adjustments
that occurred in the first three quarters of 2023 for gain on
investments, merger related costs and opioid settlement
charges.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 Fourth Quarter
Adjustment Items include adjustments for the pension plan
withdrawal liability costs, loss on investments, Home Chef
contingent consideration adjustment, merger related costs, and
goodwill and fixed asset impairment charges related to
Vitacost.com.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 Adjustment Items
include the Fourth Quarter Adjustment Items plus the adjustments
that occurred in the first three quarters of 2022 for loss on
investments, Home Chef contingent consideration adjustment,
merger related costs, and legal settlement costs.
|
Table 7. Operating
Profit Excluding the Adjustment Items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The purpose of this
table is to better illustrate comparable operating results from our
ongoing business, after removing the effects on operating profit
for certain items described below. Adjusted FIFO
operating profit is a useful metric to investors and analysts
because it presents more accurately year-over-year comparisons for
operating profit because adjusted items are not the result of
normal
operations. Items identified in this table should not be
considered alternatives to operating profit or any other GAAP
measure of performance. These items should not be reviewed in
isolation or
considered substitutes for the Company's financial results as
reported in accordance with GAAP. Due to the nature of these
items, as further described below, it is important to identify
these items
and to review them in conjunction with the Company's financial
results reported in accordance with GAAP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
summarizes items that affected the Company's financial results
during the periods presented.
|
|
|
|
|
|
|
|
|
|
|
FOURTH
QUARTER
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
$
1,194
|
|
$
826
|
|
$
3,096
|
|
$
4,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFO (credit)
charge
|
|
|
(18)
|
|
234
|
|
113
|
|
626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIFO Operating
profit
|
|
|
1,176
|
|
1,060
|
|
3,209
|
|
4,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for pension
plan withdrawal liabilities
|
|
-
|
|
25
|
|
-
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for Home
Chef contingent consideration
|
|
-
|
|
2
|
|
-
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for merger
related costs (a)
|
|
138
|
|
25
|
|
316
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for opioid
settlement charges (b)
|
|
-
|
|
-
|
|
1,475
|
|
85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for goodwill
and fixed asset impairment charges related to
Vitacost.com
|
|
-
|
|
164
|
|
-
|
|
164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
(7)
|
|
(2)
|
|
(14)
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 and 2022
Adjustment items
|
|
131
|
|
214
|
|
1,777
|
|
327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted FIFO operating
profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
excluding the adjustment items above
|
|
$
1,307
|
|
$
1,274
|
|
$
4,986
|
|
$
5,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53rd week
adjustment
|
|
|
(187)
|
|
-
|
|
(187)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted FIFO operating
profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
excluding the adjustment items above and the 53rd
week
|
|
$
1,120
|
|
$
1,274
|
|
$
4,799
|
|
$
5,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Merger related costs
primarily include third party professional fees and credit facility
fees associated with the proposed merger with Albertsons Companies,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
Opioid settlement
charges include settlements with the nationwide opioid settlement
framework and the States of West Virginia and New
Mexico.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 8.
Adjusted Free Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted free cash flow
is an important performance measure used by management, and
management believes it is also a useful
metric for investors and analysts to evaluate the Company's ability
to generate additional funding from business operations
available for dividends, managing debt levels, share repurchases
and other strategic investments. Adjusted free cash flow
is
one of the key financial indicators of the Company's business
performance and the Company also uses adjusted free cash flow
to evaluate the Company's senior management. However,
adjusted free cash flow is not a measure of financial performance
or
liquidity under GAAP and, therefore, should not be considered an
alternative to net earnings (loss) or net cash provided by
operating activities as an indicator of the Company's performance
or liquidity. Although free cash flow is a relatively
standard
term, numerous methods exist for calculating free cash flow. As a
result, the method used by the Company's management to
calculate adjusted free cash flow may differ from methods other
companies use to calculate free cash flow.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
sets forth a reconciliation of net cash provided by operating
activities to adjusted free cash flow.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
|
|
|
February 3,
|
|
January 28,
|
|
January 29,
|
|
|
|
|
|
|
|
|
|
|
2024
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
6,788
|
|
$
|
4,498
|
|
$
|
6,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments for property
and equipment, including payments for lease buyouts
|
|
(3,904)
|
|
|
(3,078)
|
|
|
(2,614)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
|
2,884
|
|
|
1,420
|
|
|
3,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for company
pension plans and payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
related to the
restructuring of multi-employer pension plans
|
|
298
|
|
|
283
|
|
|
366
|
|
|
|
|
|
|
|
|
|
Adjustment for payments
related to opioid settlements
|
|
33
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash
Flow
|
$
|
3,215
|
|
$
|
1,703
|
|
$
|
3,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/kroger-reports-fourth-quarter-and-full-year-2023-results-announces-guidance-for-2024-302082940.html
SOURCE The Kroger Co.