First Quarter Highlights
- Identical Sales without fuel increased 0.5%
- Operating Profit of $1,294
million; EPS of $1.29
- Adjusted FIFO Operating Profit of $1,499 million and Adjusted EPS of $1.43
- Executed its go-to-market strategy to deliver value for
customers
- Grew digital sales more than 8%, with Delivery and Pickup
combining for double-digit growth
- Increased total households, loyal households and customer
visits
CINCINNATI, June 20,
2024 /PRNewswire/ -- The Kroger Co. (NYSE: KR)
today reported its first quarter 2024 results, reaffirmed guidance
and updated investors on how Leading with Fresh and Accelerating
with Digital continues to position Kroger for long-term
sustainable growth.
Comments from Chairman and CEO Rodney McMullen
"Kroger is off to a solid start in 2024 led by
better-than-expected performance of our grocery business.
Kroger is delivering exceptional value at a time when many
customers need it more than ever, by providing affordable prices
with personalized promotions. We appreciate our associates who are
elevating the customer experience and improving store execution.
Together, this is growing households and increasing customer
visits.
The long-term investments we have made to strengthen and
diversify our model enables us to manage economic cycles and gives
us the confidence to deliver on our full year outlook. By
delivering value for customers and investing in our associates,
Kroger remains well-positioned to generate attractive and
sustainable returns for our shareholders."
First Quarter Financial Results
|
1Q24 ($ in
millions; except EPS)
|
1Q23 ($ in
millions; except EPS)
|
|
ID Sales* (Table 4)
|
0.5 %
|
3.5 %
|
|
Earnings Per Share
|
$1.29
|
$1.32
|
|
Adjusted EPS (Table 6)
|
$1.43
|
$1.51
|
|
Operating Profit
|
$1,294
|
$1,470
|
|
Adjusted FIFO Operating
Profit (Table 7)
|
$1,499
|
$1,669
|
|
FIFO Gross Margin Rate*
|
Decreased 7 basis points
|
|
OG&A Rate*
|
Increased 22 basis points
|
|
* Without fuel and
adjustment items, if applicable.
|
Total company sales were $45.3
billion in the first quarter compared to $45.2 billion for the same period last year.
Excluding fuel, sales increased 0.6% compared to the same period
last year.
Gross margin was 22.4% of sales for the first
quarter. The FIFO gross margin rate, excluding fuel,
decreased 7 basis points compared to the same period
last year. The decrease in rate was primarily attributable to lower
pharmacy margins and increased price investments, partially offset
by favorable product mix reflecting Our Brands
margin performance.
The LIFO charge for the quarter was $41 million, compared to a LIFO charge of
$99 million for the same period last
year. The decreased charge for the quarter was due to lower
inflation expectations for the current year compared to last
year.
The Operating, General & Administrative
rate increased 22 basis points, excluding fuel and adjustment
items, compared to the same period last year. This increase in rate
was driven by planned investments in associate wages and increased
incentive plan costs, partially offset by continued execution of
cost savings initiatives.
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 1.25
compared to 1.34 a year ago (Table 5). The company's net total debt
to adjusted EBITDA ratio target range is 2.30 to 2.50. Kroger's
strong balance sheet provides ample opportunities for the Company
to pursue growth and enhance shareholder value.
Full-Year 2024 Guidance*
Reaffirmed
- 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, payments related to opioid
settlements and merger-related expenses.
|
|
*** 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.
|
First Quarter 2024 Highlights
Leading with Fresh
- Introduced 346 new Our Brands items
- Achieved a new record for quarterly floral sales led by
strong Valentine's Day and Mother's Day sales
- Launched a new brand, Field & Vine, which offers high
quality and regionally grown berries
Accelerating with Digital
- Increased delivery sales by 17% over last year led by
Customer Fulfillment Centers
- Increased digitally engaged households by 9% compared to
last year
- Expanded new Kroger Precision Marketing advertising
capabilities on Meta's platforms
- Achieved a new record for quarterly pickup fill
rate
Associate Experience
- Awarded the 2024 Platinum Bell Seal for
Workplace Mental Health by Mental Health
America
- Recognized as one of the All-Time Top Corporations for
Women Business Enterprises by the WBENC
- Named as a Best Workplace for Diverse
Professionals by Mogul
Live Our Purpose
- Featured on the 2024 Axios Harris Poll
100, an annual ranking of the most visible and trusted
companies in America
- Sponsored the 2024 National STEM Festival
through Kroger's Zero Hunger | Zero Waste
Foundation
- Celebrated Earth Month with a contribution
to the World Wildlife Fund and introduction of a new reusable bag
campaign
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 420,000
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 first quarter 2024 ended on May 25, 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,"
"confidence," "continue," "deliver," "expect," "future,"
"guidance," "model," "outlook," "strategy," "target," "trends,"
"well-positioned," 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 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 June 20, 2024
at ir.kroger.com. An
on-demand replay of the webcast will be available at approximately
1 p.m. (ET) on Thursday, June 20,
2024.
1st Quarter 2024 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
|
Table 1.
THE KROGER CO.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(unaudited)
|
|
|
|
FIRST
QUARTER
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
SALES
|
|
$ 45,269
|
|
100.0 %
|
|
$ 45,165
|
|
100.0 %
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
MERCHANDISE COSTS,
INCLUDING ADVERTISING,
|
|
|
|
|
|
|
|
|
|
|
WAREHOUSING AND
TRANSPORTATION (a),
|
|
|
|
|
|
|
|
|
|
|
AND LIFO CHARGE
(b)
|
|
35,124
|
|
77.6
|
|
35,080
|
|
77.7
|
|
OPERATING, GENERAL AND
ADMINISTRATIVE (a)
|
|
7,604
|
|
16.8
|
|
7,393
|
|
16.4
|
|
RENT
|
|
269
|
|
0.6
|
|
265
|
|
0.6
|
|
DEPRECIATION AND
AMORTIZATION
|
|
978
|
|
2.1
|
|
957
|
|
2.1
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
PROFIT
|
|
1,294
|
|
2.9
|
|
1,470
|
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
(123)
|
|
(0.3)
|
|
(153)
|
|
(0.3)
|
|
NON-SERVICE COMPONENT
OF COMPANY-SPONSORED
|
|
|
|
|
|
|
|
|
|
|
PENSION PLAN
BENEFITS
|
|
4
|
|
-
|
|
9
|
|
-
|
|
GAIN (LOSS) ON
INVESTMENTS
|
|
16
|
|
-
|
|
(78)
|
|
(0.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS BEFORE
INCOME TAX EXPENSE
|
|
1,191
|
|
2.6
|
|
1,248
|
|
2.8
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX
EXPENSE
|
|
235
|
|
0.5
|
|
286
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS INCLUDING
NONCONTROLLING INTERESTS
|
|
956
|
|
2.1
|
|
962
|
|
2.1
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE
TO
|
|
|
|
|
|
|
|
|
|
|
|
NONCONTROLLING
INTERESTS
|
|
9
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
ATTRIBUTABLE TO THE KROGER CO.
|
|
$
947
|
|
2.1 %
|
|
$
962
|
|
2.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
ATTRIBUTABLE TO THE KROGER CO.
|
|
|
|
|
|
|
|
|
|
|
|
PER BASIC COMMON
SHARE
|
|
$
1.30
|
|
|
|
$
1.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE NUMBER OF
COMMON SHARES USED IN
|
|
|
|
|
|
|
|
|
|
|
|
BASIC
CALCULATION
|
|
721
|
|
|
|
717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
ATTRIBUTABLE TO THE KROGER CO.
|
|
|
|
|
|
|
|
|
|
|
|
PER DILUTED COMMON
SHARE
|
|
$
1.29
|
|
|
|
$
1.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE NUMBER OF
COMMON SHARES USED IN
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED
CALCULATION
|
|
727
|
|
|
|
724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIVIDENDS DECLARED PER
COMMON SHARE
|
|
$
0.29
|
|
|
|
$
0.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
LIFO charges of $41 and
$99 were recorded in the first quarters of 2024 and 2023,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 2.
|
|
THE KROGER CO.
|
|
CONSOLIDATED BALANCE SHEETS
|
|
(in
millions)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
May 25,
|
|
May 20,
|
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash
|
|
$
345
|
|
$
241
|
|
|
Temporary cash investments
|
|
2,501
|
|
2,391
|
|
|
Store deposits in-transit
|
|
1,226
|
|
1,143
|
|
|
Receivables
|
|
1,968
|
|
1,766
|
|
|
Inventories
|
|
6,694
|
|
7,030
|
|
|
Assets held for sale
|
|
607
|
|
-
|
|
|
Prepaid and other current assets
|
|
684
|
|
633
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
14,025
|
|
13,204
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
25,537
|
|
24,935
|
|
|
Operating lease
assets
|
|
6,695
|
|
6,659
|
|
|
Intangibles,
net
|
|
864
|
|
893
|
|
|
Goodwill
|
|
2,673
|
|
2,916
|
|
|
Other assets
|
|
1,647
|
|
1,586
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
51,441
|
|
$
50,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREOWNERS' EQUITY
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Current portion of long-term debt including
obligations
|
|
|
|
|
|
|
|
under finance leases
|
|
$
198
|
|
$
1,319
|
|
|
Current portion of operating lease liabilities
|
|
665
|
|
664
|
|
|
Accounts payable
|
|
10,777
|
|
10,450
|
|
|
Accrued salaries and wages
|
|
1,208
|
|
1,130
|
|
|
Liabilities held for sale
|
|
242
|
|
-
|
|
|
Other current liabilities
|
|
3,150
|
|
3,567
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
16,240
|
|
17,130
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
including obligations under finance leases
|
|
12,021
|
|
12,114
|
|
|
Noncurrent operating
lease liabilities
|
|
6,412
|
|
6,353
|
|
|
Deferred income
taxes
|
|
1,535
|
|
1,694
|
|
|
Pension and
postretirement benefit obligations
|
|
386
|
|
427
|
|
|
Other long-term
liabilities
|
|
2,434
|
|
1,595
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
39,028
|
|
39,313
|
|
|
|
|
|
|
|
|
|
Shareowners'
equity
|
|
12,413
|
|
10,880
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareowners' Equity
|
|
$
51,441
|
|
$
50,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total common shares
outstanding at end of period
|
|
722
|
|
718
|
|
|
Total diluted shares
year-to-date
|
|
727
|
|
724
|
|
|
|
|
|
|
|
|
|
Note:
|
The Company
reclassified $3.1 billion of liabilities from other current
liabilities to accounts
payable on the Consolidated Balance Sheet for the quarter ended May
20, 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
quarter ended May 20, 2023.
|
|
|
Table 3.
|
|
|
THE KROGER CO.
|
|
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
|
(in
millions)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
YEAR-TO-DATE
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net earnings including
noncontrolling interests
|
|
$
956
|
|
$
962
|
|
|
Adjustments to
reconcile net earnings including noncontrolling
|
|
|
|
|
|
|
|
interests to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
978
|
|
957
|
|
|
|
|
Operating lease asset
amortization
|
|
187
|
|
188
|
|
|
|
|
LIFO charge
|
|
41
|
|
99
|
|
|
|
|
Stock-based employee
compensation
|
|
57
|
|
49
|
|
|
|
|
Deferred income
taxes
|
|
(64)
|
|
(5)
|
|
|
|
|
Gain on the sale of
assets
|
|
(9)
|
|
(41)
|
|
|
|
|
(Gain) loss on
investments
|
|
(16)
|
|
78
|
|
|
|
|
Other
|
|
19
|
|
73
|
|
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Store deposits
in-transit
|
|
(11)
|
|
(16)
|
|
|
|
|
|
Receivables
|
|
(102)
|
|
274
|
|
|
|
|
|
Inventories
|
|
225
|
|
419
|
|
|
|
|
|
Prepaid and other
current assets
|
|
(70)
|
|
82
|
|
|
|
|
|
Accounts
payable
|
|
622
|
|
200
|
|
|
|
|
|
Accrued
expenses
|
|
(465)
|
|
(416)
|
|
|
|
|
|
Income taxes receivable
and payable
|
|
180
|
|
198
|
|
|
|
|
|
Operating lease
liabilities
|
|
(137)
|
|
(215)
|
|
|
|
|
|
Other
|
|
(66)
|
|
(26)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
2,325
|
|
2,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Payments for property
and equipment, including payments for lease buyouts
|
|
(1,304)
|
|
(1,028)
|
|
|
Proceeds from sale of
assets
|
|
304
|
|
86
|
|
|
Other
|
|
(14)
|
|
(5)
|
|
|
|
|
|
|
|
|
|
Net cash used by
investing activities
|
|
(1,014)
|
|
(947)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Payments on long-term
debt including obligations under finance leases
|
|
(54)
|
|
(62)
|
|
|
Dividends
paid
|
|
(210)
|
|
(188)
|
|
|
Proceeds from issuance
of capital stock
|
|
85
|
|
23
|
|
|
Treasury stock
purchases
|
|
(103)
|
|
(29)
|
|
|
Other
|
|
(66)
|
|
(40)
|
|
|
|
|
|
|
|
|
|
Net cash used by
financing activities
|
|
(348)
|
|
(296)
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH
AND TEMPORARY
|
|
|
|
|
|
|
CASH
INVESTMENTS
|
|
963
|
|
1,617
|
|
|
|
|
|
|
|
|
|
CASH AND TEMPORARY CASH
INVESTMENTS:
|
|
|
|
|
|
|
BEGINNING OF
YEAR
|
|
1,883
|
|
1,015
|
|
|
END OF
PERIOD
|
|
$
2,846
|
|
$
2,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
capital investments:
|
|
|
|
|
|
|
|
Payments for property
and equipment, including payments for lease buyouts
|
|
$
(1,304)
|
|
$
(1,028)
|
|
|
Payments for lease
buyouts
|
|
37
|
|
-
|
|
|
Changes in
construction-in-progress payables
|
|
37
|
|
(71)
|
|
|
|
Total capital
investments, excluding lease buyouts
|
|
$
(1,230)
|
|
$
(1,099)
|
|
|
|
|
|
|
|
|
|
|
|
|
Disclosure of cash flow
information:
|
|
|
|
|
|
|
|
Cash paid during the
year for interest
|
|
$
70
|
|
$
164
|
|
|
|
Cash paid during the
year for income taxes
|
|
$
119
|
|
$
92
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
FIRST
QUARTER
|
|
|
|
2024
|
|
2023
|
|
EXCLUDING
FUEL
|
|
$
|
38,900
|
|
$
|
38,704
|
|
|
|
|
|
|
|
|
|
EXCLUDING
FUEL
|
|
|
0.5 %
|
|
|
3.5 %
|
|
|
|
|
|
|
|
|
|
(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. For the first quarter of 2024, Kroger
Specialty Pharmacy businesses were not included in identical
sales due to being classified as held for sale.
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 25,
|
|
May 20,
|
|
|
|
|
|
|
2024
|
|
2023
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt including obligations
|
|
|
|
|
|
|
|
|
|
under
finance leases
|
|
$
198
|
|
$
1,319
|
|
$ (1,121)
|
|
|
|
Long-term debt
including obligations under finance leases
|
|
12,021
|
|
12,114
|
|
(93)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
12,219
|
|
13,433
|
|
(1,214)
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Temporary cash
investments
|
|
2,501
|
|
2,391
|
|
110
|
|
|
|
|
|
|
|
|
|
|
|
|
Net total debt
|
|
$
9,718
|
|
$
11,042
|
|
$ (1,324)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, on a
rolling four quarter 52-week basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROLLING FOUR QUARTERS
ENDED
|
|
|
|
|
|
|
May 25,
|
|
May 20,
|
|
|
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
$
2,149
|
|
$
2,542
|
|
|
|
|
|
LIFO charge
|
|
55
|
|
632
|
|
|
|
|
|
Depreciation and
amortization
|
|
3,146
|
|
3,032
|
|
|
|
|
|
Interest
expense
|
|
411
|
|
511
|
|
|
|
|
|
Income tax
expense
|
|
616
|
|
793
|
|
|
|
|
|
Adjustment for pension
plan withdrawal liabilities
|
|
-
|
|
25
|
|
|
|
|
|
Adjustment for (gain)
loss on investments
|
|
(245)
|
|
274
|
|
|
|
|
|
Adjustment for Home
Chef contingent consideration
|
|
-
|
|
13
|
|
|
|
|
|
Adjustment for merger
related costs (a)
|
|
450
|
|
85
|
|
|
|
|
|
Adjustment for opioid
settlement charges (b)
|
|
1,413
|
|
147
|
|
|
|
|
|
Adjustment for goodwill
and fixed asset impairment charges related to
Vitacost.com
|
|
-
|
|
164
|
|
|
|
|
|
53rd week EBITDA
adjustment
|
|
(187)
|
|
-
|
|
|
|
|
|
Other
|
|
(14)
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
7,794
|
|
$
8,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net total debt to
adjusted EBITDA ratio on a 52-week basis
|
|
1.25
|
|
1.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIRST
QUARTER
|
|
|
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
|
$
|
947
|
|
$
|
962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for (gain)
loss on investments (a)(b)
|
|
|
|
(12)
|
|
|
59
|
|
|
|
|
Adjustment for merger
related costs (a)(c)
|
|
|
|
143
|
|
|
34
|
|
|
|
|
Adjustment for opioid
settlement charges (a)(d)
|
|
|
|
-
|
|
|
49
|
|
|
|
|
Held for sale income
tax adjustment
|
|
|
|
(31)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 and 2023
Adjustment Items
|
|
|
|
100
|
|
|
142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
|
|
|
|
|
|
|
|
|
|
|
excluding the
adjustment items above
|
|
|
$
|
1,047
|
|
$
|
1,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
|
|
|
|
|
|
|
|
|
|
|
per diluted common
share
|
|
|
$
|
1.29
|
|
$
|
1.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for (gain)
loss on investments (e)
|
|
|
|
(0.02)
|
|
|
0.08
|
|
|
|
|
Adjustment for merger
related costs (e)
|
|
|
|
0.20
|
|
|
0.05
|
|
|
|
|
Adjustment for opioid
settlement charges (e)
|
|
|
|
-
|
|
|
0.06
|
|
|
|
|
Held for sale income
tax adjustment (e)
|
|
|
|
(0.04)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 and 2023
Adjustment Items
|
|
|
|
0.14
|
|
|
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co. per
|
|
|
|
|
|
|
|
|
|
|
|
|
diluted common share
excluding the adjustment items above
|
|
|
$
|
1.43
|
|
$
|
1.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
common shares used in
|
|
|
|
|
|
|
|
|
|
|
|
|
diluted
calculation
|
|
|
|
727
|
|
|
724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 6. Net Earnings Per Diluted Share Excluding the
Adjustment Items (continued)
|
|
(in millions, except
per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
The amounts presented
represent the after-tax effect of each adjustment.
|
|
|
|
|
|
|
|
|
|
|
(b)
|
The pre-tax adjustments
for (gain) loss on investments were $(16) and $78 in the first
quarters of 2024 and 2023, respectively.
|
|
|
|
|
|
|
|
|
|
|
(c)
|
The pre-tax adjustments
to OG&A expenses for merger-related costs were $175 and $40 in
the first quarters of 2024 and 2023, respectively.
|
|
|
|
|
|
|
|
|
|
|
(d)
|
The pre-tax adjustment
to OG&A expenses for opioid settlement charges was
$62.
|
|
|
|
|
|
|
|
|
|
|
(e)
|
The amounts presented
represent the net earnings (loss) per diluted common share effect
of each adjustment.
|
|
|
|
|
|
|
|
|
|
|
Note:
|
2024 First Quarter
Adjustment Items include adjustments for the gain on investments,
merger related costs and held for sale income tax.
|
|
|
|
|
|
|
|
|
|
|
2023 First Quarter
Adjustment Items include adjustments for the loss on investments,
merger related costs and opioid settlement
charges.
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
FIRST
QUARTER
|
|
|
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
$
|
1,294
|
|
$
|
1,470
|
|
|
|
LIFO charge
|
|
|
41
|
|
|
99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIFO Operating
profit
|
|
|
1,335
|
|
|
1,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for merger
related costs (a)
|
|
|
175
|
|
|
40
|
|
|
|
Adjustment for opioid
settlement charges (b)
|
|
|
-
|
|
|
62
|
|
|
|
Other
|
|
|
(11)
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 and 2023
Adjustment items
|
|
|
164
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted FIFO operating
profit
|
|
|
|
|
|
|
|
|
|
excluding the adjustment items above
|
|
$
|
1,499
|
|
$
|
1,669
|
|
|
|
|
|
|
|
(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 the settlement with the State of West
Virginia.
|
|
|
|
|
|
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/kroger-reports-first-quarter-2024-results-and-reaffirms-guidance-302177927.html
SOURCE The Kroger Co.