CINCINNATI, Oct. 27, 2020 /PRNewswire/ -- The Kroger Co.
(NYSE: KR) today will provide an update to investors on how its
Restock Kroger framework has reinvented the company's
business model to deliver consistently strong and attractive total
shareholder return of 8% -11% and create value for customers,
associates and other stakeholders.
"Our associates remain relentlessly focused on our customers,
who are at the center of everything we do," said Rodney McMullen, Kroger's chairman and chief
executive officer. "Our customer obsession led us to make several
strategic decisions three years ago to reinvent our business model
to better serve our customers. We believed customers would continue
to move to a seamless shopping platform that combined the best of
physical and digital experiences. These choices and investments
have positioned Kroger to more effectively respond to the pandemic.
I could not be prouder of the way our people have pulled together
with purpose to promote safety and support our customers and each
other. We also share in the grief of so many whose loved ones lost
their lives and livelihoods as a result of COVID-19."
"Through the Restock Kroger framework and intensity
around operational excellence, we are achieving cost savings of
over $1 billion each year and are
investing savings back into the business with an emphasis on the
customer and associate experience. We are improving the customer
experience by widening and deepening our competitive moats that
include fresh, seamless, personalization and Our Brands.
These moats are strong today and growing in relevance as customers
eat more food at home. We are improving the associate experience by
focusing on talent, culture and wage investments. We are living our
purpose through our commitments to a world with Zero Hunger | Zero
Waste and our framework for action to advance diversity, equity and
inclusion in our business and communities."
"We are creating shareholder value by executing our strategy. We
have returned approximately $6.4
billion to shareholders via dividends and repurchased shares
since the beginning of fiscal 2017. Kroger is growing market share
and our Total Shareholder Return has outperformed the market and
our peer group over the last 12 months. And we are incredibly
excited for the future."
Kroger reconfirmed its 2020 guidance on identical sales,
adjusted FIFO operating profit, adjusted earnings per diluted share
and adjusted free cashflow.
"Prior to the pandemic, Kroger's early results in 2020 were
strong and while the pandemic has clearly been a tailwind to our
business, we've been very pleased with the underlying progress with
all key components of our model, including sales and market share
growth, cost savings initiatives and growth in alternative profit
streams," said Gary Millerchip,
Kroger's chief financial officer. "Based on the strength of our
execution against our competitive moats, our food expertise,
unparalleled data-insights and expected structural shifts to food
consumption at home as a result of COVID-19, we believe Kroger is
well positioned to continue to differentiate and grow in the
future. One year on from announcing our Total Shareholder Return
target, we are well positioned to deliver on this commitment."
Capital Allocation Strategy
Kroger's capital allocation strategy is to use its adjusted free
cash flow to invest in the business and drive profitable growth
while also maintaining its current investment grade debt rating and
returning capital to shareholders. The company actively balances
the use of its adjusted free cash flow to achieve these goals.
On September 11, 2020, the Board
of Directors authorized a $1 billion
share repurchase program, replacing the prior authorization.
Earlier this year, Kroger increased the dividend by 13 percent,
marking the 14th consecutive year of dividend
increases.
2020 Guidance
|
IDS
(%)
|
EPS
($)
|
Operating
Profit ($B)
|
Tax
Rate**
|
Cap
Ex
($B)
|
Adjusted
FCF
($B)
|
Share
Repurchases
($M)
|
Adjusted*
|
>13.0%
|
$3.20
-
$3.30
|
$3.9 -
$4.0
|
23%
|
$3.0-
$3.4
|
$2.5-$2.7
|
$600-$1,000
|
*Without adjusted items, if applicable; Identical sales is
without fuel; Operating profit represents FIFO Operating
Profit. Kroger is unable to provide a full reconciliation of
the GAAP and non-GAAP measures used in 2020 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 2020 GAAP financial results.
** This rate reflects typical tax adjustments and does not
reflect changes to the rate from the completion of income tax audit
examinations, which cannot be predicted.
About Kroger
At The Kroger Co. (NYSE: KR), we are
Fresh for Everyone™ and dedicated to our Purpose: To Feed the
Human Spirit®. We are, across our family of companies, nearly half
a million associates who serve over 11 million customers daily
through a seamless shopping experience under a variety
of banner names. We are committed to creating
#ZeroHungerZeroWaste communities by 2025. To learn more about us,
visit our newsroom and investor relations site.
This press release contains certain statements that constitute
"forward-looking statements" about 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 "believe,"
"confidence," "continue," "future," "guidance," "positioned,"
"strategy," and "will." 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: COVID-19 related factors, risks and challenges,
including among others, the length of time that the pandemic
continues, the temporary inability of customers to shop due to
illness, quarantine, or other travel restrictions or financial
hardship, shifts in demand away from discretionary or higher priced
products to lower priced products, or stockpiling or similar
pantry-filling activities, reduced workforces which may be caused
by, but not limited to, the temporary inability of the workforce to
work due to illness, quarantine, or government mandates, temporary
store closures due to reduced workforces or government mandates, or
the availability and efficacy of a vaccine; labor negotiations or
disputes; changes in the types and numbers of businesses that
compete with Kroger; pricing and promotional activities of existing
and new competitors, including non-traditional competitors, and the
aggressiveness of that competition; Kroger's response to these
actions; the state of the economy, including interest rates, the
inflationary and deflationary trends in certain commodities,
changes in tariffs, and the unemployment rate; the effect that fuel
costs have on consumer spending; volatility of fuel margins;
changes in government-funded benefit programs and the extent and
effectiveness of any COVID-19 stimulus packages; manufacturing
commodity costs; 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; changes in inflation or deflation in product and
operating costs; stock repurchases; 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,
including the coronavirus; 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 on
Restock Kroger; 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 effective tax rate may differ from the expected rate
due to changes in 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. 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 business update call with investors will
broadcast live at 9 a.m. (ET) on
October 27, 2020
at ir.kroger.com. An on-demand replay of the webcast will be
available at approximately 1 p.m. (ET) on Tuesday, October 27, 2020.
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SOURCE The Kroger Co.