First Quarter Highlights
- Identical Sales without fuel increased 4.1%
- Operating Profit of $1,505
million; Adjusted FIFO Operating Profit of $1,601 million
- EPS of $0.90; Adjusted EPS of
$1.45
- Company is widening its competitive moats to deliver value for
customers
-
- Fresh Department identical sales increased 5.2%
- Our Brands identical sales increased 6.3%
- Digitally engaged households grew by more than half a million
and digital coupon downloads increased 11%
CINCINNATI, June 16,
2022 /PRNewswire/ -- The Kroger Co. (NYSE: KR) today
reported its first quarter 2022 results and will update investors
on how Leading with Fresh and Accelerating with Digital
initiatives continue to position Kroger for long-term sustainable
growth.
Comments from Chairman and CEO Rodney
McMullen
"Kroger achieved strong first quarter results as we successfully
executed on our strategy of Leading with Fresh and Accelerating
with Digital. We are incredibly proud of our associates who
continue to put the customer at the center of everything we do.
Our team is doing an outstanding job managing costs in an
inflationary environment, which is allowing us to continue to
invest in our associates while providing our customers the freshest
food at affordable prices when and where they need it. We are
delivering everyday value through personalized experiences, trusted
Our Brands products, data-driven promotions, and seamless
e-commerce solutions.
Looking ahead, we are well positioned to continue delivering for
our customers, investing in our associates, and driving sustainable
returns for shareholders."
First Quarter Financial Results
|
|
1Q22 ($ in
millions; except EPS)
|
1Q21 ($ in
millions; except EPS)
|
ID Sales* (Table 4)
|
4.1 %
|
(4.1 %)
|
EPS
|
$0.90
|
$0.18
|
Adjusted EPS (Table 6)
|
$1.45
|
$1.19
|
Operating Profit
|
$1,505
|
$805
|
Adjusted FIFO Operating Profit (Table
7)
|
$1,601
|
$1,375
|
FIFO Gross Margin Rate*
|
Decreased 26 basis points
|
OG&A Rate*
|
Decreased 46 basis points
|
|
*without fuel and
adjustment items, if applicable
|
Total company sales were $44.6
billion in the first quarter, compared to $41.3 billion for the same period last year.
Excluding fuel, sales increased 3.8% compared to the same period
last year.
Gross margin was 21.6% of sales for the first quarter. The FIFO
gross margin rate, excluding fuel, decreased 26 basis points
compared to the same period last year. This decrease was primarily
attributable to continued strategic price investments and higher
supply chain costs offset by sourcing benefits and the cycling of a
write-down related to a donation of personal protective equipment
inventory from prior year.
The LIFO charge for the quarter was $93
million, compared to a LIFO charge of $37 million for the same period last year driven
by higher inflation.
The Operating, General & Administrative rate decreased 46
basis points, excluding fuel and adjustment items, which reflects
sales leverage, continued execution of cost savings initiatives,
and lower contributions to multi-employer pension plans offset by
investments in associates.
The income tax rate for the first quarter was 18.0%, compared to
20.2% for the same period last year. This decrease was primarily
attributable to higher tax deductions related to employee stock
option exercises.
Capital Allocation Strategy
Kroger continues to generate strong free cash flow and remains
committed to investing in the business to drive long-term
sustainable net earnings growth, maintaining its current investment
grade debt rating, and returning excess free cash flow to
shareholders via share repurchases and a growing dividend over
time.
Kroger's net total debt to adjusted EBITDA ratio is 1.68,
compared to 1.79 a year ago (Table 5). The company's net total debt
to adjusted EBITDA ratio target range is 2.30 to 2.50.
During the quarter, Kroger repurchased $665 million shares and as of the end of the
first quarter, $301 million remains
on the board authorization announced on December 30, 2021.
2022 Guidance
Comments from CFO Gary
Millerchip
"Our relentless focus on executing our strategy and sustained
food at home trends led to a strong first quarter. The Kroger team
is effectively navigating a dynamic retail environment. Our diverse
and resilient business model gives us confidence to raise our
full-year guidance. We now expect identical sales without fuel to
be in the range of 2.5% to 3.5%, adjusted FIFO operating profit of
$4.3 billion to $4.4 billion, and adjusted net earnings per
diluted share to be in the range of $3.85 to $3.95. We
remain confident in our ability to deliver sustainable earnings
growth and total shareholder returns of 8-11% over time."
Full-Year 2022 Guidance -
Updated
|
|
IDs (%)
|
EPS ($)
|
Operating
Profit ($B)
|
Tax
Rate**
|
Cap Ex ($B)
|
Free Cash
Flow ($B)***
|
Adjusted*
|
2.5% -
3.5%
|
$3.85 -
$3.95
|
$4.3 -
$4.4
|
22 %
|
$3.8 -
$4.0
|
$2.0 -
$2.2
|
* 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 2022 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 2022 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 or changes in tax laws,
which cannot be predicted.
|
*** 2022 free cash flow
guidance includes a $300M payment of deferred payroll taxes. This
excludes
planned payments related to the restructuring of multi-employer
pension plans.
|
First Quarter 2022 Highlights
Leading with Fresh
- Achieved the two highest single-day floral sales in Kroger
history, led by Valentine's Day and Mother's Day and solidified the
company's place as the nation's largest floral retailer
- Accelerated End-to-End Fresh Produce initiative with 355 new
stores certified, driving higher fresh sales during the
quarter
- Launched 239 new, seasonal Our Brands items,
including fresh products to elevate summer cooking
- Unveiled a study completed with the University of Cincinnati and Kroger Health to
understand how Kroger's Food as Medicine platform and dietitians
can support customers' goals to incorporate more fresh foods and
live healthier lives by leveraging technology, health education,
and the OptUP shopping tool
Accelerating with Digital
- Opened two new Kroger Delivery facilities, powered by Ocado, in
Dallas, Texas and Pleasant Prairie, Wisconsin allowing Kroger to
serve fresh and affordable products directly to more
households
- Expanded the Kroger Delivery network by opening three new spoke
facilities, which serve as last-mile cross-dock locations,
including Columbus and
Louisville in existing
geographies, as well as Miami, a
new geography
- Introduced national e-commerce experience that expands Kroger's
Home and Baby offerings by selling several thousand new products on
Kroger's Ship Marketplace in collaboration with Bed Bath &
Beyond Inc.
Associate Experience
- Held nationwide hybrid hiring event with opportunities in
retail, e-commerce, manufacturing, supply chain, merchandising,
logistics, corporate, pharmacy, and healthcare roles
- Launched Microsoft Teams Rooms in supermarket locations to
improve collaboration and training capabilities for associates
- Celebrated 45 associates who were recognized by Progressive
Grocer to represent the Top Women in Grocery across three
categories including, Senior-Level Executives, Rising Stars and
Store Leaders
- Continued Kroger's commitment to associate well-being by
providing new training to more than 1,500 leaders to develop the
skills needed to identify signs and symptoms of mental health
problems, demonstrate support for associates experiencing a crisis,
and guidance for self-care
Live Our Purpose
- Directed $210 million of
$350 million in annual charitable
giving to end hunger in our communities and gave a record one-year
total of 546 million meals to people across the country while
achieving 79% waste diversion from landfills company-wide
- Reduced barriers to COVID-19 treatment options nationwide by
supporting the "Test to Treat" initiative at The Little Clinic
locations for patients exhibiting symptoms of COVID-19
- Announced new partnership with USO to bring mobile food
programming to serve local military communities
- Ranked 25th on the 2022 Axios Harris Poll 100, an annual
ranking of the reputations of the most visible U.S. companies
About Kroger
At The Kroger Co. (NYSE: KR),
we are dedicated to our Purpose: to Feed the Human Spiritâ„¢. 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 2,723 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 2022 ended on May 21, 2022.
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.
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 "achieve,"
"committed," "confident," "continue," "deliver," "driving,"
"expect," "future," "guidance," "strategy," "target," "trends," and
"well-positioned." 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 pandemic related factors, risks and challenges,
including among others, the length of time that the pandemic
continues, future variants, mutations or related strains of the
virus and the effectiveness of vaccines against variants, continued
efficacy of vaccines over time and availability of vaccine
boosters, the extent of vaccine refusal, and global access to
vaccines, as well as the effect of vaccine and/or testing
mandates and related regulations, the potential for additional
future spikes in infection and illness rates including breakthrough
infections among the fully vaccinated, and the corresponding
potential for disruptions in workforce availability and customer
shopping patterns, re-imposed restrictions as a result of
resurgence and the corresponding future easing of restrictions, and
interruptions in domestic and global supply chains or capacity
constraints; whether and when the global pandemic will become
endemic, the pace of recovery when the pandemic subsides or becomes
endemic, which may vary materially over time and among the
different regions we serve; 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,
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 current inflationary
environment and future potential inflationary and/or deflationary
trends and such trends in certain commodities, products and/or
operating costs; the geopolitical environment including the war in
Ukraine; 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; 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 moats 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 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 16, 2022 at ir.kroger.com.
An on-demand replay of the webcast will be available at
approximately 1 p.m. (ET) on Thursday, June
16, 2022.
1st Quarter 2022 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
|
|
|
|
|
|
|
|
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES
|
|
|
|
|
$
44,600
|
|
100.0 %
|
|
$ 41,298
|
|
100.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MERCHANDISE COSTS,
INCLUDING ADVERTISING,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WAREHOUSING AND
TRANSPORTATION (a),
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AND LIFO CHARGE
(b)
|
|
|
34,952
|
|
78.3
|
|
31,947
|
|
77.4
|
|
|
|
OPERATING, GENERAL AND
ADMINISTRATIVE (a)
|
|
|
6,997
|
|
15.7
|
|
7,424
|
|
18.0
|
|
|
|
RENT
|
|
|
|
|
256
|
|
0.6
|
|
261
|
|
0.6
|
|
|
|
DEPRECIATION AND
AMORTIZATION
|
|
|
890
|
|
2.0
|
|
861
|
|
2.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
PROFIT
|
|
|
|
1,505
|
|
3.4
|
|
805
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
|
|
(177)
|
|
(0.4)
|
|
(165)
|
|
(0.4)
|
|
|
|
NON-SERVICE COMPONENT
OF COMPANY-SPONSORED
|
|
|
|
|
|
|
|
|
|
|
|
|
PENSION PLAN
COSTS
|
|
|
16
|
|
-
|
|
18
|
|
-
|
|
|
|
LOSS ON
INVESTMENTS
|
|
|
(532)
|
|
(1.2)
|
|
(479)
|
|
(1.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
BEFORE INCOME TAX EXPENSE
|
|
|
812
|
|
1.8
|
|
179
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX
EXPENSE
|
|
|
146
|
|
0.3
|
|
36
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS INCLUDING
NONCONTROLLING INTERESTS
|
|
666
|
|
1.5
|
|
143
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME ATTRIBUTABLE
TO
NONCONTROLLING INTERESTS
|
|
|
2
|
|
-
|
|
3
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
ATTRIBUTABLE TO THE KROGER CO.
|
|
$
664
|
|
1.5 %
|
|
$ 140
|
|
0.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
ATTRIBUTABLE TO THE KROGER CO.
PER BASIC COMMON SHARE
|
|
|
$
0.91
|
|
|
|
$ 0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE NUMBER OF
COMMON SHARES USED IN
BASIC CALCULATION
|
|
|
722
|
|
|
|
752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
ATTRIBUTABLE TO THE KROGER CO.
PER DILUTED COMMON SHARE
|
|
|
$
0.90
|
|
|
|
$ 0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE NUMBER OF
COMMON SHARES USED IN
DILUTED CALCULATION
|
|
|
733
|
|
|
|
760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIVIDENDS DECLARED PER
COMMON SHARE
|
|
|
$
0.21
|
|
|
|
$ 0.18
|
|
|
|
|
|
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 $93 and
$37 were recorded in the first quarters of 2022 and 2021,
respectively.
|
Table
2.
|
THE KROGER
CO.
|
CONSOLIDATED BALANCE
SHEETS
|
(in
millions)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 21,
|
|
May 22,
|
|
|
|
|
|
|
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
$
245
|
|
$
360
|
|
|
Temporary
cash investments
|
|
|
1,137
|
|
1,949
|
|
|
Store
deposits in-transit
|
|
|
|
1,110
|
|
1,011
|
|
|
Receivables
|
|
|
|
|
1,887
|
|
1,936
|
|
|
Inventories
|
|
|
|
|
7,358
|
|
6,767
|
|
|
Prepaid
and other current assets
|
|
|
539
|
|
522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
|
12,276
|
|
12,545
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
24,209
|
|
23,057
|
|
Operating lease
assets
|
|
|
|
6,760
|
|
6,663
|
|
Intangibles,
net
|
|
|
|
|
928
|
|
978
|
|
Goodwill
|
|
|
|
|
3,076
|
|
3,076
|
|
Other assets
|
|
|
|
|
1,842
|
|
2,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
|
|
$
49,091
|
|
$
48,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREOWNERS' EQUITY
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
|
Current
portion of long-term debt including obligations
|
|
|
|
|
|
|
under finance leases
|
|
|
|
$
587
|
|
$
1,150
|
|
|
Current
portion of operating lease liabilities
|
|
652
|
|
644
|
|
|
Trade
accounts payable
|
|
|
|
7,556
|
|
7,015
|
|
|
Accrued
salaries and wages
|
|
|
1,171
|
|
1,165
|
|
|
Other
current liabilities
|
|
|
|
6,272
|
|
5,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
|
16,238
|
|
15,210
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
including obligations under finance leases
|
13,052
|
|
12,974
|
|
Noncurrent operating
lease liabilities
|
|
|
6,460
|
|
6,385
|
|
Deferred income
taxes
|
|
|
|
1,532
|
|
1,541
|
|
Pension and
postretirement benefit obligations
|
|
455
|
|
507
|
|
Other long-term
liabilities
|
|
|
|
1,961
|
|
2,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
|
39,698
|
|
39,582
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareowners'
equity
|
|
|
|
|
9,393
|
|
9,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Shareowners' Equity
|
|
$
49,091
|
|
$
48,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total common shares
outstanding at end of period
|
|
720
|
|
748
|
|
Total diluted shares
year-to-date
|
|
|
733
|
|
760
|
|
Table
3.
|
THE KROGER
CO.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(in
millions)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net earnings
including noncontrolling interests
|
|
$
666
|
|
$
143
|
|
|
Adjustments to
reconcile net earnings including noncontrolling
|
|
|
|
|
|
|
|
interests to net
cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
890
|
|
861
|
|
|
|
|
Operating lease
asset amortization
|
|
186
|
|
191
|
|
|
|
|
LIFO
charge
|
|
|
|
93
|
|
37
|
|
|
|
|
Stock-based
employee compensation
|
|
57
|
|
56
|
|
|
|
|
Company-sponsored pension plans
|
|
(12)
|
|
(14)
|
|
|
|
|
Deferred income
taxes
|
|
|
(30)
|
|
(2)
|
|
|
|
|
Loss on the sale
of assets
|
|
|
-
|
|
9
|
|
|
|
|
Loss on
investments
|
|
|
532
|
|
479
|
|
|
|
|
Other
|
|
|
|
54
|
|
100
|
|
|
|
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Store deposits
in-transit
|
|
|
(28)
|
|
84
|
|
|
|
|
|
|
Receivables
|
|
|
(2)
|
|
14
|
|
|
|
|
|
|
Inventories
|
|
|
(676)
|
|
205
|
|
|
|
|
|
|
Prepaid and
other current assets
|
|
117
|
|
369
|
|
|
|
|
|
|
Trade accounts
payable
|
|
|
439
|
|
341
|
|
|
|
|
|
|
Accrued
expenses
|
|
|
(748)
|
|
(549)
|
|
|
|
|
|
|
Income taxes
receivable and payable
|
|
(70)
|
|
(175)
|
|
|
|
|
|
|
Operating lease
liabilities
|
|
|
(214)
|
|
(214)
|
|
|
|
|
|
|
Other
|
|
|
|
(152)
|
|
320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
provided by operating activities
|
|
1,102
|
|
2,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Payments for
property and equipment, including payments for lease
buyouts
|
|
(745)
|
|
(819)
|
|
|
Proceeds from
sale of assets
|
|
|
14
|
|
7
|
|
|
Other
|
|
|
|
|
|
8
|
|
(40)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used by
investing activities
|
|
|
(723)
|
|
(852)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Payments on
long-term debt including obligations under finance
leases
|
|
(45)
|
|
(328)
|
|
|
Dividends
paid
|
|
|
|
(154)
|
|
(138)
|
|
|
Proceeds from
issuance of capital stock
|
|
113
|
|
31
|
|
|
Treasury stock
purchases
|
|
|
(665)
|
|
(402)
|
|
|
Proceeds from
financing arrangement
|
|
|
-
|
|
166
|
|
|
Other
|
|
|
|
|
|
(67)
|
|
(110)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used by
financing activities
|
|
|
(818)
|
|
(781)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (DECREASE) INCREASE
IN CASH AND TEMPORARY
|
|
|
|
|
|
|
CASH
INVESTMENTS
|
|
|
(439)
|
|
622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND TEMPORARY CASH
INVESTMENTS:
|
|
|
|
|
|
|
BEGINNING OF
YEAR
|
|
|
1,821
|
|
1,687
|
|
|
END OF
PERIOD
|
|
|
|
$
1,382
|
|
$
2,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
capital investments:
|
|
|
|
|
|
|
|
Payments for
property and equipment, including payments for lease
buyouts
|
|
$
(745)
|
|
$
(819)
|
|
|
Payments for
lease buyouts
|
|
|
3
|
|
-
|
|
|
Changes in
construction-in-progress payables
|
|
(229)
|
|
153
|
|
|
|
Total capital
investments, excluding lease buyouts
|
|
$
(971)
|
|
$
(666)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disclosure of cash flow
information:
|
|
|
|
|
|
|
|
|
Cash paid during
the year for interest
|
|
$
198
|
|
$
185
|
|
|
|
Cash paid during
the year for income taxes
|
|
$
244
|
|
$
205
|
|
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
|
|
|
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
EXCLUDING
FUEL
|
|
$
|
38,148
|
|
$
|
36,644
|
|
|
|
|
|
|
|
|
|
|
|
EXCLUDING
FUEL
|
|
|
4.1 %
|
|
|
(4.1) %
|
|
|
(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.
|
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 21,
|
|
|
May 22,
|
|
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt including obligations
|
|
|
|
|
|
|
|
|
|
under
finance leases
|
|
$
|
587
|
|
$
|
1,150
|
|
$
|
(563)
|
Long-term debt
including obligations under finance leases
|
|
|
13,052
|
|
|
12,974
|
|
|
78
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
13,639
|
|
|
14,124
|
|
|
(485)
|
|
|
|
|
|
|
|
|
|
|
Less: Temporary cash
investments
|
|
|
1,137
|
|
|
1,949
|
|
|
(812)
|
|
|
|
|
|
|
|
|
|
|
Net total debt
|
|
$
|
12,502
|
|
$
|
12,175
|
|
$
|
327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 2022 and 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROLLING FOUR QUARTERS
ENDED
|
|
|
|
|
|
|
May 21,
|
|
|
May 22,
|
|
|
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
$
|
2,179
|
|
$
|
1,513
|
|
|
|
LIFO charge
(credit)
|
|
|
253
|
|
|
(1)
|
|
|
|
Depreciation and
amortization
|
|
|
2,853
|
|
|
2,783
|
|
|
|
Interest
expense
|
|
|
583
|
|
|
535
|
|
|
|
Income tax
expense
|
|
|
495
|
|
|
445
|
|
|
|
Adjustment for pension
plan withdrawal liabilities
|
|
|
-
|
|
|
1,437
|
|
|
|
Adjustment for
company-sponsored pension plan settlement charges
|
|
|
87
|
|
|
-
|
|
|
|
Adjustment for loss
(gain) on investments
|
|
|
874
|
|
|
(204)
|
|
|
|
Adjustment for Home
Chef contingent consideration
|
|
|
30
|
|
|
172
|
|
|
|
Adjustment for
transformation costs (a)
|
|
|
92
|
|
|
117
|
|
|
|
Other
|
|
|
(8)
|
|
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
7,438
|
|
$
|
6,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net total debt to
adjusted EBITDA ratio
|
|
|
1.68
|
|
|
1.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Transformation
costs primarily include costs related to business closure costs and
third party professional
consulting fees associated with
business transformation and cost saving initiatives.
|
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
|
|
|
|
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
$
|
664
|
|
$
|
140
|
|
|
|
|
|
|
|
|
|
|
Adjustment for pension
plan withdrawal liabilities (a)(b)
|
|
|
-
|
|
|
344
|
|
Adjustment for loss on
investments (a)(c)
|
|
|
404
|
|
|
367
|
|
Adjustment for Home
Chef contingent consideration (a)(d)
|
|
|
6
|
|
|
33
|
|
Adjustment for
transformation costs (a)(e)
|
|
|
-
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
2022 and 2021
Adjustment Items
|
|
|
410
|
|
|
778
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
|
|
|
|
|
|
|
excluding the
adjustment items above
|
|
$
|
1,074
|
|
$
|
918
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
|
|
|
|
|
|
|
per diluted
common share
|
|
$
|
0.90
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
Adjustment for pension
plan withdrawal liabilities (f)
|
|
|
-
|
|
|
0.45
|
|
Adjustment for loss on
investments (f)
|
|
|
0.54
|
|
|
0.48
|
|
Adjustment for Home
Chef contingent consideration (f)
|
|
|
0.01
|
|
|
0.04
|
|
Adjustment for
transformation costs (f)
|
|
|
-
|
|
|
0.04
|
|
|
|
|
|
|
|
|
|
|
2022 and 2021
Adjustment Items
|
|
|
0.55
|
|
|
1.01
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co. per
|
|
|
|
|
|
|
|
|
diluted common
share excluding the adjustment items above
|
|
$
|
1.45
|
|
$
|
1.19
|
|
|
|
|
|
|
|
|
|
|
Average number of
common shares used in
|
|
|
|
|
|
|
|
|
diluted
calculation
|
|
|
733
|
|
|
760
|
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 adjustment
to OG&A expenses for pension plan withdrawal liabilities was
$449.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(c)
|
The pre-tax adjustments
for loss on investments were $532 and $479 in the first quarters of
2022 and 2021, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)
|
The pre-tax adjustments
to OG&A expenses for Home Chef contingent consideration were $7
and $43 in the first quarters of 2022 and 2021,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(e)
|
The pre-tax adjustment
to OG&A expenses for transformation costs was $44.
Transformation costs primarily include costs related to business
closure costs and third party professional consulting fees
associated with business transformation and cost saving
initiatives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f)
|
The amounts presented
represent the net earnings (loss) per diluted common share effect
of each adjustment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Note:
|
2022 First Quarter
Adjustment Items include adjustments for the loss on investments
and Home Chef contingent consideration adjustment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 First Quarter
Adjustment Items include adjustments for pension plan withdrawal
liabilities, loss on investments, Home Chef contingent
consideration adjustment and strategic transformation
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.
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|
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|
FIRST
QUARTER
|
|
|
|
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
$
|
1,505
|
|
$
|
805
|
|
LIFO charge
|
|
|
93
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
FIFO Operating
profit
|
|
|
1,598
|
|
|
842
|
|
|
|
|
|
|
|
|
|
|
Adjustment for pension
plan withdrawal liabilities
|
|
|
-
|
|
|
449
|
|
Adjustment for Home
Chef contingent consideration
|
|
7
|
|
|
43
|
|
Adjustment for
transformation costs (a)
|
|
|
-
|
|
|
44
|
|
Other
|
|
|
|
(4)
|
|
|
(3)
|
|
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|
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|
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|
|
2022 and 2021
Adjustment items
|
|
|
3
|
|
|
533
|
|
|
|
|
|
|
|
|
|
|
Adjusted FIFO operating
profit
|
|
|
|
|
|
|
|
excluding the adjustment items above
|
|
$
|
1,601
|
|
$
|
1,375
|
|
|
(a)
|
Transformation costs
primarily include costs related to business closure costs and third
party professional
consulting fees associated with business transformation and cost saving
initiatives.
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/kroger-reports-first-quarter-2022-results-and-raises-full-year-guidance-301569533.html
SOURCE The Kroger Co.