KR 8-K
Kroger Co (KR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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| Item 2.02 | Results of Operations and Financial Condition. |
On June 20, 2025, The Kroger Co. (NYSE:KR) issued a press release announcing its first quarter 2025 results. Attached hereto as Exhibit 99.1, and furnished herewith, is a copy of that release.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit No. | Description | |
| 99.1 | Press Release dated June 20, 2025 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| The Kroger Co. | ||
| June 20, 2025 | By: | /s/ Christine S. Wheatley |
| Christine S. Wheatley | ||
| Executive Vice President, General Counsel and Secretary | ||
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Exhibit 99.1
Kroger Reports First Quarter 2025 Results and
Updates Identical Sales without Fuel Guidance for 2025
First Quarter Highlights
| · | Identical Sales without fuel increased 3.2%*[1] |
| · | Operating Profit of $1,322 million; EPS of $1.29 |
| · | Adjusted FIFO Operating Profit of $1,518 million and Adjusted EPS of $1.49 |
| · | eCommerce sales increased 15% |
CINCINNATI, June 20, 2025 – The Kroger Co. (NYSE: KR) today reported its first quarter 2025 results, updated 2025 identical sales without fuel guidance and shared our progress on key priorities.
Comments from Chairman and CEO Ron Sargent
“Kroger delivered solid first quarter results, with strong sales led by pharmacy, eCommerce and fresh. We made good progress in streamlining our priorities, enhancing customer focus, and running great stores to improve the shopping experience.
Our commitment to driving growth in our core business and moving with speed positions us well for the future. We are confident in our ability to build on our momentum, deliver value for customers, invest in associates and generate attractive returns for shareholders.”
First Quarter Financial Results
| 1Q25 ($ in millions; except EPS) |
1Q24
($ in millions; except EPS) | |
| ID Sales(1) (Table 4) | 3.2% | 0.5% |
| Earnings Per Share | $1.29 | $1.29 |
| Adjusted EPS (Table 6) | $1.49 | $1.43 |
| Operating Profit | $1,322 | $1,294 |
| Adjusted FIFO Operating Profit (Table 7) | $1,518 | $1,499 |
| Gross Margin (Table 8) | 23.0% | 22.0% |
| FIFO Gross Margin Rate(2) |
Increased 79 basis points (including 46 basis points increase from the sale of Kroger Specialty Pharmacy) | |
| OG&A Rate(1) |
Increased 63 basis points (including 33 basis points increase from the sale of Kroger Specialty Pharmacy) | |
* Excludes adjustment items
(1) Without fuel and adjustment items, if applicable.
(2) Without rent, depreciation and amortization, fuel and adjustment items, if applicable.
1
Total company sales were $45.1 billion in the first quarter compared to $45.3 billion for the same period last year, which included $917 million from Kroger Specialty Pharmacy sales. Excluding fuel, Kroger Specialty Pharmacy and adjustment items, sales increased 3.7% compared to the same period last year.
Gross margin was 23.0% of sales for the first quarter compared to 22.0% for the same period last year. The improvement in gross margin was primarily attributable to the sale of Kroger Specialty Pharmacy, lower shrink and lower supply chain costs, partially offset by the mix effect from growth in pharmacy sales which have lower margins.
The FIFO gross margin rate, excluding rent, depreciation and amortization, fuel and adjustment items increased 79 basis points compared to the same period last year. The improvement in rate was primarily attributable to the sale of Kroger Specialty Pharmacy, lower shrink and lower supply chain costs, partially offset by the mix effect from growth in pharmacy sales which have lower margins.
The LIFO charge for the quarter was $40 million, compared to a LIFO charge of $41 million for the same period last year.
The Operating, General and Administrative rate, excluding fuel, and adjustment items, increased 63 basis points compared to the same period last year. The increase in rate was primarily attributable to the sale of Kroger Specialty Pharmacy and an accelerated contribution to a multi-employer pension plan, partially offset by improved productivity. Multi-employer pension contributions drove a 29 basis point increase in the quarter.
In the first quarter, Kroger recognized an impairment charge of $100 million related to the planned closing of approximately 60 stores over the next 18 months. As a result of these store closures, Kroger expects a modest financial benefit. Kroger is committed to reinvesting these savings back into the customer experience, and as a result, this will not impact full-year guidance. Kroger will offer roles in other stores to all associates currently employed at affected stores.
2
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.
During the fourth quarter of Kroger’s fiscal 2024, Kroger entered into a $5 billion accelerated share repurchase program (ASR), which is expected to be completed by no later than Kroger’s fiscal third quarter 2025. The ASR is being completed under Kroger’s $7.5 billion share repurchase authorization. After completion of the ASR program, Kroger expects to resume open market share repurchases under the remaining $2.5 billion authorization. Kroger expects to complete these open market share repurchases by the end of fiscal 2025, which is contemplated in full-year guidance.
Kroger’s net total debt to adjusted EBITDA ratio is 1.69, compared to 1.25 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 invest in the business and enhance shareholder value.
Full-Year 2025 Guidance*
Updated
| · | Identical Sales without fuel of 2.25% – 3.25% |
Reaffirmed
| · | Adjusted FIFO Operating Profit of $4.7 – $4.9 billion |
| · | Adjusted net earnings per diluted share of $4.60 – $4.80 |
| · | Adjusted Free Cash Flow of $2.8 – $3.0 billion** |
| · | Capital expenditures of $3.6 – $3.8 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 2025 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 2025 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 litigation 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 and policies, which cannot be predicted.
Comments from CFO David Kennerley
“Our strong sales results and positive momentum give us confidence to raise our identical sales without fuel guidance, to a new range of 2.25% to 3.25%. While first quarter sales and profitability exceeded our expectations, the macroeconomic environment remains uncertain and as a result other elements of our guidance remain unchanged. We continue to believe that our strategy focusing on fresh, Our Brands and eCommerce will continue to resonate with customers and our resilient model positions us well to navigate the current environment.”
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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 410,000 associates who serve over 11 million customers daily through an eCommerce and store experience under a variety of banner names, serving America through food inspiration and uplift, and creating #ZeroHungerZeroWaste communities. To learn more about us, visit our newsroom and investor relations site.
Kroger's first quarter 2025 ended on May 24, 2025.
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,” “drive,” “expect,” “future,” “guidance,” “model,” “opportunities,” “outlook,” “strategy,” “target,” “trends,” “will,” 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:
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Kroger's ability to achieve sales, earnings, incremental FIFO operating profit, and adjusted free cash flow goals may be affected by: 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, along with changes in federal policy and at regulatory agencies; 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; the outcome of litigation matters, including those relating to the terminated transaction with Albertsons; and the risks relating to or arising from our opioid litigation settlements, including the risk of litigation relating to persons, entities, or jurisdictions that do not participate in those settlements . 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 and policies, 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, 2025 at ir.kroger.com. An on-demand replay of the webcast will be available at approximately 1 p.m. (ET) on Friday, June 20, 2025.
1st Quarter 2025 Tables Include:
| 1. | Consolidated Statements of Operations |
| 2. | Consolidated Balance Sheets |
| 3. | Consolidated Statements of Cash Flows |
| 4. | Supplemental Sales Information |
| 5. | Reconciliation of Net Total Debt and Net Earnings Attributable to The Kroger Co. to Adjusted EBITDA |
| 6. | Net Earnings Per Diluted Share Excluding the Adjustment Items |
| 7. | Operating Profit Excluding the Adjustment Items |
| 8. | Gross Margin |
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Contacts: Media: Erin Rolfes (513) 762-1080; Investors: Rob Quast (513) 762-4969
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Table 1.
THE KROGER CO.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(unaudited)
| FIRST QUARTER | ||||||||||||||||
| 2025 | 2024 | |||||||||||||||
| SALES | $ | 45,118 | 100.0 | % | $ | 45,269 | 100.0 | % | ||||||||
| OPERATING EXPENSES | ||||||||||||||||
| MERCHANDISE COSTS, INCLUDING ADVERTISING, WAREHOUSING AND TRANSPORTATION (a), AND LIFO CHARGE (b) | 34,551 | 76.6 | 35,124 | 77.6 | ||||||||||||
| OPERATING, GENERAL AND ADMINISTRATIVE (a) | 7,923 | 17.6 | 7,604 | 16.8 | ||||||||||||
| RENT | 271 | 0.6 | 269 | 0.6 | ||||||||||||
| DEPRECIATION AND AMORTIZATION | 1,051 | 2.3 | 978 | 2.1 | ||||||||||||
| OPERATING PROFIT | 1,322 | 2.9 | 1,294 | 2.9 | ||||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| NET INTEREST EXPENSE | (199 | ) | (0.5 | ) | (123 | ) | (0.3 | ) | ||||||||
| NON-SERVICE COMPONENT OF COMPANY-SPONSORED PENSION PLAN (EXPENSE) BENEFITS | (1 | ) | - | 4 | - | |||||||||||
| (LOSS) GAIN ON INVESTMENTS | (19 | ) | - | 16 | - | |||||||||||
| NET EARNINGS BEFORE INCOME TAX EXPENSE | 1,103 | 2.4 | 1,191 | 2.6 | ||||||||||||
| INCOME TAX EXPENSE | 235 | 0.5 | 235 | 0.5 | ||||||||||||
| NET EARNINGS INCLUDING NONCONTROLLING INTERESTS | 868 | 1.9 | 956 | 2.1 | ||||||||||||
| NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 2 | - | 9 | - | ||||||||||||
| NET EARNINGS ATTRIBUTABLE TO THE KROGER CO. | $ | 866 | 1.9 | % | $ | 947 | 2.1 | % | ||||||||
| NET EARNINGS ATTRIBUTABLE TO THE KROGER CO. PER BASIC COMMON SHARE | $ | 1.30 | $ | 1.30 | ||||||||||||
| AVERAGE NUMBER OF COMMON SHARES USED IN BASIC CALCULATION | 660 | 721 | ||||||||||||||
| NET EARNINGS ATTRIBUTABLE TO THE KROGER CO. PER DILUTED COMMON SHARE | $ | 1.29 | $ | 1.29 | ||||||||||||
| AVERAGE NUMBER OF COMMON SHARES USED IN DILUTED CALCULATION | 664 | 727 | ||||||||||||||
| DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.32 | $ | 0.29 | ||||||||||||
| 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, rent and depreciation and amortization. |
| 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 $40 and $41 were recorded in the first quarters of 2025 and 2024, respectively. |
Table 2.
THE KROGER CO.
CONSOLIDATED BALANCE SHEETS
(in millions)
(unaudited)
| May 24, | May 25, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 340 | $ | 345 | ||||
| Temporary cash investments | 4,398 | 2,501 | ||||||
| Store deposits in-transit | 1,179 | 1,226 | ||||||
| Receivables | 2,131 | 1,968 | ||||||
| Inventories | 7,020 | 6,694 | ||||||
| Assets held for sale | - | 607 | ||||||
| Prepaid and other current assets | 697 | 822 | ||||||
| Total current assets | 15,765 | 14,163 | ||||||
| Property, plant and equipment, net | 25,829 | 25,537 | ||||||
| Operating lease assets | 6,840 | 6,695 | ||||||
| Intangibles, net | 836 | 864 | ||||||
| Goodwill | 2,674 | 2,673 | ||||||
| Other assets | 1,304 | 1,647 | ||||||
| Total Assets | $ | 53,248 | $ | 51,579 | ||||
| LIABILITIES AND SHAREOWNERS' EQUITY | ||||||||
| Current Liabilities | ||||||||
| Current portion of long-term debt including obligations under finance leases | $ | 807 | $ | 198 | ||||
| Current portion of operating lease liabilities | 668 | 665 | ||||||
| Accounts payable | 10,562 | 10,777 | ||||||
| Accrued salaries and wages | 1,209 | 1,208 | ||||||
| Liabilities held for sale | - | 242 | ||||||
| Other current liabilities | 3,379 | 3,288 | ||||||
| Total current liabilities | 16,604 | 16,378 | ||||||
| Long-term debt including obligations under finance leases | 17,138 | 12,021 | ||||||
| Noncurrent operating lease liabilities | 6,595 | 6,412 | ||||||
| Deferred income taxes | 1,401 | 1,535 | ||||||
| Pension and postretirement benefit obligations | 381 | 386 | ||||||
| Other long-term liabilities | 2,200 | 2,434 | ||||||
| Total Liabilities | 44,340 | 39,166 | ||||||
| Shareowners' equity | 8,908 | 12,413 | ||||||
| Total Liabilities and Shareowners' Equity | $ | 53,248 | $ | 51,579 | ||||
| Total common shares outstanding at end of period | 661 | 722 | ||||||
| Total diluted shares year-to-date | 664 | 727 | ||||||
Table 3.
THE KROGER CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
| YEAR-TO-DATE | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net earnings including noncontrolling interests | $ | 868 | $ | 956 | ||||
| Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 1,051 | 978 | ||||||
| Asset impairment and store closure charges | 108 | 20 | ||||||
| Operating lease asset amortization | 184 | 187 | ||||||
| LIFO charge | 40 | 41 | ||||||
| Share-based employee compensation | 38 | 57 | ||||||
| Deferred income taxes | (16 | ) | (64 | ) | ||||
| Loss (gain) on investments | 19 | (16 | ) | |||||
| Other | (37 | ) | (10 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Store deposits in-transit | 133 | (11 | ) | |||||
| Receivables | 47 | (102 | ) | |||||
| Inventories | (23 | ) | 225 | |||||
| Prepaid and other current assets | 86 | (208 | ) | |||||
| Accounts payable | 288 | 622 | ||||||
| Accrued expenses | (381 | ) | (327 | ) | ||||
| Income taxes receivable and payable | 41 | 180 | ||||||
| Operating lease liabilities | (134 | ) | (137 | ) | ||||
| Other | (163 | ) | (49 | ) | ||||
| Net cash provided by operating activities | 2,149 | 2,342 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Payments for property and equipment, including payments for lease buyouts | (1,044 | ) | (1,304 | ) | ||||
| Proceeds from sale of assets | 12 | 304 | ||||||
| Other | (7 | ) | (14 | ) | ||||
| Net cash used by investing activities | (1,039 | ) | (1,014 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Payments on long-term debt including obligations under finance leases | (52 | ) | (54 | ) | ||||
| Dividends paid | (211 | ) | (210 | ) | ||||
| Proceeds from issuance of capital stock | 145 | 85 | ||||||
| Treasury stock purchases | (181 | ) | (103 | ) | ||||
| Other | (32 | ) | (66 | ) | ||||
| Net cash used by financing activities | (331 | ) | (348 | ) | ||||
| NET INCREASE IN CASH AND TEMPORARY | ||||||||
| CASH INVESTMENTS | 779 | 980 | ||||||
| CASH AND TEMPORARY CASH INVESTMENTS: | ||||||||
| BEGINNING OF YEAR | 3,959 | 1,883 | ||||||
| END OF PERIOD | $ | 4,738 | $ | 2,863 | ||||
| Reconciliation of capital investments: | ||||||||
| Payments for property and equipment, including payments for lease buyouts | $ | (1,044 | ) | $ | (1,304 | ) | ||
| Payments for lease buyouts | 11 | 37 | ||||||
| Changes in construction-in-progress payables | (150 | ) | 37 | |||||
| Total capital investments, excluding lease buyouts | $ | (1,183 | ) | $ | (1,230 | ) | ||
| Disclosure of cash flow information: | ||||||||
| Cash paid during the year for net interest | $ | 269 | $ | 70 | ||||
| Cash paid during the year for income taxes | $ | 203 | $ | 119 | ||||
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.
Kroger defines identical sales, excluding fuel, as sales to retail customers, including sales from all departments at identical supermarket locations, 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. We include Kroger Delivery sales as identical if the delivery occurs in an existing Kroger Supermarket geography or when the location has been in operation for five full quarters.
IDENTICAL SALES
| EXCLUDING ADJUSTMENT ITEMS | ||||||||||||||||
| FIRST QUARTER (a) | FIRST QUARTER | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| EXCLUDING FUEL | $ | 39,766 | $ | 38,535 | $ | 40,027 | $ | 38,867 | ||||||||
| EXCLUDING FUEL | 3.2 | % | 0.5 | % | 3.0 | % | 0.5 | % | ||||||||
| (a) | Identical sales, excluding fuel, were adjusted to exclude stores involved the in labor disputes in Colorado. Identical sales, excluding fuel, were excluded for the first four weeks of the quarter for stores involved in this labor dispute. |
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 24, | May 25, | |||||||||||
| 2025 | 2024 | Change | ||||||||||
| Current portion of long-term debt including obligations under finance leases | $ | 807 | $ | 198 | $ | 609 | ||||||
| Long-term debt including obligations under finance leases | 17,138 | 12,021 | 5,117 | |||||||||
| Total debt | 17,945 | 12,219 | 5,726 | |||||||||
| Less: Temporary cash investments | 4,398 | 2,501 | 1,897 | |||||||||
| Net total debt | $ | 13,547 | $ | 9,718 | $ | 3,829 | ||||||
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 24, | May 25, | |||||||
| 2025 | 2024 | |||||||
| Net earnings attributable to The Kroger Co. on a 53-week basis in fiscal year 2023 | $ | 2,584 | $ | 2,149 | ||||
| LIFO charge | 94 | 55 | ||||||
| Depreciation and amortization | 3,319 | 3,146 | ||||||
| Net interest expense | 526 | 411 | ||||||
| Income tax expense | 670 | 616 | ||||||
| Adjustment for loss (gain) on investments | 183 | (245 | ) | |||||
| Adjustment for severance charge and related benefits | 32 | - | ||||||
| Adjustment for impairment of intangible assets | 30 | - | ||||||
| Adjustment for property losses | 25 | - | ||||||
| Adjustment for merger-related costs (a) | 509 | 450 | ||||||
| Adjustment for merger-related litigation costs | 15 | - | ||||||
| Adjustment for opioid settlement charges and vendor reserves | (5 | ) | 1,413 | |||||
| Adjustment for gain on sale of Kroger Specialty Pharmacy | (79 | ) | - | |||||
| Adjustment for labor dispute charges | 44 | - | ||||||
| Adjustment for store closures | 100 | - | ||||||
| Adjustment for executive stock compensation for a former executive | (21 | ) | - | |||||
| 53rd week EBITDA adjustment | - | (187 | ) | |||||
| Other | (11 | ) | (14 | ) | ||||
| Adjusted EBITDA | $ | 8,015 | $ | 7,794 | ||||
| Net total debt to adjusted EBITDA ratio on a 52-week basis | 1.69 | 1.25 | ||||||
| (a) | Merger related costs primarily include third-party professional fees and credit facility fees associated with the terminated merger with Albertsons Companies, Inc. |
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 | ||||||||
| 2025 | 2024 | |||||||
| Net earnings attributable to The Kroger Co. | $ | 866 | $ | 947 | ||||
| Adjustment for loss (gain) on investments (a)(b) | 15 | (12 | ) | |||||
| Adjustment for labor dispute charges (a)(c) | 33 | - | ||||||
| Adjustment for store closures (a)(d) | 77 | - | ||||||
| Adjustment for executive stock compensation for a former executive (a)(e) | (16 | ) | - | |||||
| Adjustment for merger-related costs (a)(f) | - | 143 | ||||||
| Adjustment for merger-related litigation costs (a)(g) | 11 | - | ||||||
| Adjustment for opioid settlement charges and vendor reserves (a)(h) | 17 | - | ||||||
| Executive stock compensation for a former executive income tax adjustment | (7 | ) | - | |||||
| Held for sale income tax adjustment | - | (31 | ) | |||||
| 2025 and 2024 Adjustment Items | 130 | 100 | ||||||
| Net earnings attributable to The Kroger Co. excluding the adjustment items above | $ | 996 | $ | 1,047 | ||||
| Net earnings attributable to The Kroger Co. per diluted common share | $ | 1.29 | $ | 1.29 | ||||
| Adjustment for loss (gain) on investments (i) | 0.02 | (0.02 | ) | |||||
| Adjustment for labor dispute charges (i) | 0.05 | - | ||||||
| Adjustment for store closures (i) | 0.12 | - | ||||||
| Adjustment for executive stock compensation for a former executive (i) | (0.03 | ) | - | |||||
| Adjustment for merger-related costs (i) | - | 0.20 | ||||||
| Adjustment for merger-related litigation costs (i) | 0.02 | - | ||||||
| Adjustment for opioid settlement charges and vendor reserves (i) | 0.03 | - | ||||||
| Executive stock compensation for a former executive income tax adjustment (i) | (0.01 | ) | - | |||||
| Held for sale income tax adjustment (i) | - | (0.04 | ) | |||||
| 2025 and 2024 Adjustment Items | 0.20 | 0.14 | ||||||
| Net earnings attributable to The Kroger Co. per diluted common share excluding the adjustment items above | $ | 1.49 | $ | 1.43 | ||||
| Average number of common shares used in diluted calculation | 664 | 727 | ||||||
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 loss (gain) on investments were $19 and $(16) in the first quarters of 2025 and 2024, respectively. |
| (c) | The pre-tax adjustments to Sales, COGS and OG&A expenses for labor dispute charges was $44. |
| (d) | The pre-tax adjustment to OG&A expenses for store closures was $100. |
| (e) | The pre-tax adjustment to OG&A expenses for executive stock compensation for a former executive was $(21). |
| (f) | The pre-tax adjustment to OG&A expenses for merger-related costs was $175. |
| (g) | The pre-tax adjustment to OG&A expenses for merger-related litigation costs was $15. |
| (h) | The pre-tax adjustments to OG&A expenses for opioid settlement charges and vendor reserves was $22. |
| (i) | The amounts presented represent the net earnings (loss) per diluted common share effect of each adjustment. |
| Note: | 2025 First Quarter Adjustment Items include adjustments for the loss on investments, labor dispute charges, store closures, executive stock compensation for a former executive, merger-related litigation costs, opioid settlement charges and vendor reserves and executive stock compensation for a former executive income tax. |
| 2024 First Quarter Adjustment Items include adjustments for the gain on investments, merger-related costs and held for sale income tax . |
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 | ||||||||
| 2025 | 2024 | |||||||
| Operating profit | $ | 1,322 | $ | 1,294 | ||||
| LIFO charge | 40 | 41 | ||||||
| FIFO operating profit | 1,362 | 1,335 | ||||||
| Adjustment for merger-related costs (a) | - | 175 | ||||||
| Adjustment for merger-related litigation costs | 15 | - | ||||||
| Adjustment for opioid settlement charges and vendor reserves | 22 | - | ||||||
| Adjustment for labor dispute charges | 44 | - | ||||||
| Adjustment for store closures | 100 | - | ||||||
| Adjustment for executive stock compensation for a former executive | (21 | ) | - | |||||
| Other | (4 | ) | (11 | ) | ||||
| 2025 and 2024 Adjustment items | 156 | 164 | ||||||
| Adjusted FIFO operating profit excluding the adjustment items above | $ | 1,518 | $ | 1,499 | ||||
| (a) | Merger related costs primarily include third party professional fees and credit facility fees associated with the terminated merger with Albertsons Companies, Inc. |
Table 8. Gross Margin
(in millions, except percentages)
(unaudited)
In the Consolidated Statements of Operations within Table 1, the Company separately presents rent and depreciation and amortization to evaluate operational effectiveness. The table below calculates gross margin in accordance with Generally Accepted Accounting Principles ("GAAP") by including a portion of rent and depreciation and amortization related to the Company's manufacturing and warehousing and transportation activities.
The following table provides the calculation of gross profit and gross margin in accordance with GAAP.
| FIRST QUARTER | ||||||||
| 2025 | 2024 | |||||||
| Sales | $ | 45,118 | $ | 45,269 | ||||
| Merchandise costs, including advertising, warehousing and transportation and LIFO charge, excluding rent and depreciation and amortization | 34,551 | 35,124 | ||||||
| Rent | 18 | 23 | ||||||
| Depreciation and amortization | 193 | 181 | ||||||
| Gross profit | $ | 10,356 | $ | 9,941 | ||||
| Gross margin | 23.0 | % | 22.0 | % | ||||