CINCINNATI, Nov. 5, 2019 /PRNewswire/ -- The Kroger Co.
(NYSE: KR) today will update investors on how the Restock
Kroger framework is repositioning the company to create
value for shareholders, customers and associates at its Investor
Conference at the New York Stock Exchange.
Kroger also announced the company's Board of Directors has
approved a $1 billion share
repurchase program, replacing the existing authorization that has
approximately $546 million
"Restock Kroger sets Kroger up for a stronger
future," said Rodney McMullen,
Kroger's chairman and chief executive officer. "Momentum is
returning to our core grocery business as a result of our customer
obsession and renewed intensity around operational excellence, plus
the asset-light, margin rich alternative profit streams that enrich
our core supermarket business. We look forward to sharing how these
come together at Kroger to create a path to consistently strong and
attractive total shareholder return."
Kroger reconfirmed its 2019 guidance on identical sales,
adjusted operating profit, adjusted earnings per diluted share, and
alternative profit streams. The company also set financial
targets for 2020.
"As promised on our second quarter earnings call, Kroger is
using our Investor Conference to provide an update on our future
expectations to create value for shareholders, including early
detailed guidance for 2020," said Gary
Millerchip, Kroger's chief financial officer. "Kroger's
value creation model is strong and durable. We are pleased to see
identical store sales momentum is building and we expect this trend
to continue into 2020 and beyond. We are also delivering adjusted
earnings per diluted share growth for our shareholders through the
Restock Kroger timeframe, supported by a disciplined
approach to returning cash to investors."
"We are confident that Restock Kroger is the
right strategic framework for business growth in 2019 and 2020, and
to position Kroger for long-term growth in the future," said
McMullen. "We believe that the food industry is special and
big enough for different models to coexist – and Kroger's model
will be one of them because, at Kroger, we are uniquely good at
food. Kroger is food first and we believe that no matter who you
are, where you're from, how you shop or what you like to eat,
everyone deserves to have fresh, affordable and easy-to-enjoy food
that tastes amazing. Kroger's ability to be America's food partner
is our competitive advantage."
Kroger expects its financial model to deliver improving adjusted
operating profit performance over time and continue to generate
strong free cash flow. The company expects this to translate into a
consistently strong and attractive total shareholder return through
sustained net earnings growth and by returning cash to
shareholders, via share repurchases and a growing dividend over
time. Maintaining a strong investment grade balance sheet is a key
component of Kroger's financial model.
The company defines free cash flow as operating cash flow
(before company-sponsored pension contributions), less capital
expenditures, and excluding the cash tax effect of the sale of
Kroger reduced net total debt by $1.3
billion over the last four quarters. Kroger's net total debt
to adjusted EBITDA ratio is 2.46, compared to 2.59 a year ago. The
company's net total debt to adjusted EBITDA ratio target range is
2.30 to 2.50.
Earlier this year, Kroger increased the dividend by 14 percent,
from 56¢ to 64¢ per year, marking the 13th consecutive
year of dividend increases. The company's quarterly dividend has
grown at a double-digit compound annual growth rate since it was
reinstated in 2006. The company continues to expect, subject to
board approval, an increasing dividend over time.
items, if applicable; operating profit represents FIFO Operating
These rates reflect
typical tax adjustments and do not reflect changes to the rate from
the completion of income tax audit examinations, which cannot be
The company expects capital investments, excluding mergers,
acquisitions and purchases of leased facilities to range between
$3.0 and $3.2
billion in 2019.
In 2020, Kroger expects:
- Identical sales growth, excluding fuel, to be greater than
- Alternative profit businesses to grow incremental operating
profit in the range of $125 to
- Adjusted FIFO operating profit to range from $3.0 to $3.1
- Adjusted EPS to range from $2.30
to $2.40 per diluted share.
- Capital investments, excluding mergers, acquisitions, and
purchases of leased facilities, to range between $3.2 and $3.4
- Free cash flow to be in the range of $1.6 to $1.8
- To repurchase shares in the range of $500 million to $1
- A tax rate of approximately 23%.
Kroger is targeting total shareholder return of between 8% and
11% beyond 2020. This will be driven by 3% – 5% growth from
improved earnings, and growth in the company's free cash flow
payout rate through a combination of share repurchases and
dividends. This range excludes any potential change in our
price-to-earnings multiple, and the optionality for additional
growth beyond 2020 created through strategic partnerships.
At The Kroger Co. (NYSE: KR), we are dedicated to our Purpose:
to Feed the Human Spirit®. We are nearly
half a million associates who serve over 11 million customers daily
through a seamless digital shopping experience and 2,759 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.
This press release includes forward-looking non-GAAP financial
measures, which management believes to be useful to investors
and analysts. Kroger is unable to provide a full
reconciliation of the non-GAAP measures used in our 2019 and
2020 guidance, including adjusted net earnings per diluted
share to net earnings per diluted share, adjusted FIFO
operating profit to operating profit, and adjusted tax rate to tax
rate, without unreasonable effort because it is not
possible to predict with a reasonable degree of certainty the
information necessary to calculate such measures on a GAAP basis.
It is not possible to estimate with a reasonable degree of
certainty certain of our adjustment items because such
information is dependent on future events that may be
outside of our control. The unavailable information could
have a significant impact on 2019 and
2020 GAAP financial results.
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. The
remarks contain certain 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 "build," "confident," "continue," "create,"
"deliver," "drive," "expect," "future," "guidance," "strategy,"
"target," "trend," 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" and "Outlook" 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 free cash flow goals may be affected by:
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; 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
uncertain pace of economic growth; 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 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 ability to achieve these goals may also be affected by
Kroger's ability to manage the factors identified above. Kroger's
ability to execute its financial strategy may be affected by its
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.
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SOURCE The Kroger Co.