CINCINNATI, Sept. 10, 2021 /PRNewswire/ -- The Kroger Co.
(NYSE: KR) today reported its second quarter 2021 results and will
update investors on how key initiatives are positioning the company
for long-term sustainable growth.
Comments from Chairman and CEO Rodney
McMullen –
"Our strategic focus on leading with fresh and accelerating with
digital continues to build momentum across our business. Kroger's
seamless ecosystem is working. This was evident during the quarter
as we saw customers seamlessly shift between channels, and we
continued to see strong digital engagement. Customers are eating
more food at home because it is more affordable, convenient, and
healthier than other options.
"Our associates continue to support our customers and our
communities through the pandemic by delivering a full, fresh, and
friendly experience every day. We are committed to our
environmental, social, and governance strategy to advance positive
outcomes for people and our planet and create more resilient global
systems, driven by our Zero Hunger | Zero Waste social and
environmental impact plan.
"We are leveraging technology, innovation, and our competitive
moats to deliver against the initiatives outlined at our 2021
investor day, and we remain confident in our ability to deliver
total shareholder returns of 8% to 11% over time."
Second Quarter Financial Results
|
2Q21 ($ in
millions; except EPS)
|
2Q20 ($ in
millions; except EPS)
|
ID Sales* (Table
4)
|
(0.6%)
|
14.6%
|
EPS
|
$0.61
|
$1.03
|
Adjusted EPS
(Table 6)
|
$0.80
|
$0.73
|
Operating
Profit
|
$839
|
$820
|
Adjusted FIFO
Operating Profit (Table 7)
|
$947
|
$894
|
FIFO Gross Margin
Rate*
|
Decreased 60 basis
points
|
OG&A
Rate*
|
Decreased 76 basis
points
|
*without fuel and adjustment items, if applicable
Second Quarter Results versus Two Years Ago
|
2Q21 ($ in
millions; except EPS)
|
ID Sales Two Year
Stacked* (Table 8)
|
14.0%
|
EPS Two Year CAGR
(Table 8)
|
28.4%
|
Adjusted EPS Two
Year CAGR (Table 8)
|
34.8%
|
Operating Profit
Two Year CAGR (Table 8)
|
22.5%
|
Adjusted FIFO
Operating Profit Two Year CAGR (Table 8)
|
23.0%
|
FIFO Gross Margin
Rate Compared to Q2 2019*
|
Decreased 55 basis
points
|
OG&A Rate
Compared to Q2 2019*
|
Decreased 137
basis points
|
*without fuel and adjustment items, if applicable
Total company sales were $31.7
billion in the second quarter, compared to $30.5 billion for the same period last year.
Excluding fuel, sales decreased 0.4% compared to the same period
last year.
Gross margin was 21.4% of sales for the second quarter. The FIFO
gross margin rate, excluding fuel, decreased 60 basis points
compared to the same period last year. This decrease primarily
related to continued price investments, and higher shrink and
supply chain costs, partially offset by sourcing benefits and
growth in the alternative profit business.
The LIFO charge for the quarter was $47
million, compared to a LIFO charge of $23 million for the same period last year. This
increase was primarily attributable to inflation in fresh
categories.
The Operating, General & Administrative rate decreased 76
basis points, excluding fuel and adjustment items, which reflects
decreased COVID-19 related costs and the execution of cost savings
initiatives.
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 repurchase and a growing dividend over
time.
Kroger's net total debt to adjusted EBITDA ratio is 1.78,
compared to 1.70 a year ago (Table 5). The company's net total debt
to adjusted EBITDA ratio target range is 2.30 to 2.50.
Earlier this quarter, Kroger increased the dividend by 17%,
marking the 15th consecutive year of dividend increases.
Additionally, in the quarter, Kroger repurchased $349 million shares and year-to-date, has
repurchased $751 million shares. As
of the end of the second quarter, $779
million remains on the board authorization announced on
June 17, 2021.
2021 Guidance
Comments from CFO Gary
Millerchip -
"Kroger's strong execution resulted in identical sales above our
internal expectations for the second quarter, and we continued to
remove costs from the business. Driven by the momentum in our
results and sustained food at home trends, we are raising our
full-year guidance. We now expect our two-year identical sales
stack to be in the range of 12.6% to 13.1%. We expect our adjusted
net earnings per diluted share to be in the range of $3.25 to $3.35.
"We are emerging stronger through the pandemic and are confident
in our ability to deliver sustainable earnings growth and total
shareholder return."
Full Year 2021 Guidance
|
IDs
(%)
|
EPS
($)
|
Operating
Profit ($B)
|
Tax
Rate**
|
Cap Ex
($B)
|
Free Cash
Flow ($B)****
|
Adjusted*
|
(1.5%) -
(1.0%)
|
$3.25 -
$3.35
|
$3.9 -
$4.0
|
22.1% -
22.7%
|
$3.4 -
$3.6
|
$1.9 -
$2.1
|
2-Year
Basis***
|
12.6% -
13.1%
(Stack)
|
22% - 24%
(CAGR)
|
14.1% - 15.6%
(CAGR)
|
|
|
$3.1 -
$3.2
(Average)
|
* 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 2021 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 2021 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.
*** Identical sales, without fuel, guidance for 2-year basis
represents the sum of actual 2020 identical sales percentage and
2021 identical sales rate guidance. The 2-year basis guidance items
denoted with CAGR represent the compounded annual growth rate
utilizing 2019 as the base year. Average free cash flow is the
average of actual 2020 free cash flow and 2021 guidance.
**** 2021 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.
Second Quarter 2021 Highlights
Leading with Fresh
- Introduced brand icon, bringing together the Kroger Family of
Companies under one unifying visual and reinforcing its brand
promise: Fresh for Everyone
- Our Brands launched 142 new items during the quarter, including
Big Pack items and further expansion of industry leading Simple
Truth Plant Based line
- Announced collaboration with ghost kitchen partner Kitchen
United to create new service that provides customers on-demand meal
pickup and delivery from popular restaurants
- Announced inaugural Go Fresh
& Local Supplier Accelerator cohort, launching innovative
locally and regionally sourced products to stores across the
country
- Introduced collaboration with KNAPP to modernize and expand the
Great Lakes Distribution Center, driving efficiency improvements
for regional store replenishment and faster delivery of fresh food
for customers
Accelerating with Digital
- Introduced Kroger Delivery Savings Pass in Florida, offering customers unlimited delivery
for $79 annually
- Launched sushi delivery pilot with DoorDash in three
geographies
- Expanded pilot with Google Maps to improve grocery pickup
experience for associates and customers
- Expanded to 2,239 Pickup locations and 2,546 Delivery
locations, covering 98% of Kroger households
- Recognized by Computerworld magazine as one of the Top
100 Best Places to Work in IT for 2021, marking the fourth
consecutive year Kroger has received the accolade
- Launched FEED app which provides associates easy access to
company communication and resources
Associate Experience
- Increased Kroger Family of Companies' average hourly wage to in
excess of $16 and with comprehensive
benefits, will be approaching $21 by
the end of 2021
- Named to the Disability Equality Index's 2020 "Best Places to
Work for Disability Inclusion"
- Launched Fresh Start, a technology enabled, personalized,
front-line associate training program to foster greater engagement
and retention
- Selected as one of WayUp's Top 100 Internship Programs for
2021
- Hosted a companywide live virtual event on mental health,
featuring company leaders and other experts
Live Our Purpose
- Partnered with the Biden Administration in offering at-home,
rapid COVID-19 tests at cost for 100 days
- Published 2021 ESG report highlighting new long-term ESG
strategy and framework to benefit people and the planet, and to
help create a more resilient, equitable food system for
tomorrow
- Partnered with Lyft Healthcare, Inc. after concluding the
successful #CommunityImmunity Giveaway in collaboration with the
Biden Administration to increase vaccinations across the
country
- Kroger Health has administered more than 6.7 million COVID-19
vaccine doses to date, supporting customers and associates
- Named Winsight Grocery's Business of the Year for the company's
sustainability efforts throughout 2020
- Hosted The Wellness Experience, a virtual wellness platform and
multi-day festival experience inspiring physical, emotional, and
mental health
- Achieved $4.1 billion in diverse
supplier spend in 2020, representing an increase of 21% versus
prior year
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.
Kroger's second quarter 2021 ended on August 14, 2021.
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,"
"approach," "believe," "contemplates," "continue," "deliver,"
"expect," "future," "guidance," "on track," "strategy," "target,"
"trends," 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 pandemic related factors, risks and challenges,
including among others, the length of time that the pandemic
continues, new variants of the virus , lack of access to vaccines
for certain populations and the extent of vaccine aversion, as well
as the effect of emerging targeted vaccine mandates and booster
vaccines, 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; the pace of recovery when
the pandemic subsides; labor negotiations or disputes; 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 inflationary and
deflationary trends in certain commodities; 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; 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 our growth strategy and value creation model, including
continued cost savings, growth of our alternative profit
businesses, and widening and deepening 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
September 10, 2021
at ir.kroger.com. An on-demand replay of the webcast will be
available at approximately 1 p.m. (ET) on Thursday, September 10, 2021.
2nd Quarter 2021 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
- Two-Year Financial Results
Table
1.
|
THE KROGER
CO.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(in millions, except
per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SECOND
QUARTER
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SALES
|
|
|
|
|
$
31,682
|
|
100.0%
|
|
$
30,489
|
|
100.0%
|
|
$
72,980
|
|
100.0%
|
|
$
72,038
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MERCHANDISE COSTS,
INCLUDING ADVERTISING,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WAREHOUSING AND
TRANSPORTATION (a),
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AND LIFO CHARGE
(b)
|
|
|
24,914
|
|
78.6
|
|
23,551
|
|
77.2
|
|
56,861
|
|
77.9
|
|
55,005
|
|
76.4
|
|
|
OPERATING, GENERAL
AND ADMINISTRATIVE (a)
|
|
5,091
|
|
16.1
|
|
5,297
|
|
17.4
|
|
12,515
|
|
17.2
|
|
12,968
|
|
18.0
|
|
|
RENT
|
|
|
|
|
191
|
|
0.6
|
|
204
|
|
0.7
|
|
452
|
|
0.6
|
|
477
|
|
0.7
|
|
|
DEPRECIATION AND
AMORTIZATION
|
|
|
647
|
|
2.0
|
|
617
|
|
2.0
|
|
1,508
|
|
2.1
|
|
1,442
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
PROFIT
|
|
|
|
839
|
|
2.7
|
|
820
|
|
2.7
|
|
1,644
|
|
2.3
|
|
2,146
|
|
3.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
|
|
(137)
|
|
(0.4)
|
|
(135)
|
|
(0.4)
|
|
(302)
|
|
(0.4)
|
|
(309)
|
|
(0.4)
|
|
|
NON-SERVICE COMPONENT
OF COMPANY-SPONSORED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PENSION PLAN
COSTS
|
|
|
15
|
|
-
|
|
8
|
|
-
|
|
33
|
|
-
|
|
19
|
|
-
|
|
|
(LOSS) GAIN ON
INVESTMENTS
|
|
|
(122)
|
|
(0.4)
|
|
368
|
|
1.2
|
|
(601)
|
|
(0.8)
|
|
790
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS BEFORE
INCOME TAX EXPENSE
|
|
595
|
|
1.9
|
|
1,061
|
|
3.5
|
|
774
|
|
1.1
|
|
2,646
|
|
3.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX
EXPENSE
|
|
|
|
126
|
|
0.4
|
|
241
|
|
0.8
|
|
162
|
|
0.2
|
|
614
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
INCLUDING NONCONTROLLING INTERESTS
|
|
469
|
|
1.5
|
|
820
|
|
2.7
|
|
612
|
|
0.8
|
|
2,032
|
|
2.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
ATTRIBUTABLE TO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONCONTROLLING
INTERESTS
|
|
|
2
|
|
-
|
|
1
|
|
-
|
|
5
|
|
-
|
|
1
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
ATTRIBUTABLE TO THE KROGER CO.
|
|
$
467
|
|
1.5%
|
|
$
819
|
|
2.7%
|
|
$
607
|
|
0.8%
|
|
$
2,031
|
|
2.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
ATTRIBUTABLE TO THE KROGER CO.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER BASIC COMMON
SHARE
|
|
|
$
0.62
|
|
|
|
$
1.04
|
|
|
|
$
0.80
|
|
|
|
$
2.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE NUMBER
OF COMMON SHARES USED IN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC
CALCULATION
|
|
|
746
|
|
|
|
777
|
|
|
|
750
|
|
|
|
779
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS
ATTRIBUTABLE TO THE KROGER CO.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER DILUTED COMMON
SHARE
|
|
|
$
0.61
|
|
|
|
$
1.03
|
|
|
|
$
0.79
|
|
|
|
$
2.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE NUMBER OF
COMMON SHARES USED IN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED
CALCULATION
|
|
|
755
|
|
|
|
786
|
|
|
|
758
|
|
|
|
787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIVIDENDS DECLARED
PER COMMON SHARE
|
|
$
0.21
|
|
|
|
$
0.18
|
|
|
|
$
0.39
|
|
|
|
$
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 $47
and $23 were recorded in the second quarters of 2021 and 2020,
respectively. For the year to date period, LIFO charges of
$84 and $54 were recorded for 2021 and 2020,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
2.
|
THE KROGER
CO.
|
CONSOLIDATED
BALANCE SHEETS
|
(in
millions)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 14,
|
|
August 15,
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
$
339
|
|
$
372
|
|
|
Temporary cash
investments
|
|
|
1,886
|
|
2,448
|
|
|
Store deposits
in-transit
|
|
|
|
1,055
|
|
1,058
|
|
|
Receivables
|
|
|
|
|
1,961
|
|
1,526
|
|
|
Inventories
|
|
|
|
|
6,541
|
|
6,344
|
|
|
Prepaid and other
current assets
|
|
|
550
|
|
538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
|
|
12,332
|
|
12,286
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
22,986
|
|
21,881
|
|
Operating lease
assets
|
|
|
|
6,704
|
|
6,822
|
|
Intangibles,
net
|
|
|
|
|
966
|
|
1,029
|
|
Goodwill
|
|
|
|
|
3,076
|
|
3,076
|
|
Other
assets
|
|
|
|
|
2,397
|
|
2,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
|
|
$
48,461
|
|
$
47,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREOWNERS' EQUITY
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt including obligations
|
|
|
|
|
|
|
under finance
leases
|
|
|
|
$
1,547
|
|
$
1,096
|
|
|
Current portion of
operating lease liabilities
|
|
644
|
|
666
|
|
|
Trade accounts
payable
|
|
|
|
6,772
|
|
6,871
|
|
|
Accrued salaries and
wages
|
|
|
|
1,274
|
|
1,267
|
|
|
Other current
liabilities
|
|
|
|
5,366
|
|
4,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
|
15,603
|
|
14,578
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
including obligations under finance leases
|
12,608
|
|
12,386
|
|
Noncurrent operating
lease liabilities
|
|
|
6,408
|
|
6,478
|
|
Deferred income
taxes
|
|
|
|
1,522
|
|
1,634
|
|
Pension and
postretirement benefit obligations
|
|
494
|
|
578
|
|
Other long-term
liabilities
|
|
|
|
2,568
|
|
2,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
|
39,203
|
|
37,750
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareowners'
equity
|
|
|
|
|
9,258
|
|
9,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Shareowners' Equity
|
|
$
48,461
|
|
$
47,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total common shares
outstanding at end of period
|
|
744
|
|
775
|
|
Total diluted shares
year-to-date
|
|
|
758
|
|
787
|
|
|
|
|
Table
3.
|
THE KROGER
CO.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(in
millions)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net earnings
including noncontrolling interests
|
|
$
612
|
|
$
2,032
|
|
|
Adjustments to
reconcile net earnings including noncontrolling
|
|
|
|
|
|
|
|
interests to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
1,508
|
|
1,442
|
|
|
|
|
Operating lease asset
amortization
|
|
332
|
|
336
|
|
|
|
|
LIFO
charge
|
|
|
|
84
|
|
54
|
|
|
|
|
Stock-based employee
compensation
|
|
108
|
|
107
|
|
|
|
|
Company-sponsored
pension plans
|
|
(24)
|
|
(9)
|
|
|
|
|
Deferred income
taxes
|
|
|
(24)
|
|
176
|
|
|
|
|
Gain on the sale of
assets
|
|
|
(28)
|
|
(7)
|
|
|
|
|
Loss (gain) on
investments
|
|
|
601
|
|
(790)
|
|
|
|
|
Other
|
|
|
|
122
|
|
121
|
|
|
|
|
Changes in operating
assets and liabilities, net
|
|
|
|
|
|
|
|
|
|
of effects from
mergers and disposals of businesses:
|
|
|
|
|
|
|
|
|
|
|
Store deposits
in-transit
|
|
|
41
|
|
121
|
|
|
|
|
|
|
Receivables
|
|
|
(57)
|
|
117
|
|
|
|
|
|
|
Inventories
|
|
|
377
|
|
685
|
|
|
|
|
|
|
Prepaid and other
current assets
|
|
356
|
|
(16)
|
|
|
|
|
|
|
Trade accounts
payable
|
|
|
101
|
|
522
|
|
|
|
|
|
|
Accrued
expenses
|
|
|
(400)
|
|
335
|
|
|
|
|
|
|
Income taxes
receivable and payable
|
|
(125)
|
|
195
|
|
|
|
|
|
|
Operating lease
liabilities
|
|
|
(374)
|
|
(302)
|
|
|
|
|
|
|
Other
|
|
|
|
(87)
|
|
286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
3,123
|
|
5,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Payments for property
and equipment, including payments for lease buyouts
|
|
(1,319)
|
|
(1,343)
|
|
|
Proceeds from sale of
assets
|
|
|
107
|
|
40
|
|
|
Other
|
|
|
|
|
|
(72)
|
|
(45)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used by
investing activities
|
|
|
(1,284)
|
|
(1,348)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Proceeds from
issuance of long-term debt
|
|
1
|
|
504
|
|
|
Payments on long-term
debt including obligations under finance leases
|
|
(369)
|
|
(28)
|
|
|
Net payments on
commercial paper
|
|
|
-
|
|
(1,150)
|
|
|
Dividends
paid
|
|
|
|
(274)
|
|
(254)
|
|
|
Proceeds from
issuance of capital stock
|
|
85
|
|
87
|
|
|
Treasury stock
purchases
|
|
|
(751)
|
|
(669)
|
|
|
Proceeds from
financing arrangement
|
|
|
166
|
|
-
|
|
|
Other
|
|
|
|
|
|
(159)
|
|
(126)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used by
financing activities
|
|
|
(1,301)
|
|
(1,636)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH
AND TEMPORARY
|
|
|
|
|
|
|
CASH
INVESTMENTS
|
|
|
538
|
|
2,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND TEMPORARY
CASH INVESTMENTS:
|
|
|
|
|
|
|
BEGINNING OF
YEAR
|
|
|
1,687
|
|
399
|
|
|
END OF
PERIOD
|
|
|
|
$
2,225
|
|
$
2,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
capital investments:
|
|
|
|
|
|
|
|
Payments for property
and equipment, including payments for lease buyouts
|
|
$
(1,319)
|
|
$
(1,343)
|
|
|
Payments for lease
buyouts
|
|
|
-
|
|
15
|
|
|
Changes in
construction-in-progress payables
|
|
89
|
|
(110)
|
|
|
|
Total capital
investments, excluding lease buyouts
|
|
$
(1,230)
|
|
$
(1,438)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disclosure of cash
flow information:
|
|
|
|
|
|
|
|
|
Cash paid during the
year for interest
|
|
$
365
|
|
$
373
|
|
|
|
Cash paid during the
year for income taxes
|
|
$
301
|
|
$
229
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SECOND
QUARTER
|
|
YEAR-TO-DATE
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXCLUDING
FUEL
|
|
$
27,606
|
|
$
27,759
|
|
$
64,214
|
|
$
65,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXCLUDING
FUEL
|
|
(0.6)%
|
|
14.6%
|
|
(2.6)%
|
|
17.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
August 14,
|
|
August 15,
|
|
|
|
|
2021
|
|
2020
|
|
Change
|
|
|
|
|
|
|
|
Current portion of
long-term debt including obligations
|
|
|
|
|
|
|
under
finance leases
|
|
$
1,547
|
|
$
1,096
|
|
$
451
|
Long-term debt
including obligations under finance leases
|
|
12,608
|
|
12,386
|
|
222
|
|
|
|
|
|
|
|
Total debt
|
|
14,155
|
|
13,482
|
|
673
|
|
|
|
|
|
|
|
Less: Temporary cash
investments
|
|
1,886
|
|
2,448
|
|
(562)
|
|
|
|
|
|
|
|
Net total debt
|
|
$
12,269
|
|
$
11,034
|
|
$
1,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 basis.
|
|
|
|
|
|
|
|
|
Rolling Four Quarters
Ended
|
|
|
|
|
August 14,
|
|
August 15,
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
$
1,161
|
|
$
2,621
|
|
|
LIFO
charge
|
|
23
|
|
113
|
|
|
Depreciation and
amortization
|
|
2,813
|
|
2,721
|
|
|
Interest
expense
|
|
537
|
|
585
|
|
|
Income tax
expense
|
|
329
|
|
764
|
|
|
Adjustment for
pension plan withdrawal liabilities
|
|
1,437
|
|
49
|
|
|
Adjustment for loss
(gain) on investments
|
|
286
|
|
(886)
|
|
|
Adjustment for Home
Chef contingent consideration
|
|
156
|
|
37
|
|
|
Adjustment for
severance charge and related benefits
|
|
-
|
|
80
|
|
|
Adjustment for
deconsolidation and impairment of Lucky's Market
|
|
|
|
|
|
|
attributable to The
Kroger Co. (a)
|
|
-
|
|
305
|
|
|
Adjustment for
transformation costs (b)
|
|
145
|
|
119
|
|
|
Other
|
|
(6)
|
|
(16)
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
6,881
|
|
$
6,492
|
|
|
|
|
|
|
|
|
|
Net total debt to
adjusted EBITDA ratio
|
|
1.78
|
|
1.70
|
|
|
|
|
|
|
|
|
|
(a)
|
The adjustment for
impairment of Lucky's Market attributable to The Kroger Co.
excludes a $107 net loss attributable to the minority interest of
Lucky's Market.
|
|
|
(b)
|
Transformation costs
primarily include costs related to store and 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SECOND
QUARTER
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
$
467
|
|
$
819
|
|
$
607
|
|
$
2,031
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for
pension plan withdrawal liabilities (a)(b)
|
|
-
|
|
-
|
|
344
|
|
-
|
|
Adjustment for loss
(gain) on investments (a)(c)
|
|
93
|
|
(278)
|
|
460
|
|
(590)
|
|
Adjustment for Home
Chef contingent consideration (a)(d)
|
|
7
|
|
19
|
|
40
|
|
63
|
|
Adjustment for
transformation costs (a)(e)
|
|
43
|
|
21
|
|
77
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 and 2020
Adjustment Items
|
|
|
143
|
|
(238)
|
|
921
|
|
(478)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
|
|
|
|
|
|
|
|
|
excluding the
adjustment items above
|
|
$
610
|
|
$
581
|
|
$
1,528
|
|
$
1,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co.
|
|
|
|
|
|
|
|
|
|
|
per diluted common
share
|
|
|
$
0.61
|
|
$
1.03
|
|
$
0.79
|
|
$
2.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for
pension plan withdrawal liabilities (f)
|
|
-
|
|
-
|
|
0.45
|
|
-
|
|
Adjustment for loss
(gain) on investments (f)
|
|
0.12
|
|
(0.35)
|
|
0.60
|
|
(0.75)
|
|
Adjustment for Home
Chef contingent consideration (f)
|
|
0.01
|
|
0.02
|
|
0.05
|
|
0.08
|
|
Adjustment for
transformation costs (f)
|
|
|
0.06
|
|
0.03
|
|
0.10
|
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 and 2020
Adjustment Items
|
|
|
0.19
|
|
(0.30)
|
|
1.20
|
|
(0.60)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to The Kroger Co. per
|
|
|
|
|
|
|
|
|
|
|
diluted common share
excluding the adjustment items above
|
|
$
0.80
|
|
$
0.73
|
|
$
1.99
|
|
$
1.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
common shares used in
|
|
|
|
|
|
|
|
|
|
|
diluted
calculation
|
|
|
|
755
|
|
786
|
|
758
|
|
787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 year-to-date
pre-tax adjustment to OG&A expenses for pension plan withdrawal
liabilities was $449 for 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
The pre-tax
adjustments for loss (gain) on investments were $122 and ($368) in
the second quarters of 2021 and 2020, respectively. The
year-to-date pre-tax adjustments for loss (gain) on investments
were $601 and ($790) in the first two quarters of 2021 and 2020,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)
|
The pre-tax
adjustments to OG&A expenses for Home Chef contingent
consideration were $9 and $25 in the second quarters of 2021 and
2020, respectively. The year-to-date pre-tax adjustments to
OG&A expenses for Home Chef contingent consideration were $52
and $85 in the first two quarters of 2021 and 2020,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
|
The pre-tax
adjustment to OG&A expenses for transformation costs were $57
and $29 in the second quarters of 2021 and 2020,
respectively. The year-to-date pre-tax adjustment to OG&A
expenses for transformation costs were $101 and $67 in the first
two quarters of 2021 and 2020, respectively. Transformation
costs primarily include costs related to store and 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
2021 Second Quarter
Adjustment Items include adjustments for the loss on investments,
Home Chef contingent consideration adjustment and strategic
transformation costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 Adjustment Items
include the Second Quarter Adjustment Items plus the adjustments
that occurred in the first quarter of 2021 for pension plan
withdrawal liabilities, loss on investments, Home Chef contingent
consideration adjustment and strategic transformation
costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 Second Quarter
Adjustment Items include adjustments for the gain on investments,
Home Chef contingent consideration adjustment and strategic
transformation costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 Adjustment Items
include the Second Quarter Adjustment Items plus the adjustments
that occurred in the first quarter of 2020 for the gain 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SECOND
QUARTER
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
$
839
|
|
$
820
|
|
$
1,644
|
|
$
2,146
|
|
LIFO
charge
|
|
|
|
47
|
|
23
|
|
84
|
|
54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIFO Operating
profit
|
|
|
886
|
|
843
|
|
1,728
|
|
2,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for
pension plan withdrawal liabilities
|
|
-
|
|
-
|
|
449
|
|
-
|
|
Adjustment for Home
Chef contingent consideration
|
|
9
|
|
25
|
|
52
|
|
85
|
|
Adjustment for
transformation costs (a)
|
|
57
|
|
29
|
|
101
|
|
67
|
|
Other
|
|
|
|
|
(5)
|
|
(3)
|
|
(8)
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 and 2020
Adjustment items
|
|
|
61
|
|
51
|
|
594
|
|
147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted FIFO
operating profit
|
|
|
|
|
|
|
|
|
|
|
|
excluding the
adjustment items above
|
|
$
947
|
|
$
894
|
|
$
2,322
|
|
$
2,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Transformation costs
primarily include costs related to store and business closure costs
and third party professional consulting fees associated with
business transformation and cost saving initiatives.
|
|
|
|
|
|
|
Table 8. Two-Year
Financial Results
|
(in millions, except
per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The purpose of this
table is to better illustrate comparable two-year growth from our
ongoing business for the current year for identical sales without
fuel, adjusted operating profit and adjusted net earnings per
diluted share, due to the significant fluctuations that occurred
during 2020 as a result of the COVID-19 pandemic. Two-year
financial results for identical sales without fuel, adjusted
operating profit and adjusted net earnings per diluted share are
useful metrics to investors and analysts because it presents more
accurate comparisons of results and trends over a longer period of
time to demonstrate the effect of COVID-19 on our results.
Items identified in these tables should not be considered
alternatives to 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IDENTICAL SALES
TWO-YEAR STACKED
|
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
SECOND
QUARTER
|
|
SECOND
QUARTER
|
|
YEAR-TO-DATE
|
|
YEAR-TO-DATE
|
|
|
|
2021
|
|
2020
|
|
2020
|
|
2019
|
|
2021
|
|
2020
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding
Fuel
|
|
$
27,606
|
|
$
27,759
|
|
$
27,761
|
|
$
24,226
|
|
$
64,214
|
|
$
65,945
|
|
$
65,898
|
|
$
56,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding
Fuel
|
|
(0.6)%
|
|
|
|
14.6%
|
|
|
|
(2.6)%
|
|
|
|
17.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two-year identical
sales stacked
|
|
14.0%
|
|
|
|
|
|
|
|
14.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT
EXCLUDING THE ADJUSTMENT ITEMS TWO-YEAR CAGR*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SECOND
QUARTER
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
2019
|
|
2021
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
$
839
|
|
$
559
|
|
$
1,644
|
|
$
1,460
|
|
|
|
|
|
|
|
|
|
LIFO
charge
|
|
47
|
|
30
|
|
84
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIFO Operating
profit
|
|
886
|
|
589
|
|
1,728
|
|
1,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for
pension plan withdrawal liabilities
|
-
|
|
27
|
|
449
|
|
86
|
|
|
|
|
|
|
|
|
|
Adjustment for Home
Chef contingent consideration
|
9
|
|
2
|
|
52
|
|
(21)
|
|
|
|
|
|
|
|
|
|
Adjustment for
transformation costs (a)
|
|
57
|
|
-
|
|
101
|
|
-
|
|
|
|
|
|
|
|
|
|
Other
|
|
(5)
|
|
8
|
|
(8)
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 and 2019
Adjustment items
|
|
61
|
|
37
|
|
594
|
|
77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted FIFO
operating profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
excluding the
adjustment items above
|
|
$
947
|
|
$
626
|
|
$
2,322
|
|
$
1,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two-year operating
profit CAGR*
|
|
22.5%
|
|
|
|
6.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two-year adjusted
FIFO operating profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
excluding the
adjustment items above CAGR*
|
|
23.0%
|
|
|
|
21.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
(a)
|
Transformation costs
primarily include costs related to store and business closure costs
and third party professional consulting fees associated with
business transformation and cost saving initiatives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
CAGR represents the
compounded annual growth rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
Table 8. Two-Year
Financial Results (continued)
|
(in millions, except
per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
NET EARNINGS PER
DILUTED SHARE EXCLUDING THE ADJUSTMENT ITEMS TWO-YEAR
CAGR*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SECOND
QUARTER
|
|
YEAR-TO-DATE
|
|
|
|
|
|
|
|
2021
|
|
2019
|
|
2021
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to the Kroger Co.
|
|
|
|
|
$
467
|
|
$
297
|
|
$
607
|
|
$
1,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for
pension plan withdrawal liabilities (a)(b)
|
|
|
|
|
-
|
|
22
|
|
344
|
|
66
|
|
Adjustment for gain
on sale of Turkey Hill Dairy (a)(c)
|
|
|
|
|
-
|
|
-
|
|
-
|
|
(80)
|
|
Adjustment for gain
on sale of You Technology (a)(d)
|
|
|
|
|
-
|
|
-
|
|
-
|
|
(52)
|
|
Adjustment for loss
(gain) on investments (a)(e)
|
|
|
|
|
93
|
|
36
|
|
460
|
|
(44)
|
|
Adjustment for Home
Chef contingent consideration (a)(f)
|
|
|
|
|
7
|
|
2
|
|
40
|
|
(16)
|
|
Adjustment for
transformation costs (a)(g)
|
|
|
|
|
43
|
|
-
|
|
77
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 and 2019
adjustment items
|
|
|
|
|
143
|
|
60
|
|
921
|
|
(126)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to the Kroger Co.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding the
adjustment items above
|
|
|
|
|
$
610
|
|
$
357
|
|
$
1,528
|
|
$
943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to the Kroger Co.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted common
share
|
|
|
|
|
$
0.61
|
|
$
0.37
|
|
$
0.79
|
|
$
1.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for
pension plan withdrawal liabilities (h)
|
|
|
|
|
-
|
|
0.03
|
|
0.45
|
|
0.08
|
|
Adjustment for gain
on sale of Turkey Hill Dairy (h)
|
|
|
|
|
-
|
|
-
|
|
-
|
|
(0.10)
|
|
Adjustment for gain
on sale of You Technology (h)
|
|
|
|
|
-
|
|
-
|
|
-
|
|
(0.06)
|
|
Adjustment for loss
(gain) on investments (h)
|
|
|
|
|
0.12
|
|
0.04
|
|
0.60
|
|
(0.05)
|
|
Adjustment for Home
Chef contingent consideration (h)
|
|
|
|
|
0.01
|
|
-
|
|
0.05
|
|
(0.02)
|
|
Adjustment for
transformation costs (h)
|
|
|
|
|
0.06
|
|
-
|
|
0.10
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 and 2019
adjustment items
|
|
|
|
|
0.19
|
|
0.07
|
|
1.20
|
|
(0.15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to the Kroger Co. per
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted common share
excluding the adjustment items above
|
|
|
|
$
0.80
|
|
$
0.44
|
|
$
1.99
|
|
$
1.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
common shares used in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
calculation
|
|
|
|
|
755
|
|
805
|
|
758
|
|
805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two-year net earnings
attributable to the Kroger Co. per
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted common share
CAGR*
|
|
|
|
|
28.4%
|
|
|
|
(22.3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two-year net earnings
attributable to the Kroger Co. per
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted common share
excluding the adjustment items above CAGR*
|
|
34.8%
|
|
|
|
31.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
CAGR represents the
compounded annual growth rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 $27 in the second quarter of 2019. The
year-to-date pre-tax adjustments for pension plan withdrawal
liabilities were $449 and $86 in the first two quarters of 2021 and
2019, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
The pre-tax
adjustment for gain on sale of Turkey Hill Dairy was
($106).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)
|
The pre-tax
adjustment for gain on sale of You Technology was ($70).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
|
The pre-tax
adjustments for loss (gain) on investments were $122 and $45 in the
second quarters of 2021 and 2019, respectively. The
year-to-date pre-tax adjustments for loss (gain) on investments
were $601 and ($61) in the first two quarters of 2021 and 2019,
respectively.
|
|
|
|
|
(f)
|
The pre-tax
adjustments to OG&A expenses for Home Chef contingent
consideration were $9 and $2 in the second quarters of 2021 and
2019, respectively. The year-to-date pre-tax adjustments to
OG&A expenses for Home Chef contingent consideration were $52
and ($21) in the first two quarters of 2021 and 2019,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(g)
|
The pre-tax
adjustment to OG&A expenses for transformation costs was $57 in
the second quarter of 2021. The year-to-date pre-tax
adjustments to OG&A expenses for transformation costs was
$101. Transformation costs primarily include costs related to
store and business closure costs and third party professional
consulting fees associated with business transformation and cost
saving initiatives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(h)
|
The amounts presented
represent the net earnings (loss) per diluted common share effect
of each adjustment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 Second Quarter
Adjustment Items include adjustments for the loss on investments,
Home Chef contingent consideration adjustment and strategic
transformation costs.
|
Note:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 Adjustment Items
include the Second Quarter Adjustment Items plus the adjustments
that occurred in the first quarter of 2021 for pension plan
withdrawal liabilities, loss on investments, Home Chef contingent
consideration adjustment and strategic transformation
costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 Second Quarter
Adjustment Items include adjustments for pension plan withdrawal
liabilities, loss on investments and Home Chef contingent
consideration adjustment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 Adjustment Items
include the Second Quarter Adjustment Items plus the adjustments
that occurred in the first quarter of 2019 for pension plan
withdrawal liabilities, the gain on sale of Turkey Hill Dairy, gain
on sale of You Technology, the gain on investments and Home Chef
contingent consideration adjustment.
|
|
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SOURCE The Kroger Co.