| Imagery Source: Flickr |
| Information Source: The Kroger Co |
| First Quarter Highlights |
- Identical Sales without fuel increased 3.2%*
- 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%
|
| 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, e-commerce 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." |
| * Excludes adjustment items |
| 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 Speciality Pharmacy sales. Excluding fuel, Kroger Speciality 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 Speciality 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, amortisation, 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 Speciality 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, Krogerecognised 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. |
| 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 authorisation. After completion of the ASR program, Kroger expects to resume open market share repurchases under the remaining $2.5 billion authorisation. 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%***
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| 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." |
| 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 millioncustomers 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. |
| For the full document, click the link below |
| The Kroger Co |
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