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Kroger

KrogerKR财报

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The Kroger Co., or simply Kroger, is an American retail corporation headquartered in Cincinnati, Ohio. It operates supermarkets and multi-department stores throughout the United States.

What changed in Kroger's 10-K — 2024 vs 2025

Top changes in Kroger's 2025 10-K

320 paragraphs added · 320 removed · 247 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

58 edited+9 added−22 removed20 unchanged
Each fuel center typically includes five to ten islands of fuel dispensers and storage tanks with capacity for 40,000 to 50,000 gallons of fuel. Supermarkets are generally operated under one of the following formats: combination food and drug stores (“combo stores”); multi-department stores; marketplace stores; or price impact warehouses. ​ The combo store is the primary grocery store format.
Each fuel center typically includes five to ten islands of fuel dispensers and storage tanks with capacity for 40,000 to 50,000 gallons of fuel. Supermarkets are generally operated under one of the following formats: combination food and drug stores (“combo stores”); multi-department stores; marketplace stores; or price impact warehouses. ​ 3 The combo store is the primary grocery store format.
We continue to invest in new platforms and applications to make learning more accessible to our associates. ​ Beyond our own programs, associates can take advantage of our tuition reimbursement benefit, which offers up to $3,500 annually — $21,000 over the course of employment — toward continuing education.
We continue to invest in new platforms and applications to make learning more accessible to our associates. ​ Beyond our own training programs, associates can take advantage of our tuition reimbursement benefit, which offers up to $3,500 annually — $21,000 over the course of employment — toward continuing education.
Adcock held leadership roles in Kroger’s Columbus Division, including Vice President of Operations and Vice President of Merchandising. Prior to that, Ms. Adcock served as Vice President of Natural Foods Merchandising and as Vice President of Deli/Bakery Manufacturing and held several leadership positions in the manufacturing department, including human resources manager, general manager and division operations manager. Ms.
Adcock held leadership roles in Kroger’s Columbus Division, including Vice President of Operations and Vice President of Merchandising. Prior to that, she served as Vice President of Natural Foods Merchandising and as Vice President of Deli/Bakery Manufacturing and held several leadership positions in the manufacturing department, including human resources manager, general manager and division operations manager. Ms.
Approximately 50% of our supermarkets were operated in Company-owned facilities, including some Company-owned buildings on leased land. Our stores operate under a variety of banners that have strong local ties and brand recognition. We connect with customers through our expanding seamless ecosystem and the consistent delivery of a full, fresh, and friendly customer experience.
Approximately 51% of our supermarkets were operated in Company-owned facilities, including some Company-owned buildings on leased land. Our stores operate under a variety of banners that have strong local ties and brand recognition. We connect with customers through our expanding seamless ecosystem and the consistent delivery of a full, fresh, and friendly customer experience.
Our supermarkets, on average, stock over 12,600 private label items. Our Brands products are primarily produced and sold in three “tiers.” Private Selection® is our main premium quality brand, offering customers culinary foods and ingredients that deliver amazing eating experiences.
Our supermarkets, on average, stock over 12,000 private label items. Our Brands products are primarily produced and sold in three “tiers.” Private Selection® is our main premium quality brand, offering customers culinary foods and ingredients that deliver amazing eating experiences.
Except as otherwise noted, each person has held office for at least five years. Each officer will hold office at the discretion of the Board for the ensuing year until removed or replaced. ​ Name Age Recent Employment History ​ ​ ​ ​ ​ Mary E. Adcock ​ 48 ​ Ms.
Except as otherwise noted, each person has held office for at least five years. Each officer will hold office at the discretion of the Board for the ensuing year until removed or replaced. ​ Name Name ​ Age ​ Recent Employment History ​ ​ ​ ​ ​ Mary E. Adcock ​ 49 ​ Ms.
Jabbar was elected Senior Vice President effective August 19, 2021 and is responsible for the oversight of several Kroger retail divisions. From July 2020 to August 2021, she served as Group Vice President of Center Store Merchandising, and from September 2018 to June 2020, as Group Vice President of Merchandising.
Jabbar ​ 56 ​ Ms. Jabbar was elected Senior Vice President effective August 19, 2021 and is responsible for the oversight of several Kroger retail divisions. From July 2020 to August 2021, she served as Group Vice President of Center Store Merchandising, and from September 2018 to June 2020, as Group Vice President of Merchandising.
There are approximately 350 such agreements, usually with terms of three to five years. Wages, health care and pensions are included in all of these collective bargaining agreements that cover approximately 65% of our associates.
There are approximately 350 such agreements, usually with terms of three to five years. Wages, health care and pensions are included in all of these collective bargaining agreements that cover approximately 64% of our associates.
Kroger has invested approximately $54 million in this program since it launched in 2018. ​ Rewarding Our Associates ​ As we continue to operate in a challenging labor market, we are dedicated to attracting and retaining the right talent across the organization to be able to continue delivering for our customers.
Kroger has invested approximately $64 million in this program since it launched in 2018. ​ 5 Rewarding Our Associates ​ As we continue to operate in a challenging labor market, we are dedicated to attracting and retaining the right talent across the organization to be able to continue delivering for our customers.
We also provide relevant customer-facing apps and interfaces that have the features customers want that are also reliable, easy to use and deliver a seamless customer experience across our store and digital channels. ​ Merchandising and Manufacturing ​ Our Brands products play an important role in our merchandising strategy and represented over $31 billion of our sales in 2023.
We also provide relevant customer-facing apps and interfaces that have the features customers want that are also reliable, easy to use and deliver a seamless customer experience across our store and digital channels. ​ Merchandising and Manufacturing ​ Our Brands products play an important role in our merchandising strategy and represented over $32 billion of our sales in 2024.
Kroger serves approximately 62 million households annually and because of our rewards program, over 95% of customer transactions are tethered to a Kroger loyalty card.
Kroger serves approximately 63 million households annually and because of our rewards program, over 95% of customer transactions are tethered to a Kroger loyalty card.
Before joining Kroger, Ms. Wheatley was engaged in the private practice of law for 11 years, most recently as a partner at Porter Wright Morris & Arthur in Cincinnati. ​ COMPETITIVE ENVIRONMENT ​ For the disclosure related to our competitive environment, see Item 1A under the heading “Competitive Environment.” ​
Wheatley was engaged in the private practice of law for 11 years, most recently as a partner at Porter Wright Morris & Arthur in Cincinnati. ​ COMPETITIVE ENVIRONMENT ​ For the disclosure related to our competitive environment, see Item 1A under the heading “Competitive Environment.” ​
He was also Global Vice President of Operations for Stanley Black and Decker and held numerous leadership roles at Unilever including Vice President of Food and Beverage Operations. ​ ​ ​ ​ ​ Yael Cosset ​ 50 ​ Mr.
He was also Global Vice President of Operations for Stanley Black and Decker and held numerous leadership roles at Unilever including Vice President of Food and Beverage Operations ​ ​ ​ ​ ​ 7 Yael Cosset ​ 51 ​ Mr.
Both Simple Truth® and Simple Truth Organic® are free from a defined list of artificial ingredients that some customers have told us they do not want in their food, and the Simple Truth Organic products are USDA certified organic. ​ 4 ​ Approximately 30% of Our Brands units and 43% of the grocery category Our Brands units sold in our supermarkets are produced in our food production plants; the remaining Our Brands items are produced to our strict specifications by outside manufacturers.
Both Simple Truth® and Simple Truth Organic® are free from a defined list of artificial ingredients that some customers have told us they do not want in their food, and the Simple Truth Organic products are USDA certified organic. ​ Approximately 31% of Our Brands units sold in our supermarkets are produced in our food production plants; the remaining Our Brands items are produced to our strict specifications by outside manufacturers.
We perform a “make or buy” analysis on Our Brands products and decisions are based upon a comparison of market-based transfer prices versus open market purchases. As of February 3, 2024, we owned 33 food production plants.
We perform a “make or buy” analysis on Our Brands products and decisions are based upon a comparison of market-based transfer prices versus open market purchases. As of February 1, 2025, we owned 33 food production plants.
We prioritize providing the right safety training and equipment, safe working conditions and resources to maintain and improve associates’ well-being. Through our strategy to set clear expectations, routine monitoring, and regular communication and engagement, we reduce the number of injuries and accidents that happen in our workplace.
It is also one of our core values. We prioritize providing the right safety training and equipment, safe working conditions and resources to maintain and improve associates’ well-being. Through our strategy to set clear expectations, routine monitoring, and regular communication and engagement, we reduce the number of injuries and accidents that happen in our workplace.
This is why we aim to create working environments where associates feel encouraged and supported to be their best selves every day. As of February 3, 2024, Kroger employed nearly 414,000 full- and part-time employees. Our people are essential to our success, and we focus intentionally on attracting, developing and engaging a diverse workforce that represents the communities we serve.
This is why we aim to create working environments where associates feel encouraged and supported to be their best selves every day. As of February 1, 2025, Kroger employed over 409,000 full- and part-time employees. Our people are essential to our success, and we focus intentionally on attracting, developing and engaging a diverse workforce that represents the communities we serve.
In 2023, we spent approximately $210 million on training our associates through onboarding, leadership development programs and programs designed to upskill associates across the Company.
In 2024, we spent approximately $192 million on training our associates through onboarding, leadership development programs and programs designed to upskill associates across the Company.
Nichols was elected Vice President, Corporate Controller in March 2024 and is responsible for oversight of Kroger’s Corporate Accounting and Corporate Tax departments, as well as the Company’s Accounting Centers and Accounting Modernization, Pension Investment, and Insurance and Claims teams. Prior to that, he served as Vice President, Assistant Corporate Controller from April 2021 to March 2024.
Nichols was elected Vice President, Corporate Controller in March 2024 and is responsible for oversight of Kroger’s Corporate Accounting and Corporate Tax departments, as well as the Company’s Accounting Centers and Accounting Modernization teams. Prior to that, he served as Vice President, Assistant Corporate Controller from April 2021 to March 2024. From May 2018 to April 2021, Mr.
Massa ​ 57 ​ Mr. Massa was elected Senior Vice President in June 2018 and serves as the company’s Chief People Officer, leading all areas of Human Resources and Labor Relations, including total rewards, labor relations, diversity, business unit human resources, people operations, training and development, talent hiring, retention and engagement, corporate affairs, and associate communications.
Massa ​ 58 ​ Mr. Massa was elected Executive Vice President in March 2025 and serves as the company’s Chief People Officer, leading all areas of Human Resources and Labor Relations, including total rewards, labor relations, diversity, business unit human resources, people operations, training and development, talent hiring, retention and engagement, corporate affairs, and associate communications.
These forms are available as soon as reasonably practicable after we have filed them with, or furnished them electronically to, the SEC. ​ Kroger is diversified across brands, product categories, channels of distribution, geographies and consumer demographics.
These forms are available as soon as reasonably practicable after we have filed them with, or furnished them electronically to, the Securities and Exchange Commission (SEC), and are also available at www.sec.gov. ​ Kroger is diversified across brands, product categories, channels of distribution, geographies and consumer demographics.
As a result of our risk assessments, we do not currently anticipate the modeled physical risks to adversely affect our financial condition, results of operations or cash flows for the foreseeable future. We plan to continue these climate risk assessments moving forward. ​ Kroger also acknowledges that current and emerging climate-related legislation could affect our business.
As a result of our risk assessments, we do not currently anticipate the modeled physical risks to adversely affect our financial condition, results of operations or cash flows for the foreseeable future. We plan to update these climate risk assessments moving forward as needed. ​ We also acknowledge that climate-related legislation could affect our business.
All references to 2023, 2022 and 2021 are to the fiscal years ended February 3, 2024, January 28, 2023 and January 29, 2022, respectively, unless specifically indicated otherwise. ​ We maintain a web site (www.thekrogerco.com) that includes the Kroger Fact Book and other additional information about the Company.
All references to 2024, 2023 and 2022 are to the fiscal years ended February 1, 2025, February 3, 2024 and January 28, 2023, respectively, unless specifically indicated otherwise. ​ We maintain a web site (www.thekrogerco.com) that includes additional information about the Company.
Our combination of assets includes the following: ​ 3 ​ Stores ​ As of February 3, 2024, Kroger operates supermarkets under a variety of local banner names in 35 states and the District of Columbia. As of February 3, 2024, Kroger operated, either directly or through its subsidiaries, 2,722 supermarkets, of which 2,257 had pharmacies and 1,665 had fuel centers.
Our combination of assets includes the following: ​ Stores ​ As of February 1, 2025, Kroger operates supermarkets under a variety of local banner names in 35 states and the District of Columbia. As of February 1, 2025, Kroger operated, either directly or through its subsidiaries, 2,731 supermarkets, of which 2,273 had pharmacies and 1,702 had fuel centers.
Our 20 years of investment in data science capabilities is allowing us to utilize this data to create personalized experiences and value for our customers and is also enabling our fast-growing, high operating margin alternative profit businesses, including data analytic services and third-party media revenue.
Our over 20 years of investment in data science capabilities allows us to utilize this data to create personalized experiences and value for our customers and enables our growing, high operating margin alternative profit businesses, including data analytic services and third-party media revenue.
Arreaga served as Senior Vice President of Supply Chains for Mondelez, where he was responsible for all operations and functions from field to consumer, internal and external factories, fulfillment centers, direct to store branches, Logistics and product development.
From December 2020 to March 2025, Mr. Arreaga served as Senior Vice President of Supply Chain. Prior to joining Kroger, Mr. Arreaga served as Senior Vice President of Supply Chains for Mondelez, where he was responsible for all operations and functions from field to consumer, internal and external factories, fulfillment centers, direct to store branches, Logistics and product development.
Cosset was elected Senior Vice President and Chief Information Officer in May 2019 and is responsible for leading Kroger’s digital strategy, focused on building Kroger’s presence in the marketplace in digital channels, personalization and e-commerce. In August 2020, he also assumed responsibility for Kroger’s alternative profit businesses, including Kroger’s data analytics subsidiary, 84.51 ͦ LLC and Kroger Personal Finance.
Cosset was elected Executive Vice President and Chief Digital Officer in March 2025 and is responsible for leading Kroger’s digital strategy, focused on building Kroger’s presence in the marketplace in digital channels, personalization and e-commerce. He is also responsible for Kroger’s alternative profit businesses, including Kroger’s data analytics subsidiary, 84.51 ͦ LLC and Kroger Personal Finance.
These funds can be applied to education programs like certifications, associate or graduate degrees. Approximately 7,000 associates, 94% of whom are hourly, have taken advantage of our tuition reimbursement program in 2023.
These funds can be applied to education programs like certifications, associate or graduate degrees. Approximately 5,500 associates, 89% of whom are hourly, have taken advantage of our tuition reimbursement program in 2024.
Additionally, certain significant events including inclement weather systems, particularly winter storms, tend to affect our sales trends. ​ 5 ​ HUMAN CAPITAL MANAGEMENT ​ Our People ​ We want Kroger to be a place where our customers love to shop and associates love to work.
However, revenues tend to be higher during the major holidays throughout the year. Additionally, certain significant events including inclement weather systems, particularly winter storms, tend to affect our sales trends. ​ HUMAN CAPITAL MANAGEMENT ​ Our People ​ We want Kroger to be a place where our customers love to shop and associates love to work.
Prior to that, Mr. Cosset served as Group Vice President and Chief Digital Officer, and also as Chief Commercial Officer and Chief Information Officer of 84.51° LLC. Prior to joining Kroger, Mr.
From May 2019 to March 2025, Mr. Cosset served as Senior Vice President and Chief Information Officer. Prior to that, he served as Group Vice President and Chief Digital Officer, and also as Chief Commercial Officer and Chief Information Officer of 84.51° LLC. Prior to joining Kroger, Mr.
Many retail roles offer opportunities to learn new skills, grow and advance careers. ​ Associates at all levels of Kroger have access to training and education programs to build their skills and prepare for the roles they want.
Many retail roles offer opportunities to learn new skills, where new associates come for a job, and discover a career. ​ Associates at all levels of Kroger have access to training and education programs to build their skills and prepare for the roles they want.
Foley was named Senior Vice President and Interim Chief Financial Officer in March 2024. Prior to that, he served as Group Vice President, Interim Chief Financial Officer and Corporate Controller from February 2024 to March 2024. Prior to that, he served as Group Vice President and Corporate Controller from October 2021 to February 2024.
Prior to that, he served as Group Vice President, Interim Chief Financial Officer and Corporate Controller from February 2024 to March 2024. Prior to that, he served as Group Vice President and Corporate Controller from October 2021 to February 2024. From April 2017 to September 2021, Mr. Foley served as Vice President and Corporate Controller.
These plants consisted of 14 dairies, nine deli or bakery plants, five grocery product plants, two beverage plants, one meat plant and two cheese plants. ​ Our Data ​ We are evolving into a more diverse business. The traffic and data generated by our retail business, including pharmacies and fuel centers, is enabling this transformation.
These plants consisted of 14 dairies, nine deli or bakery plants, five grocery product plants, two beverage plants, one meat plant and two cheese plants. ​ 4 Our Data ​ The traffic and data generated by our retail business, including pharmacies and fuel centers, enables our diverse business.
From May 2018 to April 2021, Mr. Nichols served as Senior Director and Assistant Corporate Controller. Prior to that, he held several leadership roles, including Senior Manager of Corporate and External Financial Reporting and Senior Financial Analyst of SEC Reporting. Mr. Nichols joined Kroger in 2000 as Assistant Controller of the Central Division. ​ ​ ​ ​ ​ Christine S.
Nichols served as Senior Director and Assistant Corporate Controller. Prior to that, he held several leadership roles, including Senior Manager of Corporate and External Financial Reporting and Senior Financial Analyst of SEC Reporting. Mr. Nichols joined Kroger in 2000 as Assistant Controller of the Central Division. ​ ​ ​ ​ ​ 9 Ronald L. Sargent ​ 69 ​ Mr.
Cosset served in several leadership roles at dunnhumby USA, LLC, including Executive Vice President of Consumer Markets and Global Chief Information Officer. ​ ​ ​ ​ ​ 9 ​ Carin L. Fike ​ 55 ​ Ms. Fike was elected Vice President and Treasurer effective April 2017.
Cosset served in several leadership roles at dunnhumby USA, LLC, including Executive Vice President of Consumer Markets and Global Chief Information Officer. ​ ​ ​ ​ ​ Carin L. Fike ​ 56 ​ Ms. Fike was elected Vice President and Treasurer effective April 2017. Prior to that, she served as Assistant Treasurer and also as Director of Investor Relations. Ms.
Our strategy is focused on growing customer loyalty by delivering great value and convenience, and investing in four strategic pillars: Fresh, Our Brands , Data & Personalization and Seamless. ​ We also utilize the data and traffic generated by our retail business to deliver incremental value and services for our customers that generates alternative profit streams.
Our strategy is focused on growing households and increasing customer loyalty by delivering great value and convenience, and investing in four strategic pillars: Fresh, Our Brands , Data & Personalization and Seamless. ​ We utilize the data and traffic generated by our retail business to create personalized experiences and value for our customers.
Kimball was elected Senior Vice President in March 2022 and is responsible for the oversight of several Kroger retail divisions. From April 2016 to March 2022, he served as President of the Smith’s Division. Prior to that, he held several leadership roles with the Ralphs Division, including Vice President of Operations and Vice President of Merchandising.
From April 2016 to March 2022, he served as President of the Smith’s Division. Prior to that, he held several leadership roles with the Ralphs Division, including Vice President of Operations and Vice President of Merchandising.
We offer Pickup and Harris Teeter ExpressLane™ — personalized, order online, pick up at the store services — at 2,350 of our supermarkets and provide Delivery, which allows us to offer digital solutions to substantially all of our customers.
We offer Pickup and Harris Teeter ExpressLane™ — personalized, order online, pick up at the store services — at 2,412 of our supermarkets and provide Delivery, which allows us to offer digital solutions to substantially all of our customers. Our Delivery solutions include orders delivered to customers from retail store locations, customer fulfillment centers and orders placed through third-party platforms.
Our obligation is to do this in a way that maintains a financially sustainable business. ​ MANAGING CLIMATE IMPACTS ​ Managing climate change impacts is an important part of Thriving Together , Kroger’s Environmental, Social & Governance (“ESG”) strategy and has been a focus for our business for many years.
Our obligation is to do this in a way that maintains a financially sustainable business. ​ CLIMATE RESILIENCIES ​ Managing greenhouse gas emissions to reduce our impact on the environment is an important part of Thriving Together, our responsible business strategy, and has been a focus for our business for many years.
Wheatley ​ 53 ​ Ms. Wheatley was elected Senior Vice President, General Counsel, and Secretary in May 2023. Prior to this, she served as Group Vice President, Secretary and General Counsel from May 2014 to May 2023. She joined Kroger in February 2008 as Corporate Counsel, and thereafter served as Senior Attorney, Senior Counsel, and Vice President.
Wheatley was elected Executive Vice President, General Counsel, and Secretary in March 2025. Prior to that, she served as Senior Vice President, General Counsel, and Secretary from May 2023 to March 2025. From May 2014 to May 2023, Ms. Wheatley served as Group Vice President, Secretary and General Counsel.
As a result of state and federal requirements regarding the phase down of hydrofluorocarbon (“HFC”) refrigerants, we anticipate steadily replacing our refrigerant infrastructure to reach required levels, which could incur significant costs to the business. If legislation required an accelerated timeline regarding the phase down of HFC refrigerants, we could incur higher costs.
As a result of current state and federal requirements regarding the phasedown of hydrofluorocarbon (“HFC”) refrigerants, we anticipate steadily replacing our refrigerant infrastructure to reach required levels, which could incur significant costs to the business. Any such legislation will affect all retailers using refrigerants in their operations.
He also leads the areas of shared services and aviation. Prior to that, Mr. Massa served as Group Vice President of Human Resources and Labor Relations from June 2014 to June 2018. Mr. Massa joined Kroger in October 2010 as Vice President, Corporate Human Resources and Talent Development. Prior to joining Kroger, Mr.
He also leads the areas of shared services and aviation. From June 2018 to March 2025, Mr. Massa served as Senior Vice President and Chief People Officer, and from June 2014 to June 2018, he served as Group Vice President of Human Resources and Labor Relations. Mr.
Seasonal manager, assistant director of Drug/GM and director of Drug GM, and district manager in the Fry’s Division. She joined the Company in 1987 as a clerk in the Fry’s Division. ​ ​ ​ ​ ​ Kenneth C. Kimball ​ 58 ​ Mr.
Seasonal manager, assistant director of Drug/GM and director of Drug GM, and district manager in the Fry’s Division. She joined the Company in 1987 as a clerk in the Fry’s Division. ​ ​ ​ ​ ​ 8 David J. C. Kennerley ​ 51 ​ Mr. Kennerley was elected Executive Vice President in March 2025.
These alternative profit streams would not exist without our core retail business. ​ Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our stores, fuel centers and via our online platforms.
In turn, the value generated from these businesses enables us to reinvest back into our retail business. ​ Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our stores, fuel centers and via our online platforms.
He was elected Senior Vice President in February 2019 and served as Group Vice President from June 2015 to February 2019. He is responsible for sales, pricing, promotional and category planning for fresh foods, center store and general merchandise categories, as well as analytics & execution, e-commerce and Digital Merchandising, Sourcing and Our Brands .
Adcock was elected Executive Vice President and Chief Merchant and Marketing Officer in March 2025 and is responsible for sales and category planning for fresh foods, center store and general merchandise categories, as well as analytics & execution, e-commerce and digital merchandising, fuel and Our Brands . Prior to that, Ms.
Our retail media business – Kroger Precision Marketing – provides differentiated media capabilities for our consumer packaged goods partners and other industry verticals. It is a key driver of our digital profitability and alternative profit. ​ Proposed Merger with Albertsons ​ As previously disclosed, on October 13, 2022, we entered into a merger agreement with Albertsons.
Our retail media business – Kroger Precision Marketing – provides differentiated media capabilities for our consumer packaged goods partners and other industry verticals. It is a key driver of our digital profitability and alternative profit. ​ SEASONALITY ​ The majority of our revenues are generally not seasonal in nature.
Any such legislation will affect all retailers using refrigerants in their operations. ​ 7 ​ Climate adaptation ​ To help prepare for and manage a variety of risk scenarios, including natural disasters and business disruptions to our supply chain, we maintain more than 200 business continuity plans.
We also monitor utility and technology availability and costs to help anticipate how these could affect our business operations in the future. ​ 6 To help prepare for and manage a variety of risk scenarios, including natural disasters and business disruptions to our supply chain, we maintain more than 200 business continuity plans.
Foley began his career with Kroger in 2001 as an audit manager in the Internal Audit Department after working for PricewaterhouseCoopers in various roles, including senior audit manager. ​ ​ ​ ​ ​ Valerie L. Jabbar ​ 55 ​ Ms.
Before that, he held several leadership roles, including Vice President and Treasurer, Assistant Corporate Controller, and Controller of Kroger’s Cincinnati/Dayton division. Mr. Foley began his career with Kroger in 2001 as an audit manager in the Internal Audit Department after working for PricewaterhouseCoopers in various roles, including senior audit manager. ​ ​ ​ ​ ​ Valerie L.
The Public Responsibilities Committee of the Board of Directors oversees our responsibilities as a corporate citizen and Kroger’s practices related to environmental sustainability, including climate effects, along with other environmental and social topics of material importance.
The Public Responsibilities Committee of the Board of Directors oversees our responsibilities as a responsible business and our practices related to environmental sustainability, including potential climate effects, along with other environmental and social topics of material importance. ​ INFORMATION ABOUT OUR EXECUTIVE OFFICERS ​ The following is a list of the names and ages of the executive officers and the positions held by each such person as of March 21, 2025.
Arreaga was elected Senior Vice President of Supply Chain in December 2020. He is responsible for the Company’s industry-leading Supply Chain organization, Logistics, Inventory & Replenishment, Manufacturing, and Fulfillment Centers. Prior to Kroger, Mr.
Adcock joined Kroger in 1999 as human resources assistant manager at the Country Oven Bakery in Bowling Green, Kentucky. ​ ​ ​ ​ ​ Gabriel Arreaga ​ 50 ​ Mr. Arreaga was elected Executive Vice President of Supply Chain in March 2025. He is responsible for the Company’s industry-leading Supply Chain organization, Logistics, Inventory & Replenishment, Manufacturing, and Fulfillment Centers.
Adcock was elected Senior Vice President effective May 1, 2019 and is responsible for retail operations as well as the oversight of all Kroger retail divisions. From June 2016 to April 2019, she served as Group Vice President of Retail Operations. Prior to that, Ms.
Adcock served as Senior Vice President and Chief Merchant and Marketing Officer from December 2024 to March 2025. From May 2019 to December 2024, she served as Senior Vice President of Retail Operations, and from June 2016 to April 2019, she served as Group Vice President of Retail Operations. Prior to that, Ms.
Prior to that, she served as Assistant Treasurer and also as Director of Investor Relations. Ms. Fike began her career with Kroger in 1999 as a manager in the Financial Reporting department after working with PricewaterhouseCoopers in various roles, including audit manager. ​ ​ ​ ​ ​ Todd A. Foley ​ 54 ​ Mr.
Fike began her career with Kroger in 1999 as a manager in the Financial Reporting department after working with PricewaterhouseCoopers in various roles, including audit manager. ​ ​ ​ ​ ​ Todd A. Foley ​ 55 ​ Mr. Foley was named Senior Vice President and Interim Chief Financial Officer in March 2024.
Over the last five years, we have now invested more than $2.4 billion in incremental wage investments. We remain committed to supporting our associates with investments in wages and comprehensive benefits that are sustainable and will allow us to continue to keep products affordable for the communities we serve.
We remain committed to supporting our associates with investments in wages and comprehensive benefits that are sustainable and will allow us to continue to keep products affordable for the communities we serve. We expect to make continued associate investments in 2025. ​ Creating a Safe Environment ​ Our associates’ safety is a top priority.
Kroger discloses detailed energy and emissions data, as well as our approach to managing climate-related topics, in our annual ESG Report, which can be found at www.thekrogerco.com/esgreport. ​ Risk assessment ​ To help identify and manage climate-related risks to our business, we conducted a quantitative climate risk assessment to determine the likelihood that different physical climate risks, including drought, extreme heat and extreme precipitation, would affect Kroger’s operations at representative facilities in different geographies and, in turn, potentially increase operating costs for these facilities.
With a large portfolio of supermarkets, distribution warehouses, and food production plants, as well as a complex supply chain, we continue to take steps to reduce both the effects of our operations on the environment and the potential effects of a changing climate on our operations. ​ To help identify and manage climate-related risks to our business, we conducted a quantitative climate risk assessment to determine the likelihood that different physical climate risks, including drought, extreme heat and extreme precipitation, would affect our operations at representative facilities in different geographies and, in turn, potentially increase operating costs for these facilities.
Our Delivery solutions include orders delivered to customers from retail store locations, customer fulfillment centers powered by Ocado and orders placed through third-party platforms. These channels allow us to serve customers anything, anytime and anywhere with zero compromise on selection, convenience, and price.
These channels allow us to serve customers anything, anytime and anywhere with zero compromise on selection, convenience, and price.
Massa served in various Human Resources leadership roles for 21 years at Procter & Gamble, most recently serving as Global Human Resources Director of Customer Business Development. ​ ​ ​ ​ ​ 10 ​ W. Rodney McMullen ​ 63 ​ Mr. McMullen was elected Chairman of the Board effective January 1, 2015, and Chief Executive Officer effective January 1, 2014.
Massa joined Kroger in October 2010 as Vice President, Corporate Human Resources and Talent Development. Prior to joining Kroger, he served in various Human Resources leadership roles for 21 years at Procter & Gamble, most recently serving as Global Human Resources Director of Customer Business Development. ​ ​ ​ ​ ​ Brian W. Nichols ​ 52 ​ Mr.
We are investing in our associates by expanding our industry-leading benefits, including continuing education, training and development and health and wellness. During 2023, we increased associate wages resulting in an average hourly rate of nearly $19, and a rate of nearly $25 with comprehensive benefits factored in, which is a 33% increase in rate in the last five years.
During 2024, we increased associate wages resulting in an average hourly rate of more than $19, and a rate of more than $25 with comprehensive benefits factored in, which is a 38% increase in rate in the last seven years. Over the last five years, we have now invested more than $2.7 billion in incremental wage investments.
We have installed technologies and processes to ensure our supermarkets, food production plants, fulfillment centers and supply chain can respond quickly and remain operational. We also monitor energy availability and costs to help anticipate how changing climate patterns, like increasing temperatures, could affect our energy-sourcing costs and activities.
We have installed technologies and processes to ensure our supermarkets, food production plants, fulfillment centers and supply chain can respond quickly and remain operational to serve our customers. ​ This topic is managed by leadership with input from several departments across the business.
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The proposed merger is expected to accelerate our go-to-market strategy that includes Fresh, Our Brands , Personalization and Seamless, and continue our track record of investments across lowering prices, enhancing the customer experience, and increasing associate wages and benefits.
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This data and traffic also enables our fast-growing, high operating margin alternative profit business, including data and analytic services and third-party media revenue.
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For additional information about the proposed merger with Albertsons, see Note 16 to the Consolidated Financial Statements. ​ SEGMENTS ​ We operate supermarkets, multi-department stores and fulfillment centers throughout the United States. Our retail operations, which represent 97% of our consolidated sales, is our only reportable segment.
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We are investing in our associates by expanding our industry-leading benefits, including continuing education, training and development and health and wellness.
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We aggregate our operating divisions into one reportable segment due to the operating divisions having similar economic characteristics with similar long-term financial performance.
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Prior to joining Kroger, he held various leadership roles at PepsiCo from 2001 to 2025, most recently serving as CFO, Europe. Mr.
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In addition, our operating divisions offer customers similar products, have similar distribution methods, operate in similar regulatory environments, purchase the majority of the merchandise for retail sale from similar (and in many cases identical) vendors on a coordinated basis from a centralized location, serve similar types of customers, and are allocated capital from a centralized location.
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Kennerley joined PepsiCo in 2001 as a manager in the International Corporate Finance/Treasury Department, then in 2005 moved to the U.K. business as a business development director and subsequently held a number of roles across Planning and Commercial Finance.
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Our operating divisions are organized primarily on a geographical basis so that the operating division management team can be responsive to local needs of the operating division and can execute company strategic plans and initiatives throughout the locations in their operating division. This geographical separation is the primary differentiation between these retail operating divisions.
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In 2011, he became the company’s senior finance director for the Global Beverages Group and then moved into the North American Beverage business. After that, Mr. Kennerley held a number of roles across Commercial Finance before being appointed to SVP Finance for the company’s North American Bottling business.
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The geographical basis of organization reflects how the business is managed and how our Chief Executive Officer, who acts as our chief operating decision maker, assesses performance internally. All of our operations are domestic.
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He served in his most recent role as CFO, Europe from March 2020 to March 2025. ​ ​ ​ ​ ​ Kenneth C. Kimball ​ 59 ​ Mr. Kimball was elected Senior Vice President in March 2022 and is responsible for the oversight of several Kroger retail divisions.
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Revenues, profits and losses and total assets are shown in our Consolidated Financial Statements set forth in Item 8 below. ​ SEASONALITY ​ The majority of our revenues are generally not seasonal in nature. However, revenues tend to be higher during the major holidays throughout the year.
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Sargent was named Interim Chief Executive Officer and Chairman of the Board in March 2025. He has been a Kroger director since 2006 and served as the Lead Director from June 2018 to March 2025. Mr.
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We expect to make continued associate investments in 2024. ​ Promoting Diversity, Equity & Inclusion ​ Diversity and inclusion have been among Kroger’s values for decades. We strive to reflect the communities we serve and foster a culture that inspires collaboration and feeds the human spirit.
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Sargent was Chairman and Chief Executive Officer of Staples, Inc., a business products retailer, from 2002 until his retirement in 2016 after joining the company in 1989. Prior to joining Staples, Mr. Sargent spent 10 years with Kroger in several roles across stores, sales, marketing, manufacturing and strategy. ​ ​ ​ ​ ​ Christine S. Wheatley ​ 54 ​ Ms.
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We have taken a very thoughtful and purposeful approach to enact meaningful change and develop what we believe are the right actions to achieve true and lasting equality. Our Framework for Action: Diversity, Equity & Inclusion plan reflects our desire to redefine, deepen, and advance our commitment, mobilizing our people, passion, scale and resources.
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She joined Kroger in February 2008 as Corporate Counsel, and thereafter served as Senior Attorney, Senior Counsel, and Vice President. Before joining Kroger, Ms.
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This ongoing commitment includes the following framework pillars: Create a More Inclusive Culture; Develop Diverse Talent; Advance Diverse Partnerships; Advance Equitable Communities; and Deeply Listen and Report Progress. ​ 6 ​ Creating a Safe Environment ​ Our associates’ safety is a top priority. It is also one of our core values.
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With a large portfolio of supermarkets, distribution warehouses and food production plants, as well as a complex supply chain, we recognize Kroger’s effect on our climate. We continue to explore opportunities and take steps to reduce the effects of our operations on the environment and to reduce the potential risk of a changing climate on our operations.
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This includes enhancing our operational efficiency, increasing our usage of renewable energy and investing in new technologies. The key elements of our climate strategy are included below. ​ Governance ​ Climate effects are managed by leadership with input from several departments across the business.
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Our teams also monitor transition risks due to climate change, including the effect possible new legislation may have on our business. ​ Climate mitigation ​ For many years, Kroger has implemented emission reduction projects, including energy efficiency improvements, refrigerant leak detection and mitigation measures, renewable energy installations and procurement and fleet efficiencies.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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The loss or disruption of such supply arrangements for any reason, labor disputes, loss or impairment of key manufacturing sites, acts of war or terrorism, disruptive global political events, quality control issues, a supplier’s financial distress, natural disasters or health crises, regulatory actions or ethical sourcing issues, trade sanctions or other external factors over which we have no control, could interrupt product supply and, if not effectively managed and remedied, have an adverse effect on our business, financial condition, results of operations or cash flows. ​
The loss or disruption of such supply arrangements for any reason, labor disputes, loss or impairment of key manufacturing sites, acts of war or terrorism, disruptive global political events, quality control issues, a supplier’s financial distress, natural disasters or health crises, regulatory actions or ethical sourcing issues, trade sanctions, tariffs or other external factors over which we have no control, could interrupt product supply and, if not effectively managed and remedied, have an adverse effect on our business, financial condition, results of operations or cash flows. ​
Further, if we are unable to control health care, pension and wage costs, or if we have insufficient operational flexibility under our collective bargaining agreements, we may experience increased operating costs and an adverse effect on our financial condition, results of operations or cash flows. ​ We have committed to paying fair wages and providing the benefits that were collectively bargained with the United Food and Commercial Workers (“UFCW”) and other labor unions representing associates.
Further, if we are unable to control health care, pension and wage costs, or if we have insufficient operational flexibility under our collective bargaining agreements, we may experience increased operating costs and an adverse effect on our financial condition, results of operations or cash flows. ​ 11 We have committed to paying fair wages and providing the benefits that were collectively bargained with the United Food and Commercial Workers (“UFCW”) and other labor unions representing associates.
Any issue regarding the safety of items, whether Our Brands items manufactured by us or for us or CPG products we sell, regardless of the cause, could have a substantial and adverse effect on our reputation, financial condition, results of operations or cash flows. ​ EMPLOYEE MATTERS ​ Nearly two-thirds of our associates are covered by collective bargaining agreements with unions, and our relationship with those unions, including a prolonged work stoppage affecting a substantial number of locations, could have a material adverse effect on our financial condition, results of operations or cash flows.
Any issue regarding the safety of items, whether Our Brands items manufactured by us or for us or CPG products we sell, regardless of the cause, could have a substantial and adverse effect on our reputation, financial condition, results of operations or cash flows. ​ EMPLOYEE MATTERS ​ Nearly two-thirds of our associates are covered by collective bargaining agreements with unions, and our relationship with those unions, including any work stoppage affecting a substantial number of locations, could have a material adverse effect on our financial condition, results of operations or cash flows.
Adverse weather or natural disasters and other matters that could reduce consumer spending, could materially affect our financial condition, results of operations or cash flows. ​ CLIMATE IMPACT ​ The long-term effects of global climate change present both physical risks, such as extreme weather conditions or rising sea levels, and transition risks, such as regulatory or technology changes, which are expected to be widespread and unpredictable.
Adverse weather or natural disasters and other matters that could reduce consumer spending, could materially affect our financial condition, results of operations or cash flows. ​ 17 CLIMATE IMPACT ​ The long-term effects of global climate change present both physical risks, such as extreme weather conditions or rising sea levels, and transition risks, such as regulatory or technology changes, which are expected to be widespread and unpredictable.
Future economic conditions affecting disposable consumer income such as employment levels, business conditions, overall economic slowdown or recession, changes in housing market conditions, changes in government benefits such as SNAP/EBT, student loan relief, or child care credits, the availability of credit, interest rates, inflation, disinflation or deflation, tax rates and other matters could reduce consumer spending.
Future economic conditions affecting disposable consumer income such as employment levels, business conditions, overall economic slowdown or recession, changes in housing market conditions, changes in government benefits such as SNAP/EBT, student loan relief, or child care credits, the availability of credit, interest rates, inflation, disinflation or deflation, tax rates, tariffs and other matters could reduce consumer spending.
If we, our third-party service providers, or those with whom we share information fail to comply with laws and regulations, or self-regulatory regimes, that apply to all or parts of our business, such as section 5 of the FTC Act, the California Consumer Privacy Act (CCPA), the Health Insurance Portability and Accountability Act (HIPAA), or applicable international laws such as the EU General Data Protection Regulation (GDPR), our reputation could be damaged, possibly resulting in lost business, and we could be subjected to additional legal risk or financial losses as a result of non-compliance. 15 ​ PAYMENT SYSTEMS ​ We accept payments using a variety of methods, including cash and checks, select credit and debit cards, and Kroger Pay, a mobile payment solution.
If we, our third-party service providers, or those with whom we share information fail to comply with laws and regulations, or self-regulatory regimes, that apply to all or parts of our business, such as section 5 of the FTC Act, the California Consumer Privacy Act (CCPA), the Health Insurance Portability and Accountability Act (HIPAA), or applicable international laws such as the EU General Data Protection Regulation (GDPR), our reputation could be damaged, possibly resulting in lost business, and we could be subjected to additional legal risk or financial losses as a result of non-compliance. ​ 13 PAYMENT SYSTEMS ​ We accept payments using a variety of methods, including cash and checks, select credit and debit cards, and Kroger Pay, a mobile payment solution.
If the global economy and financial markets do not perform as we expect, it could adversely affect our business, financial condition, results of operations or cash flows. ​ 17 ​ Our operating results could be adversely affected by any future disease outbreak, including pandemics, epidemics, or similar widespread health concerns.
If the global economy and financial markets do not perform as we expect, it could adversely affect our business, financial condition, results of operations or cash flows. ​ Our operating results could be adversely affected by any future disease outbreak, including pandemics, epidemics, or similar widespread health concerns.
If we fail to meet the evolving needs of our customers, our ability to compete and our financial condition, results of operations or cash flows could be adversely affected. ​ We are continuing to enhance the customer connection with investments in our four strategic pillars – Seamless, Personalization, Fresh, and Our Brands .
If we fail to meet the evolving needs of our customers, our ability to compete and our financial condition, results of operations or cash flows could be adversely affected. ​ 10 We are continuing to enhance the customer connection with investments in our four strategic pillars – Seamless, Personalization, Fresh, and Our Brands .
Furthermore, if new or pending legal or regulatory matters result in fines or costs in excess of the amounts accrued to date, that may also materially affect our financial condition, results of operations or cash flows. ​ In addition, increasing governmental and societal attention to environmental, social, and governance (“ESG”) matters, including expanding voluntary reporting, diligence, and disclosure on topics such as climate change, waste production, water usage, human capital, labor, and risk oversight, could expand the nature, scope, and complexity of matters that we are required to control, assess, and report and could negatively affect our reputation.
Furthermore, if new or pending legal or regulatory matters result in fines or costs in excess of the amounts accrued to date, that may also materially affect our financial condition, results of operations or cash flows. ​ 14 Increasing governmental and societal attention to environmental, social, and governance (“ESG”) matters, including expanding voluntary reporting, diligence, and disclosure on topics such as climate change, waste production, water usage, human capital, labor, and risk oversight, could expand the nature, scope, and complexity of matters that we are required to control, assess, and report and could negatively affect our reputation.
Changes in legal claims, trends and interpretations, variability in inflation rates, changes in the nature and method of claims settlement, benefit level changes due to changes in applicable laws, insolvency of insurance carriers, and changes in discount rates could all affect our financial condition, results of operations or cash flows. ​ 16 ​ MULTI-EMPLOYER PENSION OBLIGATIONS ​ As discussed in more detail below in “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies-Multi-Employer Pension Plans,” Kroger contributes to several multi-employer pension plans based on obligations arising under collective bargaining agreements with unions representing associates covered by those agreements.
Changes in legal claims, trends and interpretations, variability in inflation rates, changes in the nature and method of claims settlement, benefit level changes due to changes in applicable laws, insolvency of insurance carriers, and changes in discount rates could all affect our financial condition, results of operations or cash flows. ​ ​ 15 MULTI-EMPLOYER PENSION OBLIGATIONS ​ As discussed in more detail below in “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies-Multi-Employer Pension Plans,” Kroger contributes to several multi-employer pension plans based on obligations arising under collective bargaining agreements with unions representing associates covered by those agreements.
We are unable to predict future regulations, environmental effects, political unrest, acts of war or terrorism, disruptions to the economy, including but not limited to pandemics and other health crises, geopolitical conflicts and other matters that affect the cost and availability of fuel, and how our customers will react to such factors, which could adversely affect our financial condition, results of operations or cash flows. ​ ECONOMIC CONDITIONS ​ Our operating results could be materially affected by changes in overall economic conditions and other economic factors that affect consumer confidence and spending, including discretionary spending.
We are unable to predict future regulations, environmental effects, political unrest, acts of war or terrorism, disruptions to the economy, including but not limited to pandemics and other health crises, geopolitical conflicts, tariffs and other matters that affect the cost and availability of fuel, and how our customers will react to such factors, which could adversely affect our financial condition, results of operations or cash flows. ​ 16 ECONOMIC CONDITIONS ​ Our operating results could be materially affected by changes in overall economic conditions and other economic factors that affect consumer confidence and spending, including discretionary spending.
Our ability to meet our labor needs, while controlling wages and other costs, is subject to numerous external factors, including the available qualified workforce in each area where we are located, unemployment levels within those areas, wage rates, and changes in employment and labor laws. ​ Our continued success depends on the ongoing contributions of our associates, including members of our senior management and other key personnel.
Our ability to meet our labor needs, while controlling wages and other costs, is subject to numerous external factors, including the available qualified workforce in each area where we are located, unemployment levels within those areas, wage rates, and changes in employment and labor laws. ​ Our continued success depends on the ongoing contributions of our associates, including members of our senior management, key associates and executives.
If banks or financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened. We are unable to predict how the global economy and financial markets will perform.
If banks or financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened. We are unable to predict how the global economy and financial markets will perform or their volatility.
In addition, compliance with privacy and information security laws and standards may result in significant expense due to increased investment in technology and the development of new operational processes and may require us to devote significant management resources to address these issues.
In addition, compliance with rapidly changing privacy and information security laws and standards may result in significant expense due to increased investment in technology and the development of new operational processes and may require us to devote significant management resources to address these issues.
Large scale data breaches at other entities, including supply chain security vulnerabilities, increase the challenge we and our vendors face in maintaining the security of our information technology systems and proprietary information and of our customers’ information.
Large scale data breaches at other entities, including supply chain related security vulnerabilities, increase the challenge we face in maintaining the security of our information technology systems and proprietary information and of our customers’ information.
The costs of attempting to protect against the foregoing risks and the costs of responding to cyber-attacks are significant. Following a cyber-attack, our and/or our vendors’ remediation efforts may not be successful, and a cyber-attack could result in interruptions, delays or cessation of service, and loss of existing or potential customers.
The costs of attempting to protect against the foregoing risks and the costs of responding to cyber-attacks are significant. Following a cyber-attack, our and/or our third parties’ remediation efforts may not be successful, and a cyber-attack could result in interruptions, delays or cessation of service, and loss of existing or potential customers.
Further, a Kroger associate, a contractor or other third party with whom we do business may in the future circumvent our security measures in order to obtain information or may inadvertently cause a breach involving information.
Further, a Kroger associate, a contractor or other third party with whom we interact may in the future circumvent our security measures in order to obtain information or may inadvertently cause a breach involving information.
Although we have implemented procedures to protect our information, and require our vendors to do the same, we cannot be certain that our security systems will successfully defend against, or be able to effectively respond to, rapidly evolving, increasingly sophisticated cyber-attacks as they become more difficult to detect and defend against.
Although we have implemented procedures to protect our information, and require third parties we interact with to do the same, we cannot be certain that our security systems will successfully defend against, or be able to effectively respond to, rapidly evolving, increasingly sophisticated cyber-attacks as they become more difficult to detect and defend against.
Geopolitical and catastrophic events, such as wars and conflicts, civil unrest, acts of terrorism or other acts of violence, including active shooter situations (which have occurred in the past at our locations), or the loss of merchandise as a result of shrink or industry-wide theft and organized retail crime, or pandemics or other health crises, and other matters that could reduce consumer spending, could materially affect our financial condition, results of operations or cash flows.
Geopolitical and catastrophic events, such as wars and conflicts, civil unrest, acts of terrorism or other acts of violence, could materially affect our results, including several occurrences which have taken place at our locations, including active shooter situations or the loss of merchandise as a result of shrink or industry-wide theft and organized retail crime, or pandemics or other health crises, and other matters that could reduce consumer spending, could materially affect our financial condition, results of operations or cash flows.
These and other rapidly changing laws, regulations, policies and related interpretations, as well as increased enforcement actions by various governmental and regulatory agencies, create challenges for us, may alter the environment in which we do business and may increase the ongoing costs of compliance, which could adversely affect our financial condition, results of operations and cash flows.
These and other rapidly changing laws, regulations, policies and related interpretations, changes in the regulatory environment in which we operate, along with changes in federal policy and at regulatory agencies, as well as increased enforcement actions by various governmental and regulatory agencies, create challenges for us, may alter the environment in which we do business and may increase the ongoing costs of compliance, which could adversely affect our financial condition, results of operations and cash flows.
Under certain circumstances, we may share information with vendors that assist us in conducting our business, as required by law, or otherwise in accordance with our privacy policy. ​ 14 ​ Our technology systems have been, and may be in the future, disrupted from circumstances beyond our control, as we regularly defend against and respond to data security incidents.
Under certain circumstances, we may share information with third parties that assist us in conducting our business, as required by law, or otherwise in accordance with our privacy policy. ​ 12 Our technology systems have been, and may be in the future, disrupted from circumstances beyond our control, as we regularly defend against and respond to data security related attacks.
Given our commitment to our ESG strategy, we have established and publicly announced certain goals which we may refine or even expand further in the future. The execution of this strategy to achieve these goals is subject to risks and uncertainties, many of which may be outside of our control and prove to be more costly than we anticipate.
We have established and publicly announced certain goals which we may refine in the future. The execution of this strategy to achieve these goals is subject to risks and uncertainties, many of which may be outside of our control and prove to be more costly than we anticipate.
The future success of the digital business will also depend on the efficiency and cost effectiveness of fulfilling orders across our modalities, whether in store, in pickup-only locations or through customer fulfillment centers powered by Ocado. 13 ​ PRODUCT SAFETY ​ Customers count on Kroger to provide them with safe food and drugs and other merchandise.
The future success of the digital business will also depend on the efficiency and cost effectiveness of fulfilling orders across our modalities, whether in store, pickup or delivery through third parties or our customer fulfillment centers. ​ PRODUCT SAFETY ​ Customers count on Kroger to provide them with safe food and drugs and other merchandise.
Regulations limiting greenhouse gas emissions and energy inputs will also increase in coming years, which may increase our costs associated with compliance, tracking, reporting, and sourcing.
Regulations limiting greenhouse gas emissions and energy inputs may also increase in the future, which may increase our costs associated with compliance, tracking, reporting, and sourcing.
Assessing and predicting the outcome of these matters involves substantial uncertainties. Adverse outcomes in these legal proceedings, or changes in our evaluations or predictions about the proceedings, could have an adverse effect on our financial condition, results of operations or cash flows.
Adverse outcomes in these legal proceedings, or changes in our evaluations or predictions about the proceedings, could have an adverse effect on our financial condition, results of operations or cash flows.
Any failure, or perceived failure, to achieve these goals or the setting or publication of certain targets could damage our reputation and customer, investor and other stakeholder relationships, and may even result in regulatory enforcement action.
Any failure, or perceived failure, to achieve these goals or the setting or publication of certain targets could damage our reputation and customer, investor and other stakeholder relationships, and may even result in regulatory enforcement action. Such conditions could have an adverse effect on our business, financial condition, results of operations or cash flows.
We may not be able to attract or retain sufficient highly qualified associates in the future, which could have a material adverse effect on our business, financial condition, results of operations or cash flows. ​ DATA AND TECHNOLOGY ​ Our business is increasingly dependent on information technology systems that are complex and vital to continuing operations, resulting in an expansion of our technological presence and corresponding risk exposure.
If we are unable to attract, develop, retain and effectively manage the development and succession plans for our associates, including members of our senior management, key associates and executives, it could have a material adverse effect on our business, financial condition, results of operations or cash flows. ​ DATA AND TECHNOLOGY ​ Our business is increasingly dependent on information technology systems that are complex and vital to continuing operations, resulting in an expansion of our technological presence and corresponding risk exposure.
Competition among potential employers has resulted, and may in the future result, in increased associate costs and has from time to time affected our ability to recruit and retain associates.
We compete with other retail and non- retail businesses for these associates and invest significant resources in training and motivating them. Competition among potential employers has resulted, and may in the future result, in increased associate costs and has from time to time affected our ability to recruit and retain associates.
If investment results fail to meet our expectations, we could be required to make additional contributions to fund a portion of or the entire shortfall, which could have an adverse effect on our business, financial condition, results of operations or cash flows. ​ FUEL ​ We sell a significant amount of fuel in our 1,665 fuel centers, which could face increased regulation, including due to climate change or other environmental concerns, and demand could be affected by concerns about the effect of emissions on the environment as well as retail price increases.
If we are unable to achieve our objectives within the anticipated time frame, or at all, the expected benefits may not be realized fully or at all, or may take longer to realize than expected, which could have an adverse effect on our business, financial condition, results of operations or cash flows. ​ FUEL ​ We sell a significant amount of fuel in our 1,702 fuel centers, which could face increased regulation, including due to climate change or other environmental concerns, and demand could be affected by concerns about the effect of emissions on the environment as well as retail price increases.
To the extent that any health crisis affects the U.S. and global economy and our business, it may also heighten other risks described in this section, including but not limited to those related to consumer behavior and expectations, competition, implementation of strategic initiatives, cybersecurity threats, payment-related risks, supply chain disruptions, labor availability and cost, litigation and operational risk as a result of regulatory requirements. ​ LEGAL AND GOVERNMENT REGULATION ​ We are subject to various laws, regulations, and administrative practices that affect our business, including laws and regulations involving antitrust and competition, privacy, data protection, environmental, healthcare, anti-bribery, anti-corruption, tax, accounting, and financial reporting or other matters.
To the extent that any health crisis affects the U.S. and global economy and our business, it may also heighten other risks described in this section, including but not limited to those related to consumer behavior and expectations, competition, implementation of strategic initiatives, cybersecurity threats, payment-related risks, supply chain disruptions, labor availability and cost, litigation and operational risk as a result of regulatory requirements. ​ WEATHER, NATURAL DISASTERS AND OTHER EVENTS ​ A large number of our stores, distribution facilities and fulfillment centers are geographically located in areas that are susceptible to hurricanes, tornadoes, floods, droughts, wildfires, ice and snow storms, and earthquakes.
As we modernize legacy systems, if we are unable to successfully implement those systems in a coordinated manner across internal and external stakeholders, we could be subject to business interruption or reputation risk with our customers, suppliers or associates. ​ Through our sales and marketing activities, we collect and store some personal information that our customers provide to us.
As we modernize legacy systems, if we are unable to successfully implement those systems in a coordinated manner across internal and external stakeholders, we could be subject to business interruption or reputation risk with our customers, suppliers or associates. ​ Rapidly evolving technological and regulatory developments related to Artificial Intelligence (“AI”) and related technologies may increase competitive, legal, and security risks facing the Company.
Other legal proceedings purport to be brought as class actions on behalf of similarly situated parties. Some of these proceedings could result in a substantial loss to Kroger. We estimate our exposure to these legal proceedings and establish accruals for the estimated liabilities, where it is reasonably possible to estimate and where an adverse outcome is probable.
We estimate our exposure to these legal proceedings and establish accruals for the estimated liabilities, where it is reasonably possible to estimate and where an adverse outcome is probable. Assessing and predicting the outcome of these matters involves substantial uncertainties.
If we are unable to achieve our objectives within the anticipated time frame, or at all, the expected benefits may not be realized fully or at all, or may take longer to realize than expected, which could have an adverse effect on our business, financial condition, results of operations or cash flows. ​ 12 ​ COMPETITIVE ENVIRONMENT ​ The operating environment for the food retailing industry continues to be characterized by the proliferation of local, regional, and national retailers, including both retail and digital formats, and intense and ever-increasing competition ranging from online retailers, mass merchant, club stores, regional chains, deep discounters, and dollar stores, as well as ethnic, specialty and natural food stores.
The following information should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which includes forward-looking statements and factors that could cause us not to realize our goals or meet our expectations. ​ COMPETITIVE ENVIRONMENT ​ The operating environment for the food retailing industry continues to be characterized by the proliferation of local, regional, and national retailers, including both retail and digital formats, and intense and ever-increasing competition ranging from online retailers, mass merchant, club stores, regional chains, deep discounters, dollar stores, and ethnic, specialty and natural food stores.
Cyber-attackers have targeted and accessed, and may in the future again target and, if successful, access information stored in our or our vendors’ systems in order to misappropriate confidential customer or business information. Due to ongoing geopolitical conflicts, there is an increased possibility of cyberattacks that could either directly or indirectly affect our operations.
Cyber-attackers have targeted and accessed, and may in the future again target and, if successful, access information stored in our or certain third parties’ systems in order to misappropriate confidential customer or business information. The rapid evolution and increased adoption of AI and related technologies may also intensify the risk that our technology systems are targeted.
We must recruit, hire, develop and retain qualified associates with an increasingly large range of skills to meet the needs of our evolving and complex business. We compete with other retail and non-retail businesses for these associates and invest significant resources in training and motivating them.
It may be difficult to replace key executives because of the limited number of qualified individuals with the breadth of skills and experience necessary for our business. We must recruit, hire, develop and retain qualified associates with an increasingly large range of skills to meet the needs of our evolving and complex business.
Such conditions could have an adverse effect on our business, financial condition, results of operations or cash flows. ​ Additionally, we must comply with numerous provisions regulating, among other things, health and sanitation standards, food labeling and safety, equal employment opportunity, minimum wages and licensing for the sale of food, drugs, and alcoholic beverages.
In addition, new or changing regulation or public opinion regarding our sustainability goals or our actions to achieve them may result in adverse effects on our financial performance, reputation or demand for our services and products, or may otherwise result in obligations and liabilities that cannot be predicted or estimated at this time. ​ Additionally, we must comply with numerous provisions regulating, among other things, health and sanitation standards, food labeling and safety, equal employment opportunity, minimum wages and licensing for the sale of food, drugs, and alcoholic beverages.
Changes in our credit ratings, or in the interest rate environment, could have an adverse effect on our financing costs and structure. ​ LEGAL PROCEEDINGS AND INSURANCE ​ From time to time, we are a party to legal proceedings, including matters involving personnel and employment issues, personal injury, contract disputes, regulatory claims and other proceedings.
Changes in our credit ratings, or in the interest rate environment, could have an adverse effect on our financing costs and structure. ​ GOVERNMENT REGULATION, LEGAL PROCEEDINGS AND INSURANCE ​ We are subject to various laws, regulations, and administrative practices that affect our business, including laws and regulations involving antitrust and competition, privacy, data protection, environmental, healthcare, anti-bribery, anti- corruption, tax, accounting, and financial reporting or other matters.
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The following information should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which includes forward-looking statements and factors that could cause us not to realize our goals or meet our expectations. ​ 11 ​ OUR PROPOSED TRANSACTION WITH ALBERTSONS CREATES INCREMENTAL BUSINESS, REGULATORY AND REPUTATIONAL RISKS ​ On October 13, 2022, we entered into a merger agreement with Albertsons Companies Inc.
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While we have development and succession plans in place for our key associates and executives, these plans do not guarantee that the services of our key associates and executives will continue to be available to us. For example, we recently experienced several key executive changes.
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(“Albertsons”), which sets forth the terms of our proposed transaction. In connection with the proposed transaction, Kroger and Albertsons entered into a comprehensive divestiture plan with C&S Wholesale Grocers, LLC for the combined sale of certain stores, distribution centers, offices and private label brands.
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While we are utilizing AI and machine learning capabilities across our business, our competitors or other third parties may incorporate AI into their products, services and operations more successfully, which could impair our ability to compete effectively, or adversely affect our results of operations or our ability to improve operational efficiency. ​ To effectively compete, we may need to increase investments to innovate new capabilities and processes incorporating AI as well as to develop appropriate protections, safeguards, and policies for handling data and mitigating information security, data privacy and legal risks.
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The proposed transaction with Albertsons and the divestiture plan entails important risks, including, among others: the expected timing and likelihood of completion of the proposed transaction and divestiture plan, including the timing, receipt and terms and conditions of any required governmental and regulatory clearance of the proposed transaction and divestiture plan, and/or resolution of pending litigation challenging the merger; the effect of the proposed divestiture plan; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement or divestiture agreement; the outcome of any legal proceedings that have been instituted and may in the future be instituted against the parties and others following announcement of the merger agreement and proposed transaction or divestiture plan; the inability to consummate the proposed transaction or divestiture plan due to the failure to satisfy other conditions to complete the proposed transaction or divestiture plan; risks that the proposed transaction or divestiture plan disrupts our current plans and operations; the ability to identify and recognize, including on the expected timeline, the anticipated total shareholder return (“TSR”), revenue and EBITDA expectations; the amount of the costs, fees, expenses and charges related to the proposed transaction or divestiture plan; the risk that transaction and/or integration costs are greater than expected, including as a result of conditions regulators put on any approvals of the transaction; the potential effect of the announcement and/or consummation of the proposed transaction or divestiture plan on relationships, including with associates, suppliers and competitors; our ability to maintain an investment grade credit rating; the risk that management’s attention is diverted from other matters; risks related to the potential effect of general economic, political and market factors, including changes in the financial markets as a result of inflation or measures implemented to address inflation, and any epidemic, pandemic or disease outbreaks, on Kroger, Albertsons or the proposed transaction or divestiture plan; the risk of adverse effects on the market price of our or Albertsons’s securities or on Albertsons’s or our operating results for any reason; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement or divestiture agreement; and other risks described in our filings with the SEC. ​ INTEGRATION OF NEW BUSINESS AND STRATEGIC ALLIANCES ​ In addition to the above, we enter into mergers, acquisitions and strategic alliances with expected benefits including, among other things, operating efficiencies, procurement savings, innovation and sharing of best practices, that may allow for future growth.
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Furthermore, the regulatory and legal landscape regarding AI is rapidly evolving and the Company may be challenged to timely comply in a cost-effective manner. ​ Through our sales and marketing activities, we collect and store some personal information that our customers provide to us. We also gather and retain information about our associates in the normal course of business.
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We also gather and retain information about our associates in the normal course of business.
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Due to ongoing geopolitical conflicts, there is an increased possibility of cyberattacks that could either directly or indirectly affect our operations.
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Any or all of these requirements could have an adverse effect on our financial condition, results of operations or cash flows. ​ 18 ​ WEATHER, NATURAL DISASTERS AND OTHER EVENTS ​ A large number of our stores, distribution facilities and fulfillment centers are geographically located in areas that are susceptible to hurricanes, tornadoes, floods, droughts, ice and snow storms and earthquakes.
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Additionally, there is some indication that sustainability goals are becoming more controversial, as some governmental entities in the U.S. and certain investor and other constituencies question the appropriateness of or object to sustainability initiatives.
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The recent change to the United States administration and changes in investor perspectives could also affect our ability to pursue our sustainability goals and could lead to increased criticism and associated reputational harm. In addition, we may face criticism as a result of ‘anti-ESG’ sentiment among certain stakeholders, including governmental authorities, regulators, shareholders and customers.
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Any or all of these requirements could have an adverse effect on our financial condition, results of operations or cash flows. ​ In addition to legal and regulatory risks, we currently are a party to and will continue to be a party to, third party legal proceedings, including matters involving personnel and employment issues, personal injury, property damage, privacy, contract disputes, private rights of action under certain regulations, and other proceedings, including but not limited to opioid litigation and litigation with Albertsons.
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Some of these proceedings are brought by individuals and others purport to be brought as class actions on behalf of similarly situated parties. Some of these proceedings could result in a substantial loss to Kroger.
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If investment results fail to meet our expectations, we could be required to make additional contributions to fund a portion of or the entire shortfall, which could have an adverse effect on our business, financial condition, results of operations or cash flows. ​ INTEGRATION OF NEW BUSINESS AND STRATEGIC ALLIANCES ​ We enter into mergers, acquisitions and strategic alliances with expected benefits including, among other things, operating efficiencies, procurement savings, innovation and sharing of best practices, that may allow for future growth.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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We have adopted enterprise cybersecurity risk mitigation and governance processes, which are set forth in the Kroger Cybersecurity Risk Management program (“CRM”), the Kroger Third-Party Cybersecurity Risk Management program (“TPCRM”), and the Kroger Cyber Incident Response Plan (“IR Plan”).
We have adopted enterprise cybersecurity risk mitigation and governance processes, which are set forth in the Kroger Cybersecurity Risk Management program (“CRM”), the Kroger Third-Party Cybersecurity Risk Management (“TPCRM”) program and the Kroger Cyber Incident Response Plan (“IR Plan”).
Kroger’s cybersecurity policies, standards, processes, and practices are integrated into our overarching risk management system in an effort to enhance our ability to safeguard our operations and information, which includes quarterly cybersecurity reporting to the Board, delivered by senior leadership. ​ Kroger Cyber Risk Management Program ​ The CRM was developed in collaboration with third-party consultants and is aligned with the National Institute of Standards and Technology (“NIST”), Risk Management Framework (“RMF”), Cybersecurity Framework (“CSF”) and the International Organization for Standardization 27001 (“ISO 27001”).
Kroger’s cybersecurity policies, standards, processes, and practices are integrated into our overarching risk management system in an effort to enhance our ability to safeguard our operations and information, which includes quarterly cybersecurity reporting to the Board, delivered by senior leadership. ​ 18 Kroger Cyber Risk Management Program ​ The CRM was developed in collaboration with third-party consultants and is aligned with the National Institute of Standards and Technology (“NIST”), Risk Management Framework (“RMF”), Cybersecurity Framework (“CSF”) and the International Organization for Standardization 27001 (“ISO 27001”).
Kroger's CRM program is spearheaded by specific management positions, chosen for their expertise in the field as further discussed below. ​ In line with cyber risk management best practices, we have collaborated with recognized third-party experts as needed to align the CRM’s foundational processes, metrics, monitoring, and reporting with common frameworks such as NIST and RMF. ​ Third-Party Cyber Risk Management ​ Recognizing the potential vulnerabilities posed by third-party relationships, Kroger has implemented a comprehensive TPCRM program.
Kroger's CRM program is spearheaded by specific management positions, chosen for their expertise in the field as further discussed below. ​ In line with cyber risk management best practices, we have collaborated with recognized third-party experts as needed to align the CRM’s foundational processes, metrics, monitoring, and reporting with common frameworks such as the NIST RMF and the NIST CSF. ​ Third-Party Cyber Risk Management ​ Recognizing the potential vulnerabilities posed by third-party relationships, Kroger has implemented a comprehensive TPCRM program.
The TPCRM program is designed to assess third-party cybersecurity risks by employing third-party risk assessments, vendor tiering, and a dedicated team tasked with recommending holistic improvements to strengthen Kroger’s cybersecurity posture, sourcing, and contracting processes. Kroger’s Information Security Operations Center (“iSOC”) responds to known third-party incidents on a continuous basis.
The TPCRM program is designed to assess third-party cybersecurity risks by employing third-party cyber risk assessments, vendor tiering, and a dedicated team tasked with recommending holistic improvements to strengthen Kroger’s cybersecurity posture, sourcing, and contracting processes. Kroger’s Information Security Operations Center (“iSOC”) responds to known third-party incidents on a continuous basis.
They report to the Audit Committee and the Board on compliance and regulatory issues, provide updates concerning continuously-evolving threats and mitigating actions, and present a NIST Cybersecurity Framework Scorecard. Additionally, the CIO and CISO discuss and present strategies to address geopolitical threats that may affect operations as well as technological changes, such as AI and quantum computing.
They report to the Audit Committee and the Board on compliance and regulatory issues, provide updates concerning continuously-evolving threats and mitigating actions, and present a NIST Cybersecurity Framework Scorecard. Additionally, the CDO and CISO discuss and present strategies to address geopolitical threats that may affect operations as well as technological changes, such as AI and quantum computing.
This team is responsible for defining the program, cybersecurity governance, and gathering insights related to assessing, identifying, and managing cybersecurity threat risks, their severity, and mitigations. ​ Kroger’s CIO reports to the CEO and leads technology and digital capabilities for the Kroger Co., including the overall cybersecurity strategy.
This team is responsible for defining the program, cybersecurity governance, and gathering insights related to assessing, identifying, and managing cybersecurity threat risks, their severity, and mitigations. ​ Kroger’s CDO reports to the CEO and leads technology and digital capabilities for the Kroger Co., including the overall cybersecurity strategy.
Kroger’s CIO and CISO provide quarterly updates on cybersecurity risks and related mitigating actions to the Audit Committee, meet with the full Board at least annually and inform the Audit Committee immediately if a cybersecurity incident is deemed material.
Kroger’s CDO and CISO provide quarterly updates on cybersecurity risks and related mitigating actions to the Audit Committee, meet with the full Board at least annually and inform the Audit Committee immediately if a cybersecurity incident is deemed material.
Our approach is guided by the principles of the CRM, which includes monitoring threats and vulnerabilities and assessing and monitoring related controls, supporting the Corporate Information Security function, the Chief Information Security Officer (“CISO”) and Chief Information Officer (“CIO”).
Our approach is guided by the principles of the CRM, which includes monitoring threats and vulnerabilities and assessing and monitoring related controls, supporting the Corporate Information Security function, the Chief Information Security Officer (“CISO”) and Chief Digital Officer (“CDO”).
This workflow is implemented through collaboration with the iSOC, CISO, legal counsel, and corporate affairs stakeholders. ​ 20 ​ In addition to the processes outlined above, we have also implemented an information security training program for employees that includes security awareness training related to cyber security risks, simulated phishing emails and regular communication to the enterprise regarding cyber security risks. ​ We experience cybersecurity threats and incidents from time to time.
This workflow is implemented through collaboration with the iSOC, CISO, legal counsel, and corporate affairs stakeholders and correlates to industry standard severity levels. ​ In addition to the processes outlined above, we have also implemented an information security training program for employees that includes security awareness training related to cyber security risks, simulated phishing emails and regular communication to the enterprise regarding cyber security risks. ​ We experience cybersecurity threats and incidents from time to time.
We are not aware of any material risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, our financial condition, results of operations or cash flows.
We are not aware of any material risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, our financial condition, results of operations or cash flows, and we have not experienced a cybersecurity threat or incident that has materially affected Kroger in at least the last three years.
Our risk management team is integrated into our CIS function and is led by our CIO and CISO. The risk management team reports to the CISO and has combined experience in information security, governance, and compliance, including domains such as engineering, architecture, cybersecurity, and privacy.
The risk management team reports to the CISO and has combined experience in information security, governance, and compliance, including domains such as engineering, architecture, cybersecurity, and privacy.
His experience includes governance, information security, and threat management. ​ The Audit Committee of Kroger’s Board of Directors is charged with oversight of data privacy and cybersecurity risks.
His experience includes governance, information security, and threat management. He graduated from Miami University with a bachelor’s degree in management information systems and marketing. ​ The Audit Committee of Kroger’s Board of Directors is charged with oversight of data privacy and cybersecurity risks.
There can be no assurance that cybersecurity threats will not have a material effect on us, including our business strategy, our financial condition, results of operations or cash flows. Please see “Item 1A. Risk Factors” for more information on our cybersecurity-related risks. ​ GOVERNANCE ​ Protection of our customers’ data is a fundamental priority for our Board and management team.
There can be no assurance that cybersecurity threats will not have a material effect on us, including our business strategy, our financial condition, results of operations or cash flows. Please see “Item 1A.
Kroger’s CIO & Chief Digital Officer, has over 20 years of both leading and transforming technology, digital growth, and e-commerce in the retail and food industry. Kroger’s interim CISO brings nearly 20 years of experience developing and leading security and risk programs.
Kroger’s CDO has over 20 years of both leading and transforming technology, digital growth, and e-commerce in the retail and food industry. He graduated with a master’s degree in business administration and management from Ecole Supérieure de Commerce de Chambéry, Rhône-Alpes, France. Kroger’s interim CISO brings nearly 20 years of experience developing and leading security and risk programs.
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Risk Factors” for more information on our cybersecurity-related risks. ​ 19 GOVERNANCE ​ Protection of our customers’ data is a fundamental priority for our Board and management team. Our risk management team is integrated into our CIS function and is led by our CDO and CISO.

Item 2. Properties

Properties — owned and leased real estate

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Certain properties or portions thereof are subleased to others for periods generally ranging from one to 20 years. For additional information on lease obligations, see Note 9 to the Consolidated Financial Statements. ​
Certain properties or portions thereof are subleased to others for periods generally ranging from one to 20 years. For additional information on lease obligations, see Note 9 to the Consolidated Financial Statements. ​ ​ ​ 20
ITEM 2. PROPERTIES. ​ As of February 3, 2024, we operated approximately 2,800 owned or leased supermarkets, distribution warehouses and food production plants through divisions, subsidiaries or affiliates. These facilities are located throughout the United States. We generally own store equipment, fixtures and leasehold improvements, as well as processing and food production equipment.
ITEM 2. PROPERTIES. ​ As of February 1, 2025, we operated approximately 2,800 owned or leased supermarkets, distribution warehouses, customer fulfillment centers and food production plants through divisions, subsidiaries or affiliates. These facilities are located throughout the United States. We generally own store equipment, fixtures and leasehold improvements, as well as processing and food production equipment.
The total cost of our owned assets and finance leases at February 3, 2024, was $56.7 billion while the accumulated depreciation was $31.5 billion. ​ 21 ​ We lease certain store real estate, warehouses, distribution centers, office space and equipment. We operate in leased facilities in approximately half of our store locations.
The total cost of our owned assets and finance leases at February 1, 2025, was $60.1 billion while the accumulated depreciation was $34.4 billion. ​ We lease certain store real estate, warehouses, distribution centers, office space and equipment. We operate in leased facilities in approximately half of our store locations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. ​ Our common stock is listed on the New York Stock Exchange under the symbol “KR.” As of March 27, 2024, there were 24,275 shareholders of record. ​ During 2023, we paid two quarterly cash dividends of $0.26 per share and two quarterly cash dividends of $0.29 per share.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. ​ Our common stock is listed on the New York Stock Exchange under the symbol “KR.” As of March 26, 2025, there were 26,750 shareholders of record. ​ During 2024, we paid two quarterly cash dividends of $0.29 per share and two quarterly cash dividends of $0.32 per share.
(2) Includes (i) shares repurchased under a program announced on December 6, 1999 to repurchase common shares to reduce dilution resulting from our employee stock option and long-term incentive plans, under which repurchases are limited to proceeds received from exercises of stock options and the tax benefits associated therewith (“1999 Repurchase Program”) and (ii) 18,052 shares that were surrendered to Kroger by participants under our long-term incentive plans to pay for taxes on restricted stock awards.
(2) Includes (i) shares repurchased under the December 2024 Repurchase Program described below in (4), (ii) shares repurchased under a program announced on December 6, 1999 to repurchase common shares to reduce dilution resulting from our employee stock option and long-term incentive plans, under which repurchases are limited to proceeds received from exercises of stock options and the tax benefits associated therewith (“1999 Repurchase Program”) and (iii) 12,979 shares that were surrendered to Kroger by participants under our long-term incentive plans to pay for taxes on restricted stock awards.
On March 14, 2024, we announced that our Board of Directors declared a quarterly cash dividend of $0.29 per share, payable on June 1, 2024, to shareholders of record at the close of business on May 15, 2024.
On March 13, 2025, we announced that our Board of Directors declared a quarterly cash dividend of $0.32 per share, payable on June 1, 2025, to shareholders of record at the close of business on May 15, 2025.
During 2022, we paid two quarterly cash dividends of $0.21 per share and two quarterly cash dividends of $0.26 per share. On March 1, 2024, we paid a quarterly cash dividend of $0.29 per share.
During 2023, we paid two quarterly cash dividends of $0.26 per share and two quarterly cash dividends of $0.29 per share. On March 1, 2025, we paid a quarterly cash dividend of $0.32 per share.
(3) Represents shares repurchased under the 1999 Repurchase Program .
(3) Represents shares repurchased under the December 2024 Repurchase Program and the 1999 Repurchase Program .
We currently expect to continue to pay comparable cash dividends on a quarterly basis, that will increase over time, depending on our earnings and other factors, including approval by our Board. ​ For information on securities authorized for issuance under our existing equity compensation plans, see Item 12 under the heading “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.” ​ 22 ​ PERFORMANCE GRAPH ​ Set forth below is a line graph comparing the five-year cumulative total shareholder return on our common shares, based on the market price of the common shares and assuming reinvestment of dividends, with the cumulative total return of companies in the Standard & Poor’s 500 Stock Index and a peer group composed of food and drug companies. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Base ​ INDEXED RETURNS ​ ​ Period ​ Years Ending Company Name/Index 2018 2019 2020 2021 2022 2023 The Kroger Co. 100 97.94 128.49 165.19 174.57 183.07 ​ S&P 500 Index 100 121.56 142.53 172.46 161.03 199.42 ​ Peer Group 100 120.67 148.43 175.27 169.86 197.90 ​ ​ Kroger’s fiscal year ends on the Saturday closest to January 31. ​ Data supplied by Standard & Poor’s. ​ The foregoing Performance Graph will not be deemed incorporated by reference into any other filing, absent an express reference thereto. * Total assumes $100 invested on February 2, 2019, in The Kroger Co., S&P 500 Index, and the Peer Group, with reinvestment of dividends. ​ ** The Peer Group consists of Albertsons Companies, Inc.
We currently expect to continue to pay comparable cash dividends on a quarterly basis, that will increase over time, depending on our earnings and other factors, including approval by our Board. ​ For information on securities authorized for issuance under our existing equity compensation plans, see Item 12 under the heading “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.” ​ 21 PERFORMANCE GRAPH ​ Set forth below is a line graph comparing the five-year cumulative total shareholder return on our common shares, based on the market price of the common shares and assuming reinvestment of dividends, with the cumulative total return of companies in the Standard & Poor’s 500 Stock Index and a peer group composed of food and drug companies. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Base ​ INDEXED RETURNS ​ ​ Period ​ Years Ending Company Name/Index 2019 2020 2021 2022 2023 2024 The Kroger Co. 100 131.19 168.66 178.23 186.91 255.56 ​ S&P 500 Index 100 117.25 141.87 132.47 164.06 202.59 ​ Peer Group 100 123.01 145.25 140.77 164.01 238.01 ​ ​ Kroger’s fiscal year ends on the Saturday closest to January 31. ​ Data supplied by Standard & Poor’s. ​ The foregoing Performance Graph will not be deemed incorporated by reference into any other filing, absent an express reference thereto. * Total assumes $100 invested on February 1, 2020, in The Kroger Co., S&P 500 Index, and the Peer Group, with reinvestment of dividends. ​ ** The Peer Group consists of Albertsons Companies, Inc.
(included from June 26, 2020 when it began trading), Costco Wholesale Corporation, CVS Health Corporation, Koninklijke Ahold Delhaize N.V., Target Corp., Walgreens Boots Alliance Inc. and Walmart Inc. ​ 23 ​ The following table presents information on our purchases of our common shares during the fourth quarter of 2023: ​ ISSUER PURCHASES OF EQUITY SECURITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Dollar ​ ​ ​ ​ ​ ​ ​ ​ ​ Value of Shares ​ ​ ​ ​ ​ ​ ​ Total Number of ​ that May Yet Be ​ ​ ​ ​ ​ ​ ​ Shares Purchased ​ Purchased Under ​ ​ Total Number ​ Average ​ as Part of Publicly ​ the Plans or ​ ​ of Shares ​ Price Paid Per ​ Announced Plans ​ Programs (4) Period (1) Purchased (2) Share (2) or Programs (3) (in millions) First period - four weeks ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ November 5, 2023 to December 2, 2023 7,093 ​ $ 44.09 6,900 ​ $ 1,000 ​ Second period - four weeks ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 3, 2023 to December 30, 2023 82,059 ​ $ 44.75 64,200 ​ $ 1,000 ​ Third period - five weeks ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 to February 3, 2024 96,000 ​ $ 46.07 96,000 ​ $ 1,000 ​ Total 185,152 ​ $ 45.41 167,100 ​ $ 1,000 ​ (1) The fourth quarter of 2023 contained two 28-day periods and one 35-day period.
(included from June 26, 2020 when it began trading), Costco Wholesale Corporation, CVS Health Corporation, Koninklijke Ahold Delhaize N.V., Target Corp., Walgreens Boots Alliance Inc. and Walmart Inc. ​ 22 The following table presents information on our purchases of our common shares during the fourth quarter of 2024: ​ ISSUER PURCHASES OF EQUITY SECURITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Dollar ​ ​ ​ ​ ​ ​ ​ ​ ​ Value of Shares ​ ​ ​ ​ ​ ​ ​ Total Number of ​ that May Yet Be ​ ​ ​ ​ ​ ​ ​ Shares Purchased ​ Purchased Under ​ ​ Total Number ​ Average ​ as Part of Publicly ​ the Plans or ​ ​ of Shares ​ Price Paid Per ​ Announced Plans ​ Programs (4)(5) Period (1) Purchased (2) ​ Share (2) or Programs (3) ​ (in millions) First period - four weeks ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ November 10, 2024 to December 7, 2024 121,067 ​ $ 59.49 113,600 ​ $ 1,000 ​ Second period - four weeks ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 8, 2024 to January 4, 2025 65,963,661 ​ $ 61.54 65,958,149 ​ $ 2,500 ​ Third period - four weeks ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 5, 2025 to February 1, 2025 50,941 ​ $ 59.47 50,941 ​ $ 2,500 ​ Total 66,135,669 ​ $ 61.54 66,122,690 ​ $ 2,500 ​ (1) The reported periods conform to our fiscal calendar composed of thirteen 28-day periods.
The September 2022 Repurchase Program and the 1999 Repurchase Program do not have an expiration date but may be suspended or terminated by our Board of Directors at any time. No shares have been repurchased under the September 2022 authorization.
Amounts available under the 1999 Repurchase Program are dependent upon option exercise activity. The authority remaining under the December 2024 Repurchase Program and the 1999 Repurchase Program do not have an expiration date but may be suspended or terminated by our Board of Directors at any time.
The amounts shown in this column reflect the amount remaining under the September 2022 Repurchase Program as of the specified period end dates. Amounts available under the 1999 Repurchase Program are dependent upon option exercise activity.
The December 2024 Repurchase Program authorization replaced the existing September 2022 Repurchase Program. For information about our ASR agreements, see Note 13 to the Consolidated Financial Statements. The amounts shown in this column reflect the amount remaining under the September 2022 Repurchase Program and the December 2024 Repurchase Program as of the specified period end dates.
Removed
During the third quarter of 2022, we paused our share repurchase program to prioritize de-leveraging following the proposed merger with Albertsons. ​
Added
The fourth quarter of 2024 contained three 28-day periods.
Added
On December 11, 2024, our Board of Directors approved a $7.5 billion share repurchase program to reacquire shares via open market purchase or privately negotiated transactions, including accelerated stock repurchase (“ASR”) transactions, block trades, or pursuant to trades intending to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “December 2024 Repurchase Program”).
Added
(5) Reflects the reduction of the unsettled accelerated share repurchases of $1.0 billion and excludes excise tax on share repurchases in excess of issuances. ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Our identical sales, excluding fuel, results are summarized in the following table.
Our identical sales results, excluding fuel, are summarized in the following table.
The cash flow projections embedded in our goodwill impairment reviews can be affected by several factors such as inflation, business valuations in the market, the economy, market competition and our ability to successfully integrate recently acquired businesses. ​ Multi-Employer Pension Plans ​ We contribute to various multi-employer pension plans based on obligations arising from collective bargaining agreements.
The cash flow projections embedded in our goodwill impairment reviews can be affected by several factors such as inflation, business valuations in the market, the economy, competition and our ability to successfully integrate recently acquired businesses. ​ Multi-Employer Pension Plans ​ We contribute to various multi-employer pension plans based on obligations arising from collective bargaining agreements.
Actual results could differ from those estimates. ​ We believe the following accounting estimates are the most critical in the preparation of our financial statements because they involve the most difficult, subjective or complex judgments about the effect of matters that are inherently uncertain. ​ Impairments of Long-Lived Assets ​ We monitor the carrying value of long-lived assets for potential impairment each quarter based on whether certain triggering events have occurred.
Actual results could differ from those estimates. ​ We believe the following accounting estimates are the most critical in the preparation of our financial statements because they involve the most difficult, subjective or complex judgments about the effect of matters that are inherently uncertain. ​ 39 Impairments of Long-Lived Assets ​ We monitor the carrying value of long-lived assets for potential impairment each quarter based on whether certain triggering events have occurred.
Our estimate is based on the most current information available to us including actuarial evaluations and other data (that include the estimates of others), and such information may be outdated or otherwise unreliable. ​ We have made and disclosed this estimate not because, except as noted above, this underfunding is a direct liability of ours.
Our estimate is based on the most current information available to us including actuarial evaluations and other data (that include the estimates of others), and such information may be outdated or otherwise unreliable. ​ 41 We have made and disclosed this estimate not because, except as noted above, this underfunding is a direct liability of ours.
FIFO operating profit is an important measure used by management, and management believes FIFO operating profit is a useful metric to investors and analysts because it measures the operational effectiveness of our financial model . ​ 29 ​ The adjusted net earnings, adjusted net earnings per diluted share and adjusted FIFO operating profit metrics are important measures used by management to compare the performance of core operating results between periods.
FIFO operating profit is an important measure used by management, and management believes FIFO operating profit is a useful metric to investors and analysts because it measures the operational effectiveness of our financial model . ​ The adjusted net earnings, adjusted net earnings per diluted share and adjusted FIFO operating profit metrics are important measures used by management to compare the performance of core operating results between periods.
Our fuel strategy is to include a fuel center at each of our supermarket locations when it is feasible and it is expected to be profitable. ​ 28 ​ Seamless Digital Ecosystem ​ We offer a convenient shopping experience for our customers regardless of how they choose to shop with us, including Pickup, Delivery and Ship.
Our fuel strategy is to include a fuel center at each of our supermarket locations when it is feasible and it is expected to be profitable. ​ Seamless Digital Ecosystem ​ We offer a convenient shopping experience for our customers regardless of how they choose to shop with us, including Pickup, Delivery and Ship.
(2) Accumulated depreciation and amortization includes depreciation for property, plant and equipment and amortization for definite-lived intangible assets. ​ 38 ​ CRITICAL ACCOUNTING ESTIMATES ​ We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating results and financial position, and we apply those accounting policies in a consistent manner.
(2) Accumulated depreciation and amortization includes depreciation for property, plant and equipment and amortization for definite-lived intangible assets. ​ CRITICAL ACCOUNTING ESTIMATES ​ We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating results and financial position, and we apply those accounting policies in a consistent manner.
Our 20 years of investment in data science capabilities is allowing us to utilize this data to create personalized experiences and value for our customers and is also enabling our fast-growing, high operating margin alternative profit businesses, including data analytic services and third-party media revenue.
Our over 20 years of investment in data science capabilities is allowing us to utilize this data to create personalized experiences and value for our customers and is also enabling our fast-growing, high operating margin alternative profit businesses, including data analytic services and third-party media revenue.
Average invested capital is calculated as the sum of (i) the average of our total assets, (ii) the average LIFO reserve and (iii) the average accumulated depreciation and amortization; minus (i) the average taxes receivable, (ii) the average trade accounts payable, (iii) the average accrued salaries and wages and (iv) the average other current liabilities, excluding accrued income taxes.
Average invested capital is calculated as the sum of (i) the average of our total assets, (ii) the average LIFO reserve and (iii) the average accumulated depreciation and amortization; minus (i) the average taxes receivable, (ii) the average accounts payable, (iii) the average accrued salaries and wages and (iv) the average other current liabilities, excluding accrued income taxes.
These alternative profit streams would not exist without our core retail business. ​ Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our stores, fuel centers and via our online platforms.
These alternative profit streams would not exist without our core retail business. ​ 28 Our revenues are predominately earned and cash is generated as consumer products are sold to customers in our stores, fuel centers and via our online platforms.
As more and more customers incorporate ecommerce into their permanent routines, we expect digital sales to grow at a double-digit rate – a faster pace than other food at home sales – over time; and ​ ● Expanding operating margin through long-term initiatives in gross margin, growing alternative profit businesses, and productivity and cost saving initiatives that are focused on simplifying processes and utilizing technology to enhance the associate experience without affecting the customer experience.
As more and more customers incorporate ecommerce into their permanent routines, we expect digital sales to grow at a double-digit rate – a faster pace than other food at home sales – over time; and ​ ● Expanding operating margin through long-term initiatives in gross margin, growing alternative profit businesses, and productivity and cost savings initiatives that are focused on simplifying processes and utilizing technology to enhance the associate experience without affecting the customer experience.
Vitacost.com will continue to operate as an online platform providing great value natural, organic, and eco-friendly products for customers. ​ The annual evaluation of goodwill performed in 2023, 2022 and 2021 did not result in impairment for any of our reporting units other than Vitacost.com described above.
Vitacost.com will continue to operate as an online platform providing great value natural, organic, and eco-friendly products for customers. ​ The annual evaluation of goodwill performed in 2024, 2023 and 2022 did not result in impairment for any of our reporting units other than Vitacost.com described above.
We define a supermarket as identical when it has been in operation without expansion or relocation for five full quarters. We define Kroger Specialty Pharmacy businesses as identical when physical locations have been in operation continuously for five full quarters; discontinued patient therapies are excluded from the identical sales calculation starting in the quarter of transfer or termination.
We define a supermarket as identical when it has been in operation without expansion or relocation for five full quarters. We define Kroger Specialty Pharmacy business as identical when physical locations have been in operation continuously for five full quarters; discontinued patient therapies are excluded from the identical sales calculation starting in the quarter of transfer or termination.
The talent and capabilities gained through the merger with Vitacost in 2014 have been key to advancing Kroger’s digital platform and growing our digital business to more than $10 billion in annual sales. As our digital strategy has evolved, our primary focus looking forward will be to effectively utilize our Pickup and Delivery capabilities.
The talent and capabilities gained through the merger with Vitacost in 2014 have been key to advancing Kroger’s digital platform and growing our digital business to more than $13 billion in annual sales. As our digital strategy has evolved, our primary focus looking forward will be to effectively utilize our Pickup and Delivery capabilities.
Significant effects of these restructuring agreements recorded in our Consolidated Financial Statements are: ​ ● In 2022, we incurred a $25 million charge, $19 million net of tax, for obligations related to withdrawal liabilities for certain multi-employer pension funds. ​ ● In 2021, we incurred a $449 million charge, $344 million net of tax, for obligations related to withdrawal liabilities for a certain multi-employer pension fund. ​ As we continue to work to find solutions to under-funded multi-employer pension plans, it is possible we could incur withdrawal liabilities for certain funds. ​ Based on the most recent information available to us, we believe the present value of actuarially accrued liabilities in most of these multi-employer plans exceeds the value of the assets held in trust to pay benefits, and we expect that our contributions to most of these funds will increase over the next few years .
Significant effects of these restructuring agreements recorded in our Consolidated Financial Statements are: ​ ● In 2022, we incurred a $25 million charge, $19 million net of tax, for obligations related to withdrawal liabilities for certain multi-employer pension funds. ​ As we continue to work to find solutions to under-funded multi-employer pension plans, it is possible we could incur withdrawal liabilities for certain funds. ​ Based on the most recent information available to us, we believe the present value of actuarially accrued liabilities in most of these multi-employer plans exceeds the value of the assets held in trust to pay benefits, and we expect that our contributions to most of these funds will increase over the next few years .
As of March 27, 2024, we had no commercial paper borrowings outstanding. ​ Our credit facility requires the maintenance of a Leverage Ratio (our “financial covenant”). A failure to maintain our financial covenant would impair our ability to borrow under the credit facility.
As of March 27, 2025, we had no commercial paper borrowings outstanding. ​ Our credit facility requires the maintenance of a Leverage Ratio (our “financial covenant”). A failure to maintain our financial covenant would impair our ability to borrow under the credit facility.
(11) The amount presented represents the net earnings per diluted common share effect of each adjustment. ​ Key Performance Indicators ​ We evaluate our results of operations and cash flows using a variety of key performance indicators, such as sales, identical sales, excluding fuel, FIFO gross margin, adjusted FIFO operating profit, adjusted net earnings, adjusted net earnings per diluted share and return on invested capital.
(14) The amount presented represents the net earnings (loss) per diluted common share effect of each adjustment. ​ Key Performance Indicators ​ We evaluate our results of operations and cash flows using a variety of key performance indicators, such as sales, identical sales, excluding fuel, FIFO gross margin, adjusted FIFO operating profit, adjusted net earnings, adjusted net earnings per diluted share and return on invested capital.
(2) The liability related to unrecognized tax benefits has been excluded from the contractual obligations table because a reasonable estimate of the timing of future tax settlements cannot be determined. (3) As of February 3, 2024, we had no outstanding commercial paper and no borrowings under our credit facility.
(2) The liability related to unrecognized tax benefits has been excluded from the contractual obligations table because a reasonable estimate of the timing of future tax settlements cannot be determined. (3) As of February 1, 2025, we had no outstanding commercial paper and no borrowings under our credit facility.
(the “Company” or “Kroger”) was founded in 1883 and incorporated in 1902. Our Company is built on the foundation of our food retail business, which includes the added convenience of our retail pharmacies and fuel centers.
(the “Company” or “Kroger”) was founded in 1883 and incorporated in 1902. Our Company is built on the foundation of our retail grocery business, which includes the added convenience of our retail pharmacies and fuel centers.
Although these liabilities are not a direct obligation or liability of ours, any commitments to fund certain multi-employer pension plans will be expensed when our commitment is probable and an estimate can be made. ​ 41 ​ The American Rescue Plan Act ("ARP Act"), which was signed into law on March 11, 2021, established a special financial assistance program for financially troubled multi-employer pension plans.
Although these liabilities are not a direct obligation or liability of ours, any commitments to fund certain multi-employer pension plans will be expensed when our commitment is probable and an estimate can be made. ​ The ARP Act, which was signed into law on March 11, 2021, established a special financial assistance program for financially troubled multi-employer pension plans.
Our retail operations, which represent 97% of our consolidated sales, is our only reportable segment. ​ Kroger is diversified across brands, product categories, channels of distribution, geographies and consumer demographics.
Our retail operations, which represent 98% of our consolidated sales, is our only reportable segment. ​ Kroger is diversified across brands, product categories, channels of distribution, geographies and consumer demographics.
MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying notes thereto contained in Item 8 of this report, as well as Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the year ended January 28, 2023, which provides additional information on comparisons of fiscal years 2022 and 2021. ​ OUR VALUE CREATION MODEL – DELIVERING CONSISTENT AND ATTRACTIVE TOTAL SHAREHOLDER RETURN ​ Kroger’s proven value creation model is allowing us to deliver today and invest for the future.
MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying notes thereto contained in Item 8 of this report, as well as Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the year ended February 3, 2024, which provides additional information on comparisons of fiscal years 2023 and 2022. ​ OUR VALUE CREATION MODEL – DELIVERING CONSISTENT AND ATTRACTIVE TOTAL SHAREHOLDER RETURN ​ Kroger’s proven value creation model is allowing us to deliver today and invest for the future.
We also provide relevant customer-facing apps and interfaces that have the features customers want that are also reliable, easy to use and deliver a seamless customer experience across our store and digital channels. ​ Merchandising and Manufacturing ​ Our Brands products play an important role in our merchandising strategy and represented over $31 billion of our sales in 2023.
We also provide relevant customer-facing apps and interfaces that have the features customers want that are also reliable, easy to use and deliver a seamless customer experience across our store and digital channels. ​ Merchandising and Manufacturing ​ Our Brands products play an important role in our merchandising strategy and represented over $32 billion of our sales in 2024.
We have attempted to estimate the amount by which these liabilities exceed the assets, (i.e., the amount of underfunding), as of December 31, 2023.
We have attempted to estimate the amount by which these liabilities exceed the assets, (i.e., the amount of underfunding), as of December 31, 2024.
While our aggregate indemnification obligation could result in a material liability, we are not aware of any current matter that could result in a material liability. ​ 47 ​
While our aggregate indemnification obligation could result in a material liability, we are not aware of any current matter that could result in a material liability. ​ 48
We expect our future commitments for customer fulfillment centers will continue to grow as we place orders for additional customer fulfillment centers. ​ We expect to meet our short-term and long-term liquidity needs with cash and temporary cash investments on hand as of February 3, 2024, cash flows from our operating activities and other sources of liquidity, including borrowings under our commercial paper program and bank credit facility.
Future commitments for customer fulfillment centers will grow as we place orders for additional customer fulfillment centers. ​ We expect to meet our short-term and long-term liquidity needs with cash and temporary cash investments on hand as of February 1, 2025, cash flows from our operating activities and other sources of liquidity, including borrowings under our commercial paper program and bank credit facility.
The increase in adjusted net earnings per diluted share resulted primarily from a decreased LIFO charge and lower interest expense, partially offset by decreased fuel earnings, higher income tax expense and decreased FIFO operating profit, excluding fuel. ​ RETURN ON INVESTED CAPITAL ​ We calculate return on invested capital (“ROIC”) by dividing adjusted ROIC operating profit for the prior four quarters by the average invested capital.
The decrease in adjusted net earnings per diluted share resulted primarily from decreased adjusted FIFO operating profit, excluding fuel, and decreased fuel earnings, partially offset by a decreased LIFO charge and lower net interest expense. ​ RETURN ON INVESTED CAPITAL ​ We calculate return on invested capital (“ROIC”) by dividing adjusted ROIC operating profit for the prior four quarters by the average invested capital.
Capital investments for the purchase of leased facilities totaled $21 million in 2022. We did not purchase any leased facilities in 2023. Our capital priorities align directly with our value creation model and our target to consistently grow net earnings.
Capital investments for the purchase of leased facilities totaled $51 million in 2024. We did not purchase any leased facilities in 2023. Our capital priorities align directly with our value creation model and our target to consistently grow net earnings.
For additional information about these obligations, see Note 14 to the Consolidated Financial Statements. This table also excludes contributions under various multi-employer pension plans, which totaled $635 million in 2023. For additional information about these multi-employer pension plans, see Note 15 to the Consolidated Financial Statements.
For additional information about these obligations, see Note 14 to the Consolidated Financial Statements. This table also excludes contributions under various multi-employer pension plans, which totaled $398 million in 2024. For additional information about these multi-employer pension plans, see Note 15 to the Consolidated Financial Statements.
We included our future commitments for customer fulfillment centers for which we have placed an order as of February 3, 2024. We did not include our commitments associated with additional customer fulfillment centers that have not yet been ordered.
We included our future commitments for customer fulfillment centers for which we have placed an order as of February 1, 2025. We did not include our commitments associated with additional customer fulfillment centers that have not yet been ordered.
Merchandise costs exclude depreciation and rent expenses. FIFO gross margin is an important measure used by management, and management believes FIFO gross margin is a useful metric to investors and analysts because it measures the merchandising and operational effectiveness of our go-to-market strategy. ​ We calculate FIFO operating profit as operating profit excluding the LIFO charge.
FIFO gross margin is an important measure used by management, and management believes FIFO gross margin is a useful metric to investors and analysts because it measures the merchandising and operational effectiveness of our go-to-market strategy. ​ We calculate FIFO operating profit as operating profit excluding the LIFO charge.
(4) Amounts include contractual interest payments using the interest rate as of February 3, 2024 and stated fixed and swapped interest rates, if applicable, for all other debt instruments. (5) The amounts included for self-insurance liability related to workers’ compensation claims have been stated on a present value basis.
(4) Amounts include contractual interest payments using the interest rate as of February 1, 2025 and stated fixed and swapped interest rates, if applicable, for all other debt instruments. (5) The amounts include self-insurance liabilities related to workers’ compensation claims and general liability claims. Workers’ compensation claims have been stated on a present value basis.
At February 3, 2024, we had no outstanding commercial paper. Commercial paper borrowings are backed by our credit facility and reduce the amount we can borrow under the credit facility.
At February 1, 2025, we had no outstanding commercial paper. Commercial paper borrowings are backed by our credit facility and reduce the amount we can borrow under the credit facility.
This financial covenant is described below: ​ ● Our Leverage Ratio (the ratio of Net Debt to Adjusted EBITDA, as defined in the credit facility) was 1.10 to 1 as of February 3, 2024.
This financial covenant is described below: ​ ● Our Leverage Ratio (the ratio of Net Debt to Adjusted EBITDA, as defined in the credit facility) was 1.54 to 1 as of February 1, 2025.
At the end of 2023, we expect certain multi-employer pension plans in which we participate, for which our estimated share of underfunding is approximately $1.1 billion, $850 million net of tax, to apply for funding in 2024, which may reduce a portion of our share of unfunded multi-employer pension plan liabilities. ​ See Note 15 to the Consolidated Financial Statements for more information relating to our participation in these multi-employer pension plans. ​ NEW ACCOUNTING STANDARDS ​ Refer to Note 17 to the Consolidated Financial Statements for recently issued accounting standards not yet adopted as of February 3, 2024. ​ LIQUIDITY AND CAPITAL RESOURCES ​ Cash Flow Information ​ The following table summarizes our net increase (decrease) in cash and temporary cash investments for 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ ​ ​ ​ ​ ​ 2023 2022 Net cash provided by (used in) ​ ​ ​ ​ ​ ​ Operating activities ​ $ 6,788 ​ $ 4,498 Investing activities ​ ​ (3,750) ​ ​ (3,015) Financing activities ​ ​ (2,170) ​ ​ (2,289) Net increase (decrease) in cash and temporary cash investments ​ $ 868 ​ $ (806) ​ Net cash provided by operating activities ​ We generated $6.8 billion of cash from operations in 2023, compared to $4.5 billion in 2022.
At the end of 2024, we expect certain multi-employer pension plans in which we participate, for which our estimated share of underfunding is approximately $665 million, $509 million net of tax, to apply for or receive funding in 2025, which may reduce a portion of our share of unfunded multi-employer pension plan liabilities. ​ See Note 15 to the Consolidated Financial Statements for more information relating to our participation in these multi-employer pension plans. ​ NEW ACCOUNTING STANDARDS ​ Refer to Note 19 and Note 20 to the Consolidated Financial Statements for recently adopted accounting standards and recently issued accounting standards not yet adopted as of February 1, 2025. ​ LIQUIDITY AND CAPITAL RESOURCES ​ Cash Flow Information ​ The following table summarizes our net increase in cash and temporary cash investments for 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ 2024 2023 Net cash provided by (used in) ​ ​ ​ ​ ​ ​ Operating activities ​ $ 5,794 ​ $ 6,788 Investing activities ​ ​ (3,228) ​ ​ (3,750) Financing activities ​ ​ (490) ​ ​ (2,170) Net increase in cash and temporary cash investments ​ $ 2,076 ​ $ 868 ​ Net cash provided by operating activities ​ We generated $5.8 billion of cash from operations in 2024, compared to $6.8 billion in 2023.
The amount of cash used for financing activities decreased in 2023, compared to 2022, primarily due to decreased treasury stock purchases, partially offset by increased payments on long-term debt including obligations under finance leases. ​ Capital Investments ​ Capital investments, including changes in construction-in-progress payables and excluding the purchase of leased facilities, totaled $3.6 billion in 2023 and $3.3 billion in 2022.
The amount of cash used for financing activities decreased in 2024, compared to 2023, primarily due to increased proceeds from the issuance of long-term debt, partially offset by increased payments on long-term debt including obligations under finance leases and increased payments on treasury stock purchases and unsettled accelerated share repurchases. ​ 43 Capital Investments ​ Capital investments, including changes in construction-in-progress payables and excluding the purchase of leased facilities, totaled $3.6 billion in 2024 and 2023.
This could increase our cost or decrease the funds available under our credit facility if the letters of credit were issued against our credit facility. We had $473 million of outstanding surety bonds as of February 3, 2024.
This could increase our cost or decrease the funds available under our credit facility if the letters of credit were issued against our credit facility. We had $478 million of outstanding surety bonds as of February 1, 2025.
Digital sales increased approximately 12% in 2023 excluding the Extra Week, increased approximately 4% in 2022 and decreased approximately 3% in 2021. Digital sales growth for 2023 and 2022 was led by strength in our Delivery solutions, which grew by 25% in 2023 excluding the Extra Week and 25% in 2022.
Digital sales increased approximately 11% in 2024 and 12% in 2023, excluding the Extra Week in 2023, and increased approximately 4% in 2022. Digital sales growth for 2024, 2023 and 2022 was led by strength in our Delivery solutions, which grew by 18% in 2024 and 25% in 2023, excluding the Extra Week in 2023, and 25% in 2022.
The increase in the average retail fuel price was caused by an increase in the product cost of fuel . ​ 33 ​ We calculate identical sales, excluding fuel, as sales to retail customers, including sales from all departments at identical supermarket locations, Kroger Specialty Pharmacy businesses and Delivery and Ship solutions.
The decrease in the average retail fuel price was caused by a decrease in the product cost of fuel. ​ 34 We calculate identical sales, excluding fuel, as sales to retail customers, including sales from all departments at identical supermarket locations, Kroger Specialty Pharmacy business and Delivery and Ship solutions.
Rent expense, depreciation and amortization expense, and interest expense are not included in OG&A. ​ OG&A expenses, as a percentage of sales, were 17.50% in 2023 and 16.09% in 2022.
Rent expense, depreciation and amortization expense, and interest expense are not included in OG&A. ​ OG&A expenses, as a percentage of sales, were 17.29% in 2024 and 17.50% in 2023.
Excluding the effect of fuel, the Extra Week, the 2023 OG&A Adjusted Items, the 2022 OG&A Adjusted Items, our OG&A rate increased 21 basis points in 2023, compared to 2022.
Excluding the effect of fuel, the Extra Week, the 2024 OG&A Adjusted Items and the 2023 OG&A Adjusted Items, our OG&A rate increased 31 basis points in 2024, compared to 2023.
By expanding our store network and improving our digital capabilities, we expect to grow households and increase sales. Kroger has evolved into a more diverse business, with a model that provides more ways than ever to generate net earnings growth. ​ This will be achieved by: ​ ● Growing identical sales without fuel.
By expanding our store network and improving our digital capabilities, we expect to grow households and increase sales. Our model provides more ways than ever to generate net earnings growth. ​ This will be achieved by: ​ ● Growing identical sales without fuel.
Our combination of assets include the following: ​ Stores ​ As of February 3, 2024, Kroger operates supermarkets under a variety of local banner names in 35 states and the District of Columbia. As of February 3, 2024, Kroger operated, either directly or through its subsidiaries, 2,722 supermarkets, of which 2,257 had pharmacies and 1,665 had fuel centers.
Our combination of assets includes the following: ​ Stores ​ As of February 1, 2025, Kroger operates supermarkets under a variety of local banner names in 35 states and the District of Columbia. As of February 1, 2025, Kroger operated, either directly or through its subsidiaries, 2,731 supermarkets, of which 2,273 had pharmacies and 1,702 had fuel centers.
Operating profit, as a percentage of sales, decreased 72 basis points in 2023, compared to 2022, due to increased OG&A and depreciation and amortization expenses, as a percentage of sales, and a decrease in fuel operating profit, partially offset by a higher FIFO gross margin rate, a decreased LIFO charge and the Extra Week. ​ FIFO operating profit was $3.2 billion, or 2.14% of sales, for 2023, compared to $4.8 billion, or 3.21% of sales, for 2022.
Operating profit, as a percentage of sales, increased 56 basis points in 2024, compared to 2023, due to decreased OG&A expenses, as a percentage of sales and a higher FIFO gross margin rate, partially offset by increased depreciation and amortization expenses, as a percentage of sales, a decrease in fuel operating profit and the Extra Week. ​ 36 FIFO operating profit was $3.9 billion, or 2.68% of sales, for 2024, compared to $3.2 billion, or 2.14% of sales, for 2023.
Nonetheless, the underfunding is not a direct obligation or liability of ours or of any employer. ​ As of December 31, 2023, we estimate our share of the underfunding of multi-employer pension plans to which we contribute was approximately $2.5 billion, $1.9 billion net of tax, which remained consistent with the estimated amount of underfunding as of December 31, 2022.
Nonetheless, the underfunding is not a direct obligation or liability of ours or of any employer. ​ As of December 31, 2024, we estimate our share of the underfunding of multi-employer pension plans to which we contribute was approximately $1.9 billion, $1.4 billion net of tax.
Our Delivery solutions include orders delivered to customers from retail store locations, customer fulfillment centers powered by Ocado and orders placed through third-party platforms. Our Ship solutions primarily include online orders placed through our owned platforms that are dispatched using mail service or third-party courier.
Digital sales include products ordered online and picked up at our stores and our Delivery and Ship solutions. Our Delivery solutions include orders delivered to customers from retail store locations, customer fulfillment centers and orders placed through third-party platforms. Our Ship solutions primarily include online orders placed through our owned platforms that are dispatched using mail service or third-party courier.
We made cash contributions to these plans of $635 million in 2023, $620 million in 2022 and $1.1 billion in 2021.
We made cash contributions to these plans of $398 million in 2024, $635 million in 2023 and $620 million in 2022.
In addition, net earnings for 2023 include the following, which we define as the “2023 Adjusted Items:” ​ ● Charges to operating, general and administrative expenses (“OG&A”) of $316 million, $268 million net of tax, for merger related costs and $1.5 billion, $1.2 billion net of tax, for opioid settlement charges (the “2023 OG&A Adjusted Items”). ​ ● A gain in other income (expense) of $151 million, $116 million net of tax, for the unrealized gain on investments (the “2023 Other Income (Expense) Adjusted Items”). ​ Net earnings for 2022 include the following, which we define as the “2022 Adjusted Items:” ​ ● Charges to operating, general and administrative expenses (“OG&A”) of $25 million, $19 million net of tax, for obligations related to withdrawal liabilities for certain multi-employer pension funds, $20 million, $15 million net of tax, for the revaluation of Home Chef contingent consideration, $44 million, $34 million net of tax, for merger related costs, $85 million, $67 million net of tax, for opioid settlement charges and $164 million for goodwill and fixed asset impairment charges related to Vitacost.com (the “2022 OG&A Adjusted Items”). ​ ● Losses in other income (expense) of $728 million, $561 million net of tax, for the unrealized loss on investments (the “2022 Other Income (Expense) Adjusted Items”). ​ Net earnings for 2021 include the following, which we define as the “2021 Adjusted Items:” ​ ● Charges to OG&A of $449 million, $344 million net of tax, for obligations related to withdrawal liabilities for a certain multi-employer pension fund, $66 million, $50 million net of tax, for the revaluation of Home Chef contingent consideration and $136 million, $104 million net of tax, for transformation costs (the “2021 OG&A Adjusted Items”). ​ ● Losses in other income (expense) of $87 million, $68 million net of tax, related to company-sponsored pension plan settlements and $821 million, $628 million net of tax, for the unrealized loss on investments (the “2021 Other Income (Expense) Adjusted Items”). ​ ● A reduction to income tax expense of $47 million primarily due to the completion of income tax audit examinations covering multiple years. ​ 30 ​ The table below provides a reconciliation of net earnings attributable to The Kroger Co. to adjusted net earnings attributable to The Kroger Co. and a reconciliation of net earnings attributable to The Kroger Co. per diluted common share to adjusted net earnings attributable to The Kroger Co. per diluted common share excluding the 2023, 2022 and 2021 Adjusted Items : ​ Net Earnings per Diluted Share excluding the Adjusted Items ($ in millions, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Net earnings attributable to The Kroger Co. ​ $ 2,164 ​ $ 2,244 ​ $ 1,655 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Income) expense adjustments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjustment for pension plan withdrawal liabilities (1)(2) ​ — ​ 19 ​ 344 ​ Adjustment for company-sponsored pension plan settlement charges (1)(3) ​ ​ — ​ ​ — ​ ​ 68 ​ Adjustment for (gain) loss on investments (1)(4) ​ ​ (116) ​ ​ 561 ​ ​ 628 ​ Adjustment for Home Chef contingent consideration (1)(5) ​ ​ — ​ ​ 15 ​ ​ 50 ​ Adjustment for transformation costs (1)(6) ​ ​ — ​ ​ — ​ ​ 104 ​ Adjustment for merger related costs (1)(7) ​ ​ 268 ​ ​ 34 ​ ​ — ​ Adjustment for opioid settlement charges (1)(8) ​ ​ 1,163 ​ ​ 67 ​ ​ — ​ Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com (1)(9) ​ ​ — ​ ​ 164 ​ ​ — ​ Adjustment for income tax audit examinations (1) ​ ​ — ​ ​ — ​ ​ (47) ​ Total Adjusted Items ​ ​ 1,315 ​ ​ 860 ​ ​ 1,147 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net earnings attributable to The Kroger Co. excluding the Adjusted Items ​ $ 3,479 ​ $ 3,104 ​ $ 2,802 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Extra Week adjustment (1 ) (10) ​ ​ (144) ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net earnings attributable to The Kroger Co. excluding the Adjusted Items and the Extra Week adjustment ​ $ 3,335 ​ $ 3,104 ​ $ 2,802 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net earnings attributable to The Kroger Co. per diluted common share ​ $ 2.96 ​ $ 3.06 ​ $ 2.17 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Income) expense adjustments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjustment for pension plan withdrawal liabilities (11) ​ — ​ 0.03 ​ 0.45 ​ Adjustment for company-sponsored pension plan settlement charges (11) ​ ​ — ​ ​ — ​ ​ 0.09 ​ Adjustment for (gain) loss on investments (11) ​ ​ (0.17) ​ ​ 0.76 ​ ​ 0.83 ​ Adjustment for Home Chef contingent consideration (11) ​ ​ — ​ ​ 0.02 ​ ​ 0.07 ​ Adjustment for transformation costs (11) ​ ​ — ​ ​ — ​ ​ 0.14 ​ Adjustment for merger related costs (11) ​ ​ 0.37 ​ ​ 0.05 ​ ​ — ​ Adjustment for opioid settlement charges (11) ​ ​ 1.60 ​ ​ 0.09 ​ ​ — ​ Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com (11) ​ ​ — ​ ​ 0.22 ​ ​ — ​ Adjustment for income tax audit examinations (11) ​ ​ — ​ ​ — ​ ​ (0.07) ​ Total Adjusted Items ​ ​ 1.80 ​ ​ 1.17 ​ ​ 1.51 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net earnings attributable to The Kroger Co. per diluted common share excluding the Adjusted Items ​ $ 4.76 ​ $ 4.23 ​ $ 3.68 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Extra Week adjustment (11) ​ ​ (0.20) ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net earnings attributable to The Kroger Co. per diluted common share excluding the Adjusted Items and the Extra Week adjustment ​ $ 4.56 ​ $ 4.23 ​ $ 3.68 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average numbers of common shares used in diluted calculation ​ 725 ​ 727 ​ 754 ​ ​ 31 ​ Net Earnings per Diluted Share excluding the Adjusted Items (continued) ($ in millions, except per share amounts) ​ (1) The amounts presented represent the after-tax effect of each adjustment, which was calculated using discrete tax rates.
In addition, net earnings for 2023 include the following, which we define as the “2023 Adjusted Items:” ​ ● Charges to OG&A of $316 million, $268 million net of tax, for merger related costs and $1.5 billion, $1.2 billion net of tax, for opioid settlement charges (the “2023 OG&A Adjusted Items”). ​ ● A gain in other income (expense) of $151 million, $116 million net of tax, for the unrealized gain on investments (the “2023 Other Income (Expense) Adjusted Item”). ​ Net earnings for 2022 include the following, which we define as the “2022 Adjusted Items:” ​ ● Charges to OG&A of $25 million, $19 million net of tax, for obligations related to withdrawal liabilities for certain multi-employer pension funds, $20 million, $15 million net of tax, for the revaluation of Home Chef contingent consideration, $44 million, $34 million net of tax, for merger related costs, $85 million, $67 million net of tax, for opioid settlement charges and $164 million for goodwill and fixed asset impairment charges related to Vitacost.com (the “2022 OG&A Adjusted Items”). ​ ● Losses in other income (expense) of $728 million, $561 million net of tax, for the unrealized loss on investments (the “2022 Other Income (Expense) Adjusted Item”). ​ 31 The table below provides a reconciliation of net earnings attributable to The Kroger Co. to adjusted net earnings attributable to The Kroger Co. and a reconciliation of net earnings attributable to The Kroger Co. per diluted common share to adjusted net earnings attributable to The Kroger Co. per diluted common share excluding the 2024, 2023 and 2022 Adjusted Items : ​ Net Earnings per Diluted Share excluding the Adjusted Items ($ in millions, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 2022 Net earnings attributable to The Kroger Co. ​ $ 2,665 ​ $ 2,164 ​ $ 2,244 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Income) expense adjustments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjustment for pension plan withdrawal liabilities (1)(2) ​ ​ — ​ ​ — ​ ​ 19 ​ Adjustment for loss (gain) on investments (1)(3) ​ 112 ​ (116) ​ ​ 561 ​ Adjustment for Home Chef contingent consideration (1)(4) ​ ​ — ​ ​ — ​ ​ 15 ​ Adjustment for severance charge and related benefits (1)(5) ​ ​ 24 ​ ​ — ​ ​ — ​ Adjustment for impairment of intangible assets (1)(6) ​ ​ 23 ​ ​ — ​ ​ — ​ Adjustment for property losses (1)(7) ​ ​ 19 ​ ​ — ​ ​ — ​ Adjustment for merger-related costs (1)(8) ​ ​ 489 ​ ​ 268 ​ ​ 34 ​ Adjustment for merger-related net interest expense (1)(9) ​ ​ 26 ​ ​ — ​ ​ — ​ Adjustment for opioid settlement charges (1)(10) ​ ​ (21) ​ ​ 1,163 ​ ​ 67 ​ Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com (1)(11) ​ ​ — ​ ​ — ​ ​ 164 ​ Adjustment for gain on sale of Kroger Specialty Pharmacy (1)(12) ​ ​ (60) ​ ​ — ​ ​ — ​ Adjustment for income tax expense on sale of Kroger Specialty Pharmacy ​ ​ (31) ​ ​ — ​ ​ — ​ Total Adjusted Items ​ ​ 581 ​ ​ 1,315 ​ ​ 860 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net earnings attributable to The Kroger Co. excluding the Adjusted Items ​ $ 3,246 ​ $ 3,479 ​ $ 3,104 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Extra Week adjustment (1 ) (13) ​ ​ — ​ ​ (144) ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net earnings attributable to The Kroger Co. excluding the Adjusted Items and the Extra Week adjustment ​ $ 3,246 ​ $ 3,335 ​ $ 3,104 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net earnings attributable to The Kroger Co. per diluted common share ​ $ 3.67 ​ $ 2.96 ​ $ 3.06 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Income) expense adjustments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjustment for pension plan withdrawal liabilities (14) ​ — ​ — ​ 0.03 ​ Adjustment for loss (gain) on investments (14) ​ ​ 0.15 ​ ​ (0.17) ​ ​ 0.76 ​ Adjustment for Home Chef contingent consideration (14) ​ ​ — ​ ​ — ​ ​ 0.02 ​ Adjustment for severance charge and related benefits (14) ​ ​ 0.03 ​ ​ — ​ ​ — ​ Adjustment for impairment of intangible assets (14) ​ ​ 0.03 ​ ​ — ​ ​ — ​ Adjustment for property losses (14) ​ ​ 0.03 ​ ​ — ​ ​ — ​ Adjustment for merger-related costs (14) ​ ​ 0.67 ​ ​ 0.37 ​ ​ 0.05 ​ Adjustment for merger-related net interest expense (14) ​ ​ 0.04 ​ ​ — ​ ​ — ​ Adjustment for opioid settlement charges (14) ​ ​ (0.03) ​ ​ 1.60 ​ ​ 0.09 ​ Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com (14) ​ ​ — ​ ​ — ​ ​ 0.22 ​ Adjustment for gain on sale of Kroger Specialty Pharmacy (14) ​ ​ (0.08) ​ ​ — ​ ​ — ​ Adjustment for income tax expense on sale of Kroger Specialty Pharmacy (14) ​ ​ (0.04) ​ ​ — ​ ​ — ​ Total Adjusted Items ​ ​ 0.80 ​ ​ 1.80 ​ ​ 1.17 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net earnings attributable to The Kroger Co. per diluted common share excluding the Adjusted Items ​ $ 4.47 ​ $ 4.76 ​ $ 4.23 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Extra Week adjustment (14) ​ ​ — ​ ​ (0.20) ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net earnings attributable to The Kroger Co. per diluted common share excluding the Adjusted Items and the Extra Week adjustment ​ $ 4.47 ​ $ 4.56 ​ $ 4.23 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average numbers of common shares used in diluted calculation ​ 720 ​ 725 ​ 727 ​ ​ 32 Net Earnings per Diluted Share excluding the Adjusted Items (continued) ($ in millions, except per share amounts) ​ (1) The amounts presented represent the after-tax effect of each adjustment, which was calculated using discrete tax rates.
We repurchased approximately $62 million in 2023 and $172 million in 2022 of our common shares under the 1999 Repurchase Program. ​ On September 9, 2022, our Board of Directors approved a $1.0 billion share repurchase program to reacquire shares via open market purchase or privately negotiated transactions, block trades, or pursuant to trades intending to comply with Rule 10b5-1 under the Exchange Act (the “September 2022 Repurchase Program”).
The December 2024 Repurchase Program authorization replaced the existing September 2022 Repurchase Program described below. ​ On September 9, 2022, our Board of Directors approved a $1.0 billion share repurchase program to reacquire shares via open market purchase or privately negotiated transactions, block trades, or pursuant to trades intending to comply with Rule 10b5-1 under the Exchange Act (the “September 2022 Repurchase Program”).
During the third quarter of 2022, we paused our share repurchase program to prioritize de-leveraging following the proposed merger with Albertsons. ​ In addition, we also repurchase common shares under a program announced on December 6, 1999 to repurchase common shares to reduce dilution resulting from our employee stock option and long-term incentive plans, under which repurchases are limited to proceeds received from exercises of stock options and the tax benefits associated therewith (“1999 Repurchase Program”).
The December 2021 Repurchase Program was exhausted during 2022. ​ On December 6, 1999, the Company announced a program to repurchase common shares to reduce dilution resulting from our employee stock option and long-term incentive plans, under which repurchases are limited to proceeds received from exercises of stock options and the tax benefits associated therewith (“1999 Repurchase Program”).
Our capital program includes initiatives to enhance the customer experience in stores, improve our process efficiency and enhance our digital capabilities through technology developments. Capital investments increased in 2023, compared to 2022, due to increasing our store capital investments compared to prior years.
Our capital program includes initiatives to enhance the customer experience in stores, improve our process efficiency and enhance our digital capabilities through technology developments.
These measures, which are described in more detail in this Annual Report on Form 10-K, may not be comparable to similarly-titled performance indicators used by other companies. ​ 32 ​ RESULTS OF OPERATIONS ​ Sales ​ Total Sales ($ in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ Percentage ​ Percentage ​ ​ ​ ​ 2023 ​ Adjusted (1) ​ Change (2) ​ 2022 ​ Change (3) ​ 2021 ​ Total sales to retail customers without fuel (4) ​ $ 132,284 ​ $ 129,868 ​ 0.9 % $ 128,664 ​ 5.2 % $ 122,293 ​ Supermarket fuel sales ​ ​ 16,621 ​ ​ 16,340 ​ (12.3) % 18,632 ​ 26.9 % 14,678 ​ Other sales (5) ​ 1,134 ​ 1,120 ​ 16.4 % 962 ​ 4.9 % 917 ​ Total sales ​ $ 150,039 ​ $ 147,328 ​ (0.6) % $ 148,258 ​ 7.5 % $ 137,888 ​ (1) The 2023 adjusted column represents the items presented in the 2023 column adjusted to remove the Extra Week.
These measures, which are described in more detail in this Annual Report on Form 10-K, may not be comparable to similarly-titled performance indicators used by other companies. ​ 33 RESULTS OF OPERATIONS ​ Sales ​ Total Sales ($ in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage ​ ​ ​ 2023 ​ Percentage ​ ​ ​ ​ 2024 ​ Change (1) ​ 2023 (6) ​ Adjusted (2)(6) ​ Change (3) ​ 2022 (6) Total sales to retail customers without fuel (4) ​ $ 130,859 ​ 0.8 % $ 132,175 ​ $ 129,759 ​ 0.9 % $ 128,559 Supermarket fuel sales ​ ​ 14,973 ​ (8.4) % 16,621 ​ ​ 16,340 ​ (12.3) % ​ 18,632 Other sales (5) ​ 1,291 ​ 5.0 % 1,243 ​ ​ 1,229 ​ 15.2 % 1,067 Total sales ​ $ 147,123 ​ (0.1) % $ 150,039 ​ $ 147,328 ​ (0.6) % $ 148,258 (1) This column represents the percentage change in 2024 compared to 2023 adjusted sales, which removes the Extra Week.
We offer Pickup and Harris Teeter ExpressLane™ — personalized, order online, pick up at the store services — at 2,350 of our supermarkets and provide Delivery, which allows us to offer digital solutions to substantially all of our customers.
We offer Pickup and Harris Teeter ExpressLane™ — personalized, order online, pick up at the store services — at 2,412 of our supermarkets and provide Delivery, which allows us to offer digital solutions to substantially all of our customers. Our Delivery solutions include orders delivered to customers from retail store locations, customer fulfillment centers and orders placed through third-party platforms.
Our cash flow projections look several years into the future and include assumptions on variables such as inflation, the economy and market competition. Application of alternative assumptions and definitions, such as reviewing long-lived assets for impairment at a different level, could produce significantly different results. ​ Business Combinations ​ We account for business combinations using the acquisition method of accounting.
Application of alternative assumptions and definitions, such as reviewing long-lived assets for impairment at a different level, could produce significantly different results. ​ Business Combinations ​ We account for business combinations using the acquisition method of accounting.
Our KSP reporting unit has a goodwill balance of $243 million. ​ For additional information relating to our results of the goodwill impairment reviews performed during 2023, 2022 and 2021, see Note 2 to the Consolidated Financial Statements. ​ The impairment review requires the extensive use of management judgment and financial estimates.
A 10% reduction in fair value of our reporting units would not indicate a potential for impairment of our goodwill balance. ​ 40 For additional information relating to our results of the goodwill impairment reviews performed during 2024, 2023 and 2022, see Note 2 to the Consolidated Financial Statements. ​ The impairment review requires the extensive use of management judgment and financial estimates.
These surety bonds expire during fiscal year 2024 and are expected to be renewed. ​ We have standby letters of credit outstanding as part of our insurance program and for other business purposes. The letters of credit for our insurance program collateralize obligations to our insurance carriers in connection with the settlement of potential claims.
These standby letters of credit expire during fiscal year 2025 or early fiscal year 2026 and most are expected to be renewed. The letters of credit for our insurance program collateralize obligations to our insurance carriers in connection with the settlement of potential claims.
We urge you to understand the methods used by other companies to calculate their ROIC before comparing our ROIC to that of such other companies. ​ 37 ​ The following table provides a calculation of ROIC for 2023 and 2022 on a 52 week basis ($ in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ February 3, ​ January 28, ​ ​ 2024 ​ 2023 Return on Invested Capital ​ ​ ​ ​ ​ ​ ​ Numerator ​ ​ ​ ​ ​ ​ ​ Operating profit on a 53 week basis in fiscal year 2023 ​ $ 3,096 ​ $ 4,126 ​ Extra Week operating profit adjustment ​ ​ (187) ​ ​ — ​ LIFO charge ​ 113 ​ 626 ​ Depreciation and amortization ​ 3,125 ​ 2,965 ​ Rent on a 53 week basis in fiscal year 2023 ​ 891 ​ 839 ​ Extra Week rent adjustment ​ ​ (17) ​ ​ — ​ Adjustment for Home Chef contingent consideration ​ ​ — ​ ​ 20 ​ Adjustment for pension plan withdrawal liabilities ​ ​ — ​ ​ 25 ​ Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com ​ ​ — ​ ​ 164 ​ Adjustment for merger related costs ​ ​ 316 ​ ​ 44 ​ Adjustment for opioid settlement charges ​ ​ 1,475 ​ ​ 85 ​ Adjusted ROIC operating profit ​ $ 8,812 ​ $ 8,894 ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator ​ ​ ​ ​ ​ ​ ​ Average total assets ​ $ 50,064 ​ $ 49,355 ​ Average taxes receivable (1) ​ (197) ​ (137) ​ Average LIFO reserve ​ 2,253 ​ 1,883 ​ Average accumulated depreciation and amortization (2) ​ 30,573 ​ 27,843 ​ Average accounts payable ​ (10,280) ​ (10,016) ​ Average accrued salaries and wages ​ (1,535) ​ (1,741) ​ Average other current liabilities ​ (3,414) ​ (3,435) ​ Average invested capital ​ $ 67,464 ​ $ 63,752 ​ Return on Invested Capital ​ 13.06 % 13.95 % (1) Taxes receivable were $163 as of February 3, 2024, $231 as of January 28, 2023 and $42 as of January 29, 2022.
We urge you to understand the methods used by other companies to calculate their ROIC before comparing our ROIC to that of such other companies. ​ 38 The following table provides a calculation of ROIC for 2024 and 2023 on a 52 week basis ($ in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ February 1, ​ February 3, ​ ​ 2025 ​ 2024 Return on Invested Capital ​ ​ ​ ​ ​ ​ ​ Numerator ​ ​ ​ ​ ​ ​ ​ Operating profit on a 53 week basis in fiscal year 2023 ​ $ 3,849 ​ $ 3,096 ​ Extra Week operating profit adjustment ​ ​ — ​ ​ (187) ​ LIFO charge ​ 95 ​ 113 ​ Depreciation and amortization ​ 3,246 ​ 3,125 ​ Rent on a 53 week basis in fiscal year 2023 ​ 877 ​ 891 ​ Extra Week rent adjustment ​ ​ — ​ ​ (17) ​ 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 ​ ​ 684 ​ ​ 316 ​ Adjustment for opioid settlement charges ​ ​ (27) ​ ​ 1,475 ​ Adjusted ROIC operating profit ​ $ 8,811 ​ $ 8,812 ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator ​ ​ ​ ​ ​ ​ ​ Average total assets ​ $ 51,561 ​ $ 50,064 ​ Average taxes receivable (1) ​ (124) ​ (197) ​ Average LIFO reserve ​ 2,357 ​ 2,253 ​ Average accumulated depreciation and amortization (2) ​ 33,397 ​ 30,573 ​ Average accounts payable ​ (10,253) ​ (10,280) ​ Average accrued salaries and wages ​ (1,327) ​ (1,535) ​ Average other current liabilities ​ (3,551) ​ (3,414) ​ Average invested capital ​ $ 72,060 ​ $ 67,464 ​ Return on Invested Capital ​ 12.23 % 13.06 % (1) Taxes receivable were $84 as of February 1, 2025, $163 as of February 3, 2024 and $231 as of January 28, 2023.
The 2022 tax rate differed from the federal statutory rate due to the effect of state income taxes and non-deductible goodwill impairment charges related to Vitacost.com, partially offset by the benefits from share-based payments and the utilization of tax credits. ​ 36 ​ Net Earnings and Net Earnings Per Diluted Share ​ Our net earnings are based on the factors discussed in the Results of Operations section. ​ Net earnings of $2.96 per diluted share for 2023 represented a decrease of 3.3% compared to net earnings of $3.06 per diluted share for 2022.
The 2023 tax rate differed from the federal statutory rate due to the effect of state income taxes and the nondeductible portion of opioid settlement charges, partially offset by the benefit from share-based payments and the utilization of tax credits. 37 Net Earnings and Net Earnings Per Diluted Share ​ Our net earnings are based on the factors discussed in the Results of Operations section. ​ Net earnings of $3.67 per diluted share for 2024 represented an increase of 24.0% compared to net earnings of $2.96 per diluted share for 2023.
Delivery solutions growth was driven by our Boost membership program and expansion of our Kroger Delivery network. (5) Other sales primarily relate to external sales at food production plants, data analytic services and third-party media revenue.
Delivery solutions growth was driven by the growth in demand across our Kroger Delivery network. (5) Other sales primarily relate to external sales at food production plants, third-party media revenue and data analytic services. The increase in 2024, compared to 2023, is primarily due to an increase in external sales at food production plants and in third-party media revenue .
We used the identical sales, excluding fuel, dollar figures presented below to calculate percentage changes for 2023 and 2022. ​ Identical Sales ($ in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 (1) Excluding fuel ​ $ 131,748 ​ $ 130,562 ​ Excluding fuel ​ 0.9 % 5.6 % (1) Identical sales, excluding fuel, for 2022 were adjusted to a comparable 53 week basis by including week 1 of fiscal 2023 in our 2022 identical sales, excluding fuel, base.
We used the identical sales, excluding fuel, dollar figures presented below to calculate percentage changes for 2024 and 2023. ​ Identical Sales ($ in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 (1) 2023 (2) Excluding fuel ​ $ 128,297 ​ $ 126,378 ​ Excluding fuel ​ 1.5 % 0.9 % (1) Identical sales, excluding fuel, for 2024 were calculated on a 52-week basis by excluding week 1 of fiscal 2023 in our 2023 identical sales base.
The increase in 2023, compared to 2022, and the increase in 2022, compared to 2021, is primarily due to an increase in data analytic services and third-party media revenue . ​ Total 2023 adjusted sales represent total sales for 2023 excluding the Extra Week. Total 2023 adjusted sales decreased in 2023, compared to 2022, by 0.6%.
The increase in 2023, compared to 2022, is primarily due to an increase in data analytic services and third-party media revenue. (6) 2023, 2023 adjusted and 2022 sales by category amounts have been reclassified to conform to the 2024 presentation. ​ Total sales decreased in 2024, compared to total 2023 adjusted sales, by 0.1%.
The decrease in 2023 and 2022, compared to 2021 is due to the contractual payments we made in 2021 related to our commitments established for the restructuring of certain multi-employer pension plan agreements. ​ 40 ​ We continue to evaluate and address our potential exposure to under-funded multi-employer pension plans as it relates to our associates who are beneficiaries of these plans.
The decrease in 2024, compared to 2023 and 2022, is due to the fulfillment of contractually obligated payments related to our commitments established when restructuring the United Food and Commercial Workers International Union-Industry Variable Annuity Pension Plan agreement. ​ We continue to evaluate and address our potential exposure to under-funded multi-employer pension plans as it relates to our associates who are beneficiaries of these plans.
(6) Amounts include funds owed to third parties for projects currently under construction. These amounts are reflected in “Accounts payable” in our Consolidated Balance Sheets. (7) Amounts include scheduled opioid settlement commitments related to the nationwide opioid settlement framework and the State of West Virginia.
(6) Amounts include funds owed to third parties for projects currently under construction. These amounts are reflected in “Accounts payable” in our Consolidated Balance Sheets. (7) Amounts include scheduled opioid settlement commitments. For additional information about our opioid settlement charges, see Note 12 to the Consolidated Financial Statements.
FIFO operating profit, as a percentage of sales, excluding the 2023 and 2022 Adjusted Items and the Extra Week, decreased 15 basis points in 2023, compared to 2022, due to increased OG&A and depreciation and amortization expenses, as a percentage of sales and a decrease in fuel operating profit, partially offset by a higher FIFO gross margin rate. ​ Specific factors contributing to the trends driving operating profit and FIFO operating profit identified above are discussed earlier in this section. ​ 35 ​ The following table provides a reconciliation of operating profit to FIFO operating profit, and to Adjusted FIFO operating profit, excluding the 2023 and 2022 Adjusted Items: ​ Operating Profit excluding the Adjusted Items ($ in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 ​ Operating profit ​ $ 3,096 ​ $ 4,126 ​ LIFO charge ​ ​ 113 ​ ​ 626 ​ ​ ​ ​ ​ ​ ​ ​ FIFO Operating profit ​ 3,209 ​ 4,752 ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjustment for pension plan withdrawal liabilities ​ ​ — ​ ​ 25 ​ Adjustment for Home Chef contingent consideration ​ ​ — ​ ​ 20 ​ Adjustment for merger related costs (1) ​ ​ 316 ​ ​ 44 ​ Adjustment for opioid settlement charges (2) ​ ​ 1,475 ​ ​ 85 ​ Adjustment for goodwill and fixed asset impairment charges related to Vitacost.com ​ ​ — ​ ​ 164 ​ Other ​ ​ (14) ​ ​ (11) ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 and 2022 Adjusted items ​ ​ 1,777 ​ ​ 327 ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted FIFO operating profit excluding the adjusted items above ​ $ 4,986 ​ $ 5,079 ​ ​ ​ ​ ​ ​ ​ ​ ​ Extra Week adjustment ​ ​ (187) ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted FIFO operating profit excluding the adjusted items above and the Extra Week ​ $ 4,799 ​ $ 5,079 ​ (1) Merger related costs primarily include third-party professional fees and credit facility fees associated with the proposed merger with Albertsons.
FIFO operating profit, as a percentage of sales, excluding the 2024 and 2023 Adjusted Items and the Extra Week, decreased 8 basis points in 2024, compared to 2023, due to increased OG&A and depreciation and amortization expenses, as a percentage of sales, and a decrease in fuel operating profit, partially offset by a higher FIFO gross margin rate. ​ Specific factors contributing to the trends driving operating profit and FIFO operating profit identified above are discussed earlier in this section. ​ The following table provides a reconciliation of operating profit to FIFO operating profit, and to Adjusted FIFO operating profit, excluding the 2024 and 2023 Adjusted Items: ​ Operating Profit excluding the Adjusted Items ($ in millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 ​ Operating profit ​ $ 3,849 ​ $ 3,096 ​ LIFO charge ​ ​ 95 ​ ​ 113 ​ ​ ​ ​ ​ ​ ​ ​ FIFO Operating profit ​ 3,944 ​ 3,209 ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjustment for merger related costs (1) ​ ​ 684 ​ ​ 316 ​ Adjustment for opioid settlement charges ​ ​ (27) ​ ​ 1,475 ​ Adjustment for severance charge and related benefits ​ ​ 32 ​ ​ — ​ Adjustment for impairment of intangible assets ​ ​ 30 ​ ​ — ​ Adjustment for property losses ​ ​ 25 ​ ​ — ​ Other ​ ​ (14) ​ ​ (14) ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 and 2023 Adjusted items ​ ​ 730 ​ ​ 1,777 ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted FIFO operating profit excluding the adjusted items above ​ $ 4,674 ​ $ 4,986 ​ ​ ​ ​ ​ ​ ​ ​ ​ Extra Week adjustment ​ ​ — ​ ​ (187) ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted FIFO operating profit excluding the adjusted items above and the Extra Week ​ $ 4,674 ​ $ 4,799 ​ (1) Merger related costs primarily include third-party professional fees and credit facility fees associated with the terminated merger with Albertsons. ​ Net Interest Expense ​ Net interest expense totaled $450 million in 2024 and $441 million in 2023.
Excluding the 2023 and 2022 Adjusted Items and the Extra Week, adjusted net earnings of $4.56 per diluted share for 2023 represented an increase of 7.8% compared to adjusted net earnings of $4.23 per diluted share for 2022.
Excluding the 2024 and 2023 Adjusted Items and the Extra Week, adjusted net earnings of $4.47 per diluted share for 2024 represented a decrease of 2.0% compared to adjusted net earnings of $4.56 per diluted share for 2023.
Borrowings under the Term Loan Facilities will bear interest at rates that vary based on the type of loan and our debt rating. ​ In addition to the available credit mentioned above, as of February 3, 2024, we had authorized for issuance $5 billion of securities remaining under a shelf registration statement filed with the SEC and effective on May 20, 2022. ​ We maintain surety bonds related primarily to our self-insured workers’ compensation claims.
The outstanding letters of credit that reduce funds available under our credit facility totaled $1 million as of February 1, 2025 . ​ In addition to the available credit mentioned above, as of February 1, 2025, we had authorized for issuance $2.0 billion of securities remaining under a shelf registration statement filed with the SEC and effective on May 20, 2022. ​ We maintain surety bonds related primarily to our self-insured workers’ compensation claims.
Outstanding borrowings under the credit facility, commercial paper borrowings, and some outstanding letters of credit reduce funds available under the credit facility. As of February 3, 2024, we had no outstanding commercial paper and no borrowings under our revolving credit facility.
As of February 1, 2025, we had no outstanding commercial paper and no borrowings under our revolving credit facility.
These measures should not be reviewed in isolation or considered as a substitute for our financial results as reported in accordance with GAAP. ​ We calculate FIFO gross margin as FIFO gross profit divided by sales. FIFO gross profit is calculated as sales less merchandise costs, including advertising, warehousing, and transportation expenses, but excluding the Last-In, First-Out (“LIFO”) charge.
These measures should not be reviewed in isolation or considered as a substitute for our financial results as reported in accordance with GAAP. ​ We calculate FIFO gross margin as FIFO gross profit divided by sales.
We own 33 food production plants, primarily bakeries and dairies, which supply approximately 30% of Our Brands units and 43% of the grocery category Our Brands units sold in our supermarkets; the remaining Our Brands items are produced to our strict specifications by outside manufacturers. ​ Our Data ​ We are evolving into a more diverse business.
We own 33 food production plants, primarily bakeries and dairies, which supply approximately 31% of Our Brands units sold in our supermarkets; the remaining Our Brands items are produced to our strict specifications by outside manufacturers. ​ Our Data ​ The traffic and data generated by our retail business, including pharmacies and fuel centers, is enabling this transformation.
The 2023 tax rate differed from the federal statutory rate due to the effect of state income taxes and non-deductible portion of opioid settlement charges, partially offset by the benefit from share-based payments and the utilization of tax credits.
The 2024 tax rate differed from the federal statutory rate due to a tax benefit from recognizing deferred tax assets related to the sale of Kroger Specialty Pharmacy, the benefit from share-based payments and the utilization of tax credits, partially offset by the effect of state income taxes.
For additional information about the proposed merger with Albertsons, see Note 16 to the Consolidated Financial Statements. ​ For additional information about our debt activity in 2023, see Note 5 to the Consolidated Financial Statements. ​ Factors Affecting Liquidity ​ We can currently borrow on a daily basis approximately $2.75 billion under our commercial paper program.
We believe we have adequate coverage of our debt covenants to continue to maintain our current investment grade debt ratings and to respond effectively to competitive conditions . ​ For additional information about our debt activity in 2024, see Note 5 to the Consolidated Financial Statements. ​ 46 Factors Affecting Liquidity ​ We can currently borrow on a daily basis approximately $2.75 billion under our commercial paper program.
(2) This column represents the percentage change in 2023 adjusted sales compared to 2022. (3) This column represents the percentage change in 2022 compared to 2021. (4) Digital sales are included in the “Total sales to retail customers without fuel” line above. Digital sales include products ordered online and picked up at our stores and our Delivery and Ship solutions.
(2) The 2023 adjusted column represents the items presented in the 2023 column adjusted to remove the Extra Week. (3) This column represents the percentage change in 2023 adjusted sales compared to 2022. (4) Digital sales are included in the “Total sales to retail customers without fuel” line above.
Generally, fair value is determined using a multiple of earnings, or discounted projected future cash flows, and we compare fair value to the carrying value of a reporting unit for purposes of identifying potential impairment. We base projected future cash flows on management’s knowledge of the current operating environment and expectations for the future.
We perform reviews of each of our operating divisions and other consolidated entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is determined using a multiple of earnings, or discounted projected future cash flows, and we compare fair value to the carrying value of a reporting unit for purposes of identifying potential impairment.
The excess of the purchase price over fair values of identifiable assets and liabilities is recorded as goodwill. See Note 2 for further information about goodwill. ​ 39 ​ Goodwill ​ Our goodwill totaled $2.9 billion as of February 3, 2024.
The excess of the purchase price over fair values of identifiable assets and liabilities is recorded as goodwill. See Note 2 for further information about goodwill. ​ Goodwill ​ Our goodwill totaled $2.7 billion as of February 1, 2025. We review goodwill for impairment in the fourth quarter of each year and also upon the occurrence of triggering events.
In fiscal 2023, the terminated agreement had a positive effect on the FIFO gross margin rate, excluding fuel and the Extra Week, and a negative effect on the OG&A rate, excluding fuel, the Extra Week and the 2023 and 2022 Adjusted Items, as defined below.
In 2024, the sale of Kroger Specialty Pharmacy had a positive effect on the FIFO gross margin rate, excluding rent, depreciation and amortization, fuel and the Extra Week and a negative effect on the OG&A rate, excluding fuel, the Extra Week and the 2024 and 2023 Adjusted Items, as defined below. It had no material effect on operating profit.
(7) The pre-tax adjustment for merger related costs was $316 in 2023 and $44 in 2022. Merger related costs primarily include third-party professional fees and credit facility fees associated with the proposed merger with Albertsons. (8) The pre-tax adjustment for opioid settlement charges was $1,475 in 2023 and $85 in 2022.
(6) The pre-tax adjustment for impairment of intangible assets was $30. (7) The pre-tax adjustment for property losses was $25. (8) The pre-tax adjustments for merger related costs were $684 in 2024, $316 in 2023 and $44 in 2022. Merger related costs primarily include third-party professional fees and credit facility fees associated with the terminated merger with Albertsons.
We recorded asset impairments in the normal course of business totaling $69 million in 2023 and $68 million in 2022. We record costs to reduce the carrying value of long-lived assets in the Consolidated Statements of Operations as OG&A expense. ​ The factors that most significantly affect the impairment calculation are our estimates of future cash flows.
We record costs to reduce the carrying value of long-lived assets in the Consolidated Statements of Operations as OG&A expense. ​ The factors that most significantly affect the impairment calculation are our estimates of future cash flows. Our cash flow projections look several years into the future and include assumptions on variables such as inflation, the economy and competition.
The traffic and data generated by our retail business, including pharmacies and fuel centers, is enabling this transformation. Kroger serves approximately 62 million households annually and because of our rewards program, over 95% of customer transactions are tethered to a Kroger loyalty card.
Kroger serves approximately 63 million households annually and because of our rewards program, over 95% of customer transactions are tethered to a Kroger loyalty card.
The decrease in the average retail fuel price was caused by a decrease in the product cost of fuel. ​ Total sales increased in 2022, compared to 2021, by 7.5%. The increase was primarily due to increases in supermarket fuel sales and total sales to retail customers without fuel.
Total supermarket fuel sales decreased 8.4%, compared to 2023 adjusted supermarket fuel sales, primarily due to a decrease in the average retail fuel price of 5.9% and a decrease in fuel gallons sold of 2.6%. The decrease in the average retail fuel price was caused by a decrease in the product cost of fuel.
The increase in 2023, compared to 2022, resulted primarily from planned investments in associates, costs related to strategic investments that are expected to drive future growth and the effect of our terminated agreement with Express Scripts and the 2023 OG&A Adjusted Items, partially offset by the 2022 OG&A Adjusted Items, broad-based cost savings initiatives that drive administrative efficiencies, store productivity and sourcing cost reductions and lower incentive plan costs. ​ Our fuel sales lower our OG&A rate, as a percentage of sales, due to the very low OG&A rate, as a percentage of sales, of fuel sales compared to non-fuel sales.
The decrease in 2024, compared to 2023, resulted primarily from the 2023 OG&A Adjusted Items and continued execution of broad-based cost savings initiatives that drive administrative efficiencies, including store productivity, partially offset by the effect of decreased fuel sales, which increases our OG&A rate, as a percentage of sales, the sale of our Kroger Specialty Pharmacy business, which has a lower OG&A rate to sales, increased incentive plan costs, an increase in costs due to the severity of general liability claims, planned investment in associates and the 2024 OG&A Adjusted Items. ​ Our fuel sales lower our OG&A rate, as a percentage of sales, due to the very low OG&A rate, as a percentage of sales, of fuel sales compared to non-fuel sales.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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To help manage or minimize the effect of commodity price risk exposure on our operations, we use a combination of pricing features embedded within supply contracts, such as fixed-price and price-to-be-fixed contracts, and have the ability to increase or decrease retail prices to our customers as commodity prices change. ​ We are exposed to changes in the prices of diesel and unleaded fuel.
To help manage or minimize the effect of commodity price risk exposure on our operations, we use a combination of pricing features embedded within supply contracts, such as fixed-price and price-to-be-fixed contracts, and have the ability to increase or decrease retail prices to our customers as commodity prices change. ​ 50 We are exposed to changes in the prices of diesel and unleaded fuel.
Because of this, our operating results may be affected should the market price of fuel suddenly change by a significant amount, which can affect our operating results either positively or negatively in the short-term. ​ 49 ​ We manage our exposure to diesel fuel price changes through the strategic use of diesel fuel hedge contracts.
Because of this, our operating results may be affected should the market price of fuel suddenly change by a significant amount, which can affect our operating results either positively or negatively in the short-term. ​ We manage our exposure to diesel fuel price changes through the strategic use of diesel fuel hedge contracts.
Declines in the fair value of plan assets could diminish the funded status of our defined benefit pension plans and potentially increase our requirement to make contributions to these plans. For additional details, s ee Note 14 to the Consolidated Financial Statements. ​ 50 ​
Declines in the fair value of plan assets could diminish the funded status of our defined benefit pension plans and potentially increase our requirement to make contributions to these plans. For additional details, s ee Note 14 to the Consolidated Financial Statements. ​ 51
The weighted average interest rate calculation excludes the effects of debt discounts and deferred financing costs. ​ Based on our year-end 2023 variable rate debt levels, a 10 percent change in interest rates would be immaterial.
The weighted average interest rate calculation excludes the effects of debt discounts and deferred financing costs. ​ Based on our year-end 2024 variable rate debt levels, a 10 percent change in interest rates would be immaterial.
Interest rates reflect the weighted average rate for the outstanding instruments. The variable rate debt is based on a reference rate using the forward yield curve as of February 3, 2024 and January 28, 2023. The Fair Value column includes the fair value of our debt instruments as of February 3, 2024 and January 28, 2023.
Interest rates reflect the weighted average rate for the outstanding instruments. The variable rate debt is based on a reference rate using the forward yield curve as of February 1, 2025 and February 3, 2024. The Fair Value column includes the fair value of our debt instruments as of February 1, 2025 and February 3, 2024.
The guidelines may change as our business needs dictate. 48 ​ The tables below provide information about our underlying debt portfolio as of February 3, 2024 and January 28, 2023. The amounts shown for each year represent the contractual maturities of long-term debt, excluding finance leases, as of February 3, 2024 and January 28, 2023.
The guidelines may change as our business needs dictate. ​ The tables below provide information about our underlying debt portfolio as of February 1, 2025 and February 3, 2024. The amounts shown for each year represent the contractual maturities of long-term debt, excluding finance leases, as of February 1, 2025 and February 3, 2024.
This is achieved by investing more of the plan assets in fixed income instruments to more closely match the duration of the plan liability. As of February 3, 2024, our defined benefit pension plans had total investment assets of $2.4 billion. As of January 28. 2023, our defined benefit pension plans had total investment assets of $2.5 billion.
This is achieved by investing more of the plan assets in fixed income instruments to more closely match the duration of the plan liability. As of February 1, 2025, our defined benefit pension plans had total investment assets of $2.3 billion. As of February 3, 2024, our defined benefit pension plans had total investment assets of $2.4 billion.
See Notes 5, 6 and 7 to the Consolidated Financial Statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ February 3, 2024 ​ ​ Expected Year of Maturity ​ 2024 2025 2026 2027 2028 Thereafter Total Fair Value ​ ​ (in millions) Debt ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed rate principal payments (1) ​ $ (23) ​ $ (19) ​ $ (1,311) ​ $ (616) ​ $ (625) ​ $ (7,521) ​ $ (10,115) ​ $ (9,256) ​ Average interest rate (1) ​ 2.41 % 3.03 % 3.00 % 3.68 % 4.50 % 4.56 % ​ ​ ​ ​ ​ ​ Variable rate principal payments ​ $ (9) ​ $ (81) ​ $ — ​ $ — ​ $ (22) ​ $ (33) ​ $ (145) ​ $ (145) ​ Average interest rate ​ 7.19 % 3.07 % — ​ — ​ 7.94 % 7.19 % ​ ​ ​ ​ ​ ​ (1) The fixed rate principal payments exclude debt discounts and deferred financing costs of $73 million, of which $7 million is current and $66 million is long-term.
The weighted average interest rate calculation excludes the effects of debt discounts and deferred financing costs. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ February 3, 2024 ​ ​ Expected Year of Maturity ​ 2024 2025 2026 2027 2028 Thereafter Total Fair Value ​ ​ (in millions) Debt ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed rate principal payments (1) ​ $ (23) ​ $ (19) ​ $ (1,311) ​ $ (616) ​ $ (625) ​ $ (7,521) ​ $ (10,115) ​ $ (9,256) ​ Average interest rate (1) ​ 2.41 % 3.03 % 3.00 % 3.68 % 4.50 % 4.56 % ​ ​ ​ ​ ​ ​ Variable rate principal payments ​ $ (9) ​ $ (81) ​ $ — ​ $ — ​ $ (22) ​ $ (33) ​ $ (145) ​ $ (145) ​ Average interest rate ​ 7.19 % 3.07 % — ​ — ​ 7.94 % 7.19 % ​ ​ ​ ​ ​ ​ (1) The fixed rate principal payments exclude debt discounts and deferred financing costs of $73 million, of which $7 million is current and $66 million is long-term.
The interest rate derivatives we use are straightforward instruments with liquid markets. ​ As of February 3, 2024 and January 28, 2023, we maintained five forward-starting interest rate swap agreements with a maturity date of August 1, 2027 with an aggregate notional amount totaling $5.4 billion.
The interest rate derivatives we use are straightforward instruments with liquid markets. ​ As of February 1, 2025, we had no forward-starting interest rate swap agreements outstanding. ​ As of February 3, 2024, we maintained five forward-starting interest rate swap agreements with a maturity date of August 1, 2027 with an aggregate notional amount totaling $5.4 billion.
F air value adjustments flow through “Gain (loss) on investments” in our Consolidated Statements of Operations . The change in fair value of certain Level 1 investments resulted in an unrealized loss of $66 million in 2023, $586 million in 2022 and $821 million in 2021.
F air value adjustments flow through “(Loss) gain on investments” in our Consolidated Statements of Operations . The change in fair value of certain Level 1 investments resulted in an unrealized loss of $116 million in 2024, $66 million in 2023 and $586 million in 2022.
The fixed interest rates for these forward-starting interest rate swaps range from 3.00% to 3.78%. The variable rate component on the forward-starting interest rate swaps is the Secured Overnight Financing Rate (“SOFR”). ​ A notional amount of $2.4 billion of these forward-starting interest rate swaps was designated as a cash-flow hedge as defined by GAAP.
The variable rate component on the forward-starting interest rate swaps is the Secured Overnight Financing Rate (“SOFR”). ​ A notional amount of $2.4 billion of these forward-starting interest rate swaps was designated as a cash-flow hedge as defined by GAAP.
We had no outstanding interest rate derivatives classified as fair value hedges as of February 3, 2024 or January 28, 2023.
We had no outstanding interest rate derivatives classified as fair value hedges as of February 1, 2025 or February 3, 2024.
A forward-starting interest rate swap is an agreement that effectively hedges the variability in future benchmark interest payments attributable to changes in interest rates on the forecasted issuance of fixed-rate debt. We entered into these forward-starting interest rate swaps in order to lock in fixed interest rates on our forecasted issuances of debt.
A forward-starting interest rate swap is an agreement that effectively hedges the variability in future benchmark interest payments attributable to changes in interest rates on the forecasted issuance of fixed-rate debt.
As of February 3, 2024, the fair value of the interest rate swaps designated as cash flow hedges was recorded in “Other assets” for $125 million and accumulated other comprehensive income for $95 million, net of tax.
As of February 3, 2024, the fair value of the interest rate swaps designated as cash flow hedges was recorded in “Other assets” for $125 million and accumulated other comprehensive income for $95 million, net of tax. ​ The remainder of the notional amount of $3.0 billion of the forward-starting interest rate swaps was not designated as a cash-flow hedge.
As of February 3, 2024, our outstanding diesel fuel hedge contracts had a total notional amount of $48 million. The fair value and effect to the Consolidated Statement of Operations of these contracts is insignificant. ​ We have entered into fixed price contracts to purchase electricity and natural gas for a portion of our energy needs.
The fair value and effect to the Consolidated Statement of Operations of these contracts is insignificant. ​ We have entered into fixed price contracts to purchase electricity and natural gas for a portion of our energy needs.
As of February 3, 2024, the fair value of our investments in certain Level 1 financial instruments was $578 million. As of January 28, 2023, the fair value of our investment in certain Level 1 financial instrument was $401 million. As of February 3, 2024, a 10% change in the fair value of these investments would be approximately $58 million.
As of February 1, 2025, the fair value of our investments in certain Level 1 financial instruments was $183 million. As of February 1, 2025, a 10% change in the fair value of these investments would be approximately $18 million.
As of January 28, 2023, we had no commodity derivative contracts outstanding. ​ Equity Investment Risk ​ We are exposed to market price volatility for our equity investments in certain financial instruments, measured using Level 1 inputs, which are measured at fair value through net earnings.
We expect to take delivery of these commitments in the normal course of business, and, as a result, these contracts qualify as normal purchases. ​ As of February 1, 2025 and February 3, 2024, we had no commodity derivative contracts outstanding other than the diesel fuel hedge contracts described above. ​ Equity Investment Risk ​ We are exposed to market price volatility for our equity investments in certain financial instruments, measured using Level 1 inputs, which are measured at fair value through net earnings.
The weighted average interest rate calculation excludes the effects of debt discounts and deferred financing costs. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 28, 2023 ​ ​ Expected Year of Maturity ​ 2023 2024 2025 2026 2027 Thereafter Total Fair Value ​ ​ (in millions) Debt ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed rate principal payments (1) ​ $ (1,127) ​ $ (10) ​ $ (10) ​ $ (1,392) ​ $ (612) ​ $ (8,085) ​ $ (11,236) ​ $ (10,455) ​ Average interest rate (1) ​ 3.89 % 2.67 % 2.68 % 3.04 % 3.68 % 4.56 % ​ ​ ​ ​ ​ ​ Variable rate principal payments ​ $ (35) ​ $ (22) ​ $ (81) ​ $ — ​ $ — ​ $ — ​ $ (138) ​ $ (138) ​ Average interest rate ​ 6.32 % 7.07 % 1.70 % — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ (1) The fixed rate principal payments exclude debt discounts and deferred financing costs of $82 million, of which $9 million is current and $73 million is long-term.
See Notes 5, 6 and 7 to the Consolidated Financial Statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ February 1, 2025 ​ ​ Expected Year of Maturity ​ 2025 2026 2027 2028 2029 Thereafter Total Fair Value ​ ​ (in millions) Debt ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed rate principal payments (1) ​ $ (25) ​ $ (1,311) ​ $ (616) ​ $ (663) ​ $ (552) ​ $ (12,735) ​ $ (15,902) ​ $ (14,497) ​ Average interest rate (1) ​ 2.10 % 3.00 % 3.68 % 4.43 % 7.69 % 4.79 % ​ ​ ​ ​ ​ ​ Variable rate principal payments ​ $ (90) ​ $ — ​ $ — ​ $ (22) ​ $ (38) ​ $ — ​ $ (150) ​ $ (151) ​ Average interest rate ​ 2.87 % — ​ — ​ 7.93 % 6.17 % — ​ ​ ​ ​ ​ ​ ​ (1) The fixed rate principal payments exclude debt discounts and deferred financing costs of $143 million, of which $11 million is current and $132 million is long-term.
As of January 28, 2023, the fair value of the interest rate swaps designated as cash flow hedges was recorded in “Other long-term liabilities” for $116 million and accumulated other comprehensive loss for $89 million, net of tax. ​ The remainder of the notional amount of $3.0 billion of the forward-starting interest rate swaps was not designated as a cash-flow hedge.
For the notional amount of $2.4 billion of these forward-starting interest rate swaps that was designated as a cash-flow hedge, the unamortized gain of $48 million, $36 million net of tax, has been deferred in accumulated other comprehensive income and will be amortized to earnings as the interest payments are made.
In 2023, we recognized an unrealized gain of $174 million that is included in “Gain (loss) on investments” in our Consolidated Statements of Operations. As of January 28, 2023, the fair value of these swaps was recorded in “Other long-term liabilities” for $142 million.
In 2023, we recognized an unrealized gain of $174 million that is included in “(Loss) gain on investments” in our Consolidated Statements of Operations. ​ In 2024, we terminated these five forward-starting interest rate swaps with a maturity date of August 1, 2027 and an aggregate notional amount totaling $5.4 billion.
Removed
In 2022, we recognized an unrealized loss of $142 million related to these swaps that is included in “Gain (loss) on investments” in our Consolidated Statements of Operations. ​ Annually, we review with the Finance Committee of our Board of Directors compliance with the guidelines described above.
Added
We entered into these forward-starting interest rate swaps in order to hedge the variability in future benchmark interest payments attributable to changing interest rate on the forecasted issuance of fixed-rate debt that was issued in 2024. The fixed interest rates for these forward-starting interest rate swaps range from 3.00% to 3.78%.
Removed
We expect to take delivery of these commitments in the normal course of business, and, as a result, these contracts qualify as normal purchases. ​ As of February 3, 2024, we had no commodity derivative contracts outstanding other than the diesel fuel hedge contracts described above.
Added
For the remainder of the notional amount of $3.0 billion of the forward-starting interest rate swaps not designated as a cash-flow hedge, we recognized a realized loss of $55 million that is included in “(Loss) gain on investments” in our Consolidated Statements of Operations. 49 In 2024, we entered into two 10-year treasury lock agreements with an aggregate notional amount of $2.1 billion and a weighted-average interest rate of 3.91% and two 30-year treasury lock agreements with an aggregate notional amount of $3.3 billion and a weighted-average interest rate of 4.11%.
Added
These treasury locks were an agreement used to hedge the U.S. Treasury benchmark interest rate associated with future interest payments on the forecasted issuance of fixed-rate debt that was issued in 2024. These treasury locks were designated as cash-flow hedges as defined by GAAP.
Added
Accordingly, the changes in fair value of these treasury locks are recorded to accumulated other comprehensive income and reclassified into net earnings when the hedged transaction affects net earnings. In 2024, we terminated these treasury lock agreements.
Added
The unamortized loss of $56 million, $43 million net of tax, has been deferred in accumulated other comprehensive loss and will be amortized to earnings as the interest payments are made. ​ Annually, we review with the Finance Committee of our Board of Directors compliance with the guidelines described above.
Added
As of February 1, 2025, our outstanding diesel fuel hedge contracts had a total notional amount of $32 million. As of February 3, 2024, our outstanding diesel fuel hedge contracts had a total notional amount of $48 million.