Document and Entity Information
Document and Entity Information - $ / shares | 4 Months Ended | |
May 22, 2021 | Jun. 22, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | May 22, 2021 | |
Entity File Number | 1-303 | |
Entity Registrant Name | The Kroger Co. | |
Entity Incorporation, State or Country Code | OH | |
Entity Tax Identification Number | 31-0345740 | |
Entity Address, Address Line One | 1014 Vine Street | |
Entity Address, City or Town | Cincinnati | |
Entity Address, State or Province | OH | |
Entity Address, Postal Zip Code | 45202 | |
City Area Code | 513 | |
Local Phone Number | 762-4000 | |
Title of 12(b) Security | Common, $1.00 Par Value | |
Trading Symbol | KR | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 747,238,079 | |
Entity Listing, Par Value Per Share | $ 1 | |
Current Fiscal Year End Date | --01-29 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0000056873 | |
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 4 Months Ended | |
May 22, 2021 | May 23, 2020 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Sales | $ 41,298 | $ 41,549 |
Operating expenses | ||
Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below | 31,947 | 31,454 |
Operating, general and administrative | 7,424 | 7,671 |
Rent | 261 | 273 |
Depreciation and amortization | 861 | 825 |
Operating profit | 805 | 1,326 |
Other income (expense) | ||
Interest expense | (165) | (174) |
Non-service component of company-sponsored pension plan costs | 18 | 11 |
(Loss) gain on investments | (479) | 422 |
Net earnings before income tax expense | 179 | 1,585 |
Income tax expense | 36 | 373 |
Net earnings including noncontrolling interests | 143 | 1,212 |
Net income attributable to noncontrolling interests | 3 | |
Net earnings attributable to The Kroger Co. | $ 140 | $ 1,212 |
Net earnings attributable to The Kroger Co. per basic common share | $ 0.18 | $ 1.53 |
Average number of common shares used in basic calculation | 752 | 780 |
Net earnings attributable to The Kroger Co. per diluted common share | $ 0.18 | $ 1.52 |
Average number of common shares used in diluted calculation | 760 | 788 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 4 Months Ended | ||
May 22, 2021 | May 23, 2020 | ||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net earnings including noncontrolling interests | $ 143 | $ 1,212 | |
Other comprehensive income (loss) | |||
Change in pension and other postretirement defined benefit plans, net of income tax | [1] | 1 | 3 |
Unrealized gains and losses on cash flow hedging activities, net of income tax | [2] | (22) | |
Amortization of unrealized gains and losses on cash flow hedging activities, net of income tax | [3] | 2 | 1 |
Total other comprehensive income (loss) | 3 | (18) | |
Comprehensive income | 146 | 1,194 | |
Comprehensive income attributable to noncontrolling interests | 3 | ||
Comprehensive income attributable to The Kroger Co. | $ 143 | $ 1,194 | |
[1] | Amount is net of tax of $1 for the first quarter of 2021 and $2 for the first quarter of 2020. | ||
[2] | Amount is net of tax of ($11) for the first quarter of 2020. | ||
[3] | Amount is net of tax of $1 for the first quarters of 2021 and 2020. |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 4 Months Ended | |
May 22, 2021 | May 23, 2020 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Change in pension and other postretirement defined benefit plans, income tax | $ 1 | $ 2 |
Unrealized gains and losses on cash flow hedging activities, income tax | (11) | |
Amortization of unrealized gains and losses on cash flow hedging activities, income tax | $ 1 | $ 1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | May 22, 2021 | Jan. 30, 2021 |
Current assets | ||
Cash and temporary cash investments | $ 2,309 | $ 1,687 |
Store deposits in-transit | 1,011 | 1,096 |
Receivables | 1,936 | 1,781 |
FIFO inventory | 8,177 | 8,436 |
LIFO reserve | (1,410) | (1,373) |
Prepaid and other current assets | 522 | 876 |
Total current assets | 12,545 | 12,503 |
Property, plant and equipment, net | 23,057 | 22,386 |
Operating lease assets | 6,663 | 6,796 |
Intangibles, net | 978 | 997 |
Goodwill | 3,076 | 3,076 |
Other assets | 2,492 | 2,904 |
Total Assets | 48,811 | 48,662 |
Current liabilities | ||
Current portion of long-term debt including obligations under finance leases | 1,150 | 911 |
Current portion of operating lease liabilities | 644 | 667 |
Trade accounts payable | 7,015 | 6,679 |
Accrued salaries and wages | 1,165 | 1,413 |
Other current liabilities | 5,236 | 5,696 |
Total current liabilities | 15,210 | 15,366 |
Long-term debt including obligations under finance leases | 12,974 | 12,502 |
Noncurrent operating lease liabilities | 6,385 | 6,507 |
Deferred income taxes | 1,541 | 1,542 |
Pension and postretirement benefit obligations | 507 | 535 |
Other long-term liabilities | 2,965 | 2,660 |
Total Liabilities | 39,582 | 39,112 |
Commitments and contingencies see Note 7 | ||
SHAREHOLDERS' EQUITY | ||
Preferred shares, $100 par per share, 5 shares authorized and unissued | ||
Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2021 and 2020 | 1,918 | 1,918 |
Additional paid-in capital | 3,505 | 3,461 |
Accumulated other comprehensive loss | (627) | (630) |
Accumulated earnings | 23,021 | 23,018 |
Common shares in treasury, at cost, 1,169 shares in 2021 and 1,160 shares in 2020 | (18,568) | (18,191) |
Total Shareholders' Equity - The Kroger Co. | 9,249 | 9,576 |
Noncontrolling interests | (20) | (26) |
Total Equity | 9,229 | 9,550 |
Total Liabilities and Equity | $ 48,811 | $ 48,662 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Millions | May 22, 2021 | Jan. 30, 2021 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred shares, per share (in dollars per share) | $ 100 | $ 100 |
Preferred shares, shares authorized | 5 | 5 |
Preferred shares, shares unissued | 5 | 5 |
Common shares, par per share (in dollars per share) | $ 1 | $ 1 |
Common shares, shares authorized | 2,000 | 2,000 |
Common shares, shares issued | 1,918 | 1,918 |
Common shares in treasury, shares | 1,169 | 1,160 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 4 Months Ended | |
May 22, 2021 | May 23, 2020 | |
Cash Flows from Operating Activities: | ||
Net earnings including noncontrolling interests | $ 143 | $ 1,212 |
Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities: | ||
Depreciation and amortization | 861 | 825 |
Operating lease asset amortization | 191 | 193 |
LIFO charge | 37 | 31 |
Stock-based employee compensation | 56 | 63 |
Company-sponsored pension plans | (14) | (5) |
Deferred income taxes | (2) | 76 |
Loss (gain) on the sale of assets | 9 | (12) |
Loss (gain) on investments | 479 | (422) |
Other | 100 | 108 |
Changes in operating assets and liabilities | ||
Store deposits in-transit | 84 | 37 |
Receivables | 14 | 90 |
Inventories | 205 | 756 |
Prepaid and other current assets | 369 | 63 |
Trade accounts payable | 341 | 783 |
Accrued expenses | (548) | 167 |
Income taxes receivable and payable | (175) | 276 |
Operating lease liabilities | (214) | (141) |
Other | 320 | 145 |
Net cash provided by operating activities | 2,256 | 4,245 |
Cash Flows from Investing Activities: | ||
Payments for property and equipment, including payments for lease buyouts | (820) | (698) |
Proceeds from sale of assets | 7 | 35 |
Other | (40) | (26) |
Net cash used by investing activities | (853) | (689) |
Cash Flows from Financing Activities: | ||
Proceeds from issuance of long-term debt | 504 | |
Payments on long-term debt including obligations under finance leases | (328) | (14) |
Net payments on commercial paper | (1,150) | |
Dividends paid | (138) | (128) |
Proceeds from issuance of capital stock | 31 | 57 |
Treasury stock purchases | (402) | (422) |
Proceeds from financing arrangement | 166 | |
Other | (110) | (76) |
Net cash used by financing activities | (781) | (1,229) |
Net increase in cash and temporary cash investments | 622 | 2,327 |
Cash and temporary cash investments: | ||
Beginning of year | 1,687 | 399 |
End of period | 2,309 | 2,726 |
Reconciliation of capital investments: | ||
Payments for property and equipment, including payments for lease buyouts | (820) | (698) |
Payments for lease buyouts | 5 | |
Changes in construction-in-progress payables | 154 | (62) |
Total capital investments, excluding lease buyouts | (666) | (755) |
Disclosure of cash flow information: | ||
Cash paid during the year for interest | 185 | 188 |
Cash paid during the year for income taxes | $ 205 | $ 18 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN SHAREOWNERS' EQUITY - USD ($) shares in Millions, $ in Millions | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Accumulated Earnings | Noncontrolling Interest | Total |
Balances at Feb. 01, 2020 | $ 1,918 | $ 3,337 | $ (16,991) | $ (640) | $ 20,978 | $ (29) | $ 8,573 |
Balances (in shares) at Feb. 01, 2020 | 1,918 | 1,130 | |||||
Issuance of common stock: | |||||||
Stock options exercised | $ 57 | 57 | |||||
Stock options exercised (in shares) | (4) | ||||||
Restricted stock issued | (20) | $ 10 | (10) | ||||
Treasury stock activity: | |||||||
Treasury stock purchases, at cost | $ (355) | (355) | |||||
Treasury stock purchases, at cost (in shares) | 12 | ||||||
Stock options exchanged | $ (67) | (67) | |||||
Stock options exchanged (in shares) | 2 | ||||||
Share-based employee compensation | 63 | 63 | |||||
Other comprehensive income (loss) net of tax | (18) | (18) | |||||
Other | 17 | $ (17) | 1 | 1 | |||
Cash dividends declared per common share | (128) | (128) | |||||
Net earnings (loss) including non-controlling interests | 1,212 | 1,212 | |||||
Balances at May. 23, 2020 | $ 1,918 | 3,397 | $ (17,363) | (658) | 22,062 | (28) | 9,328 |
Balances (in shares) at May. 23, 2020 | 1,918 | 1,140 | |||||
Issuance of common stock: | |||||||
Stock options exercised | $ 30 | 30 | |||||
Stock options exercised (in shares) | (1) | ||||||
Restricted stock issued | (109) | $ 57 | (52) | ||||
Restricted stock issued (in shares) | (3) | ||||||
Treasury stock activity: | |||||||
Treasury stock purchases, at cost | $ (212) | (212) | |||||
Treasury stock purchases, at cost (in shares) | 6 | ||||||
Stock options exchanged | $ (35) | (35) | |||||
Stock options exchanged (in shares) | 1 | ||||||
Share-based employee compensation | 44 | 44 | |||||
Other comprehensive income (loss) net of tax | 7 | 7 | |||||
Other | 47 | $ (47) | |||||
Cash dividends declared per common share | (137) | (137) | |||||
Net earnings (loss) including non-controlling interests | 819 | 1 | 820 | ||||
Balances at Aug. 15, 2020 | $ 1,918 | 3,379 | $ (17,570) | (651) | 22,744 | (27) | 9,793 |
Balances (in shares) at Aug. 15, 2020 | 1,918 | 1,143 | |||||
Issuance of common stock: | |||||||
Stock options exercised | $ 11 | 11 | |||||
Stock options exercised (in shares) | (1) | ||||||
Restricted stock issued | (2) | $ 1 | (1) | ||||
Treasury stock activity: | |||||||
Treasury stock purchases, at cost | $ (304) | (304) | |||||
Treasury stock purchases, at cost (in shares) | 9 | ||||||
Stock options exchanged | $ (16) | (16) | |||||
Stock options exchanged (in shares) | 1 | ||||||
Share-based employee compensation | 40 | 40 | |||||
Other comprehensive income (loss) net of tax | 30 | 30 | |||||
Other | 3 | $ (3) | |||||
Cash dividends declared per common share | (141) | (141) | |||||
Net earnings (loss) including non-controlling interests | 631 | 1 | 632 | ||||
Balances at Nov. 07, 2020 | $ 1,918 | 3,420 | $ (17,881) | (621) | 23,234 | (26) | 10,044 |
Balances (in shares) at Nov. 07, 2020 | 1,918 | 1,152 | |||||
Issuance of common stock: | |||||||
Stock options exercised | $ 29 | 29 | |||||
Stock options exercised (in shares) | (1) | ||||||
Restricted stock issued | (3) | $ 3 | |||||
Treasury stock activity: | |||||||
Treasury stock purchases, at cost | $ (325) | (325) | |||||
Treasury stock purchases, at cost (in shares) | 9 | ||||||
Stock options exchanged | $ (10) | (10) | |||||
Share-based employee compensation | 38 | 38 | |||||
Other comprehensive income (loss) net of tax | (9) | (9) | |||||
Other | 6 | (7) | (1) | (2) | |||
Cash dividends declared per common share | (139) | (139) | |||||
Net earnings (loss) including non-controlling interests | (77) | 1 | (76) | ||||
Balances at Jan. 30, 2021 | $ 1,918 | 3,461 | $ (18,191) | (630) | 23,018 | (26) | 9,550 |
Balances (in shares) at Jan. 30, 2021 | 1,918 | 1,160 | |||||
Issuance of common stock: | |||||||
Stock options exercised | $ 31 | 31 | |||||
Stock options exercised (in shares) | (2) | ||||||
Restricted stock issued | (35) | $ 17 | (18) | ||||
Restricted stock issued (in shares) | (1) | ||||||
Treasury stock activity: | |||||||
Treasury stock purchases, at cost | $ (338) | (338) | |||||
Treasury stock purchases, at cost (in shares) | 10 | ||||||
Stock options exchanged | $ (64) | (64) | |||||
Stock options exchanged (in shares) | 2 | ||||||
Share-based employee compensation | 56 | 56 | |||||
Other comprehensive income (loss) net of tax | 3 | 3 | |||||
Other | 23 | $ (23) | 1 | 3 | 4 | ||
Cash dividends declared per common share | (138) | (138) | |||||
Net earnings (loss) including non-controlling interests | 140 | 3 | 143 | ||||
Balances at May. 22, 2021 | $ 1,918 | $ 3,505 | $ (18,568) | $ (627) | $ 23,021 | $ (20) | $ 9,229 |
Balances (in shares) at May. 22, 2021 | 1,918 | 1,169 |
CONSOLIDATED STATEMENT OF CHA_2
CONSOLIDATED STATEMENT OF CHANGES IN SHAREOWNERS' EQUITY (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 4 Months Ended | |||
Jan. 30, 2021 | Nov. 07, 2020 | Aug. 15, 2020 | May 22, 2021 | May 23, 2020 | |
CONSOLIDATED STATEMENT OF CHANGES IN SHAREOWNERS' EQUITY | |||||
Other comprehensive income net of income tax | $ 4 | $ 3 | $ 2 | $ 2 | $ (8) |
Cash dividends declared per common share (in dollars per share) | $ 0.18 | $ 0.18 | $ 0.18 | $ 0.18 | $ 0.16 |
ACCOUNTING POLICIES
ACCOUNTING POLICIES | 4 Months Ended |
May 22, 2021 | |
ACCOUNTING POLICIES | |
ACCOUNTING POLICIES | 1. ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying financial statements include the consolidated accounts of The Kroger Co., its wholly-owned subsidiaries and other consolidated entities. The January 30, 2021 balance sheet was derived from audited financial statements and, due to its summary nature, does not include all disclosures required by generally accepted accounting principles (“GAAP”). Significant intercompany transactions and balances have been eliminated. References to the “Company” in these Consolidated Financial Statements mean the consolidated company. In the opinion of management, the accompanying unaudited Consolidated Financial Statements include adjustments, all of which are of a normal, recurring nature that are necessary for a fair statement of results of operations for such periods but should not be considered as indicative of results for a full year. The financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted, pursuant to SEC regulations. Accordingly, the accompanying Consolidated Financial Statements should be read in conjunction with the financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2021. The unaudited information in the Consolidated Financial Statements for the first quarter ended May 22, 2021 and May 23, 2020, includes the results of operations of the Company for the 16-week periods then ended. Fair Value Measurements Fair value measurements are classified and disclosed in one of the following three categories: Level 1 – Quoted prices are available in active markets for identical assets or liabilities; Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable; Level 3 – Unobservable pricing inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing an asset or liability. The Company records cash and temporary cash investments, store deposits in-transit, receivables, prepaid and other current assets, trade accounts payable, accrued salaries and wages and other current liabilities at approximated fair value. Certain other investments and derivatives are recorded as Level 1, 2 or 3 instruments. The equity investment in Ocado is measured at fair value through net earnings. The fair value of all shares owned, which is measured using Level 1 inputs, was as of May 22, 2021 and January 30, 2021, respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. An unrealized loss of for this level 1 investment was recorded in the first quarters of 2021 and 2020, respectively, and is included in “(Loss) gain on investments” in the Company’s Consolidated Statements of Operations. |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 4 Months Ended |
May 22, 2021 | |
DEBT OBLIGATIONS | |
DEBT OBLIGATIONS | 2. DEBT OBLIGATIONS Long-term debt consists of: May 22, January 30, 2021 2021 1.70% to 8.00% Senior Notes due through 2049 $ 11,602 $ 11,899 Other 1,121 511 Total debt, excluding obligations under finance leases 12,723 12,410 Less current portion (1,049) (844) Total long-term debt, excluding obligations under finance leases $ 11,674 $ 11,566 The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted market prices for the same or similar issues adjusted for illiquidity based on available market evidence. If quoted market prices were not available, the fair value was based upon the net present value of the future cash flow using the forward interest rate yield curve in effect at May 22, 2021 and January 30, 2021. At May 22, 2021, the fair value of total debt was $14,375 compared to a carrying value of $12,723 . At January 30, 2021, the fair value of total debt was $14,680 compared to a carrying value of $12,410 . Additionally, in the first quarter of 2021, the Company repaid $300 of senior notes bearing an interest rate of 2.60% using cash on hand. During the first quarter of 2021, the Company acquired 28 , previously leased, properties for a purchase price of $455 . Separately, the Company also entered into a transaction to sell those properties to a third party for total proceeds of $621 . Total cash proceeds received as a result of the transactions was $166 . The sale transaction did not qualify for sale-leaseback accounting treatment. As a result, the Company recorded property, plant and equipment for the $455 price paid and recorded a $621 financing obligation. The leases have a base term of 25 years and twelve option periods of five years each. The Company has the option to purchase the individual properties for fair market value at the end of the base term or at the end of any option period. The Company is obligated to repurchase the properties at the end of the base term for $300 if the lessor exercises its put option. |
BENEFIT PLANS
BENEFIT PLANS | 4 Months Ended |
May 22, 2021 | |
BENEFIT PLANS | |
BENEFIT PLANS | 3. BENEFIT PLANS The following table provides the components of net periodic benefit cost for the company-sponsored defined benefit pension plans and other post-retirement benefit plans for the first quarters of 2021 and 2020: First Quarter Ended Pension Benefits Other Benefits May 22, May 23, May 22, May 23, 2021 2020 2021 2020 Components of net periodic benefit cost: Service cost $ 3 $ 4 $ 1 $ 2 Interest cost 32 34 1 2 Expected return on plan assets (53) (52) — — Amortization of: Prior service cost — — (4) (4) Actuarial loss (gain) 12 11 (6) (2) Net periodic benefit cost $ (6) $ (3) $ (8) $ (2) The Company is not required to make any contributions to its company-sponsored pension plans in 2021, but may make contributions to the extent such contributions are beneficial to the Company. The Company did not make any contributions to its company-sponsored pension plans in the first quarters of 2021 and 2020. The Company contributed $95 and $96 to employee 401(k) retirement savings accounts in the first quarters of 2021 and 2020, respectively. During the first quarter of 2021, associates within the Fred Meyer and QFC divisions ratified an agreement for the transfer of liabilities from the Sound Retirement Trust to the UFCW Consolidated Pension Plan. The Company will transfer $449, $344 net of tax, in net accrued pension liabilities and prepaid escrow funds, on a pre-tax basis, to fulfill obligations for past service for associates and retirees. The agreement will be satisfied by cash installment payments to the UFCW Consolidated Pension Plan and are expected to be paid evenly over seven years . |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 4 Months Ended |
May 22, 2021 | |
EARNINGS PER COMMON SHARE | |
EARNINGS PER COMMON SHARE | 4. EARNINGS PER COMMON SHARE Net earnings attributable to The Kroger Co. per basic common share equal net earnings attributable to The Kroger Co. less income allocated to participating securities divided by the weighted-average number of common shares outstanding. Net earnings attributable to The Kroger Co. per diluted common share equal net earnings attributable to The Kroger Co. less income allocated to participating securities divided by the weighted-average number of common shares outstanding, after giving effect to dilutive stock options. The following table provides a reconciliation of net earnings attributable to The Kroger Co. and shares used in calculating net earnings attributable to The Kroger Co. per basic common share to those used in calculating net earnings attributable to The Kroger Co. per diluted common share: First Quarter Ended First Quarter Ended May 22, 2021 May 23, 2020 Per Per Earnings Shares Share Earnings Shares Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net earnings attributable to The Kroger Co. per basic common share $ 139 752 $ 0.18 $ 1,197 780 $ 1.53 Dilutive effect of stock options 8 8 Net earnings attributable to The Kroger Co. per diluted common share $ 139 760 $ 0.18 $ 1,197 788 $ 1.52 The Company had combined undistributed and distributed earnings to participating securities totaling $1 and $15 in the first quarters of 2021 and 2020, respectively. The Company had options outstanding for approximately 8 million and 11 million shares during the first quarters of 2021 and 2020, respectively, that were excluded from the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive effect on net earnings per share. |
LEASES AND LEASE-FINANCED TRANS
LEASES AND LEASE-FINANCED TRANSACTIONS | 4 Months Ended |
May 22, 2021 | |
LEASES AND LEASE-FINANCED TRANSACTIONS | |
LEASES AND LEASE-FINANCED TRANSACTIONS | 5. LEASES AND LEASE-FINANCED TRANSACTIONS On May 17, 2018, the Company entered into a Partnership Framework Agreement with Ocado International Holdings Limited and Ocado Group plc (“Ocado”). The Partnership Framework Agreement was amended in 2020. Under this agreement, Ocado will partner exclusively with the Company in the U.S., enhancing the Company’s digital and robotics capabilities in its distribution networks. In the first quarter of 2021, the Company opened its first two Kroger Delivery facilities in Monroe, Ohio and Groveland, Florida. The Company determined the arrangement with Ocado contains a lease of the robotic equipment used to fulfil customer orders. As a result, the Company established a finance lease when each facility began fulfilling orders to customers and used its 10 year incremental borrowing rate of 1.66% to calculate the lease liability. The base term of each lease is 10 years with options to renew at the Company’s sole discretion. The Company elected to combine the lease and non-lease elements in the contract. As a result, it will account for all payments to Ocado as lease payments. During the first quarter of 2021, the Company recorded finance lease assets of $267 and finance lease liabilities of $249 related to these two location openings. |
RECENTLY ISSUED ACCOUNTING STAN
RECENTLY ISSUED ACCOUNTING STANDARDS | 4 Months Ended |
May 22, 2021 | |
RECENTLY ISSUED ACCOUNTING STANDARDS | |
RECENTLY ISSUED ACCOUNTING STANDARDS | 6. RECENTLY ISSUED ACCOUNTING STANDARDS In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This standard provides optional expedients and exceptions for applying GAAP to certain contract modifications and hedging relationships that reference LIBOR or other reference rates expected to be discontinued. This guidance is effective upon issuance and can be applied through December 31, 2022. The Company may elect to apply the amendments for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020. The Company is currently evaluating the effect of this standard on its Consolidated Financial Statements. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 4 Months Ended |
May 22, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 7. COMMITMENTS AND CONTINGENCIES The Company continuously evaluates contingencies based upon the best available evidence. The Company believes that allowances for loss have been provided to the extent necessary and that its assessment of contingencies is reasonable. To the extent that resolution of contingencies results in amounts that vary from the Company’s estimates, future earnings will be charged or credited. The principal contingencies are described below: Insurance Litigation — Various claims and lawsuits arising in the normal course of business, including personal injury, contract disputes, employment discrimination, wage and hour and other regulatory claims are pending against the Company. Some of these suits purport or have been determined to be class actions and/or seek substantial damages. Although it is not possible at this time to evaluate the merits of all of these claims and lawsuits, nor their likelihood of success, the Company is of the belief that any resulting liability will not have a material effect on the Company’s financial position, results of operations, or cash flows. The Company continually evaluates its exposure to loss contingencies arising from pending or threatened litigation and believes it has made provisions where it is reasonably possible to estimate and when an adverse outcome is probable. Nonetheless, assessing and predicting the outcomes of these matters involves substantial uncertainties. Management currently believes that the aggregate range of loss for the Company’s exposure is not material to the Company. It remains possible that despite management’s current belief, material differences in actual outcomes or changes in management’s evaluation or predictions could arise that could have a material adverse effect on the Company’s financial condition, results of operations, or cash flows. Assignments — |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 4 Months Ended |
May 22, 2021 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS). | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table represents the changes in AOCI by component for the first quarters of 2021 and 2020: Pension and Cash Flow Postretirement Hedging Defined Benefit Activities (1) Plans (1) Total (1) Balance at February 1, 2020 $ (42) $ (598) $ (640) OCI before reclassifications (2) (22) — (22) Amounts reclassified out of AOCI (3) 1 3 4 Net current-period OCI (21) 3 (18) Balance at May 23, 2020 $ (63) $ (595) $ (658) Balance at January 30, 2021 $ (54) $ (576) $ (630) Amounts reclassified out of AOCI (3) 2 1 3 Net current-period OCI 2 1 3 Balance at May 22, 2021 $ (52) $ (575) $ (627) (1) All amounts are net of tax. (2) Net of tax of ($11 ) for cash flow hedging activities for the first quarter of 2020. (3) Net of tax of $1 for cash flow hedging activities and $2 for pension and postretirement defined benefit plans for the first quarter of 2020. Net of tax of $1 for cash flow hedging activities and $1 for pension and postretirement defined benefit plans for the first quarter of 2021. The following table represents the items reclassified out of AOCI and the related tax effects for the first quarters of 2021 and 2020: First Quarter Ended May 22, May 23, 2021 2020 Cash flow hedging activity items Amortization of gains and losses on cash flow hedging activities (1) $ 3 $ 2 Tax expense (1) (1) Net of tax 2 1 Pension and postretirement defined benefit plan items Amortization of amounts included in net periodic pension cost (2) 2 5 Tax expense (1) (2) Net of tax 1 3 Total reclassifications, net of tax $ 3 $ 4 (1) Reclassified from AOCI into interest expense. (2) Reclassified from AOCI into non-service component of company-sponsored pension plan costs. These components are included in the computation of net periodic pension cost (see Note 3 for additional details). |
INCOME TAXES
INCOME TAXES | 4 Months Ended |
May 22, 2021 | |
INCOME TAXES | |
INCOME TAXES | 9. INCOME TAXES The effective income tax rate was 20.2% in the first quarter of 2021 and 23.5% in the first quarter of 2020. The effective income tax rate for the first quarter of 2021 differed from the federal statutory rate due to the utilization of tax credits and deductions, partially offset by the effect of state income taxes. The effective income tax rate decreased in the first quarter of 2021, compared to the first quarter of 2020, due to lower pre-tax income in 2021, which increases the favorable impact of tax credits and deductions and reduces the impact of state income taxes. The effective income tax rate for the first quarter of 2020 differed from the federal statutory rate due to the effect of state income taxes, partially offset by the utilization of tax credits and deductions. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020, includes measures to assist companies in response to the COVID-19 pandemic. These measures include deferring the due dates of tax payments and other changes to income and non-income-based tax laws. As permitted under the CARES Act, the Company deferred the remittance of the employer portion of the social security tax. The social security tax provision requires that the deferred employment tax be paid over two years , with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022. During 2020, the Company deferred the employer portion of social security tax of |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 4 Months Ended |
May 22, 2021 | |
SUBSEQUENT EVENT. | |
SUBSEQUENT EVENT | 10. SUBSEQUENT EVENT On June 16, 2021, the Company’s Board of Directors approved a $1,000 share repurchase program. The previous share repurchase program was exhausted on June 11, 2021. |
ACCOUNTING POLICIES (Policies)
ACCOUNTING POLICIES (Policies) | 4 Months Ended |
May 22, 2021 | |
ACCOUNTING POLICIES | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying financial statements include the consolidated accounts of The Kroger Co., its wholly-owned subsidiaries and other consolidated entities. The January 30, 2021 balance sheet was derived from audited financial statements and, due to its summary nature, does not include all disclosures required by generally accepted accounting principles (“GAAP”). Significant intercompany transactions and balances have been eliminated. References to the “Company” in these Consolidated Financial Statements mean the consolidated company. In the opinion of management, the accompanying unaudited Consolidated Financial Statements include adjustments, all of which are of a normal, recurring nature that are necessary for a fair statement of results of operations for such periods but should not be considered as indicative of results for a full year. The financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted, pursuant to SEC regulations. Accordingly, the accompanying Consolidated Financial Statements should be read in conjunction with the financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2021. The unaudited information in the Consolidated Financial Statements for the first quarter ended May 22, 2021 and May 23, 2020, includes the results of operations of the Company for the 16-week periods then ended. |
Fair Value Measurements | Fair Value Measurements Fair value measurements are classified and disclosed in one of the following three categories: Level 1 – Quoted prices are available in active markets for identical assets or liabilities; Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable; Level 3 – Unobservable pricing inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing an asset or liability. The Company records cash and temporary cash investments, store deposits in-transit, receivables, prepaid and other current assets, trade accounts payable, accrued salaries and wages and other current liabilities at approximated fair value. Certain other investments and derivatives are recorded as Level 1, 2 or 3 instruments. The equity investment in Ocado is measured at fair value through net earnings. The fair value of all shares owned, which is measured using Level 1 inputs, was as of May 22, 2021 and January 30, 2021, respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. An unrealized loss of for this level 1 investment was recorded in the first quarters of 2021 and 2020, respectively, and is included in “(Loss) gain on investments” in the Company’s Consolidated Statements of Operations. |
DEBT OBLIGATIONS (Tables)
DEBT OBLIGATIONS (Tables) | 4 Months Ended |
May 22, 2021 | |
DEBT OBLIGATIONS | |
Schedule of long-term debt | May 22, January 30, 2021 2021 1.70% to 8.00% Senior Notes due through 2049 $ 11,602 $ 11,899 Other 1,121 511 Total debt, excluding obligations under finance leases 12,723 12,410 Less current portion (1,049) (844) Total long-term debt, excluding obligations under finance leases $ 11,674 $ 11,566 |
BENEFIT PLANS (Tables)
BENEFIT PLANS (Tables) | 4 Months Ended |
May 22, 2021 | |
BENEFIT PLANS | |
Schedule of components of net periodic benefit cost | First Quarter Ended |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 4 Months Ended |
May 22, 2021 | |
EARNINGS PER COMMON SHARE | |
Schedule of earnings per common and diluted shares | First Quarter Ended First Quarter Ended May 22, 2021 May 23, 2020 Per Per Earnings Shares Share Earnings Shares Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net earnings attributable to The Kroger Co. per basic common share $ 139 752 $ 0.18 $ 1,197 780 $ 1.53 Dilutive effect of stock options 8 8 Net earnings attributable to The Kroger Co. per diluted common share $ 139 760 $ 0.18 $ 1,197 788 $ 1.52 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 4 Months Ended |
May 22, 2021 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS). | |
Schedule of changes in AOCI by component | Pension and Cash Flow Postretirement Hedging Defined Benefit Activities (1) Plans (1) Total (1) Balance at February 1, 2020 $ (42) $ (598) $ (640) OCI before reclassifications (2) (22) — (22) Amounts reclassified out of AOCI (3) 1 3 4 Net current-period OCI (21) 3 (18) Balance at May 23, 2020 $ (63) $ (595) $ (658) Balance at January 30, 2021 $ (54) $ (576) $ (630) Amounts reclassified out of AOCI (3) 2 1 3 Net current-period OCI 2 1 3 Balance at May 22, 2021 $ (52) $ (575) $ (627) (1) All amounts are net of tax. (2) Net of tax of ($11 ) for cash flow hedging activities for the first quarter of 2020. (3) Net of tax of $1 for cash flow hedging activities and $2 for pension and postretirement defined benefit plans for the first quarter of 2020. Net of tax of $1 for cash flow hedging activities and $1 for pension and postretirement defined benefit plans for the first quarter of 2021. |
Schedule of items reclassified out of AOCI and the related tax effects | First Quarter Ended May 22, May 23, 2021 2020 Cash flow hedging activity items Amortization of gains and losses on cash flow hedging activities (1) $ 3 $ 2 Tax expense (1) (1) Net of tax 2 1 Pension and postretirement defined benefit plan items Amortization of amounts included in net periodic pension cost (2) 2 5 Tax expense (1) (2) Net of tax 1 3 Total reclassifications, net of tax $ 3 $ 4 (1) Reclassified from AOCI into interest expense. (2) Reclassified from AOCI into non-service component of company-sponsored pension plan costs. These components are included in the computation of net periodic pension cost (see Note 3 for additional details). |
ACCOUNTING POLICIES - DESCRIPTI
ACCOUNTING POLICIES - DESCRIPTION OF BUSINESS (Details) - USD ($) $ in Millions | 4 Months Ended | ||
May 22, 2021 | May 23, 2020 | Jan. 30, 2021 | |
FAIR VALUE MEASUREMENTS | |||
(Loss) gain on investments | $ (479) | $ 422 | |
Level 1 | |||
FAIR VALUE MEASUREMENTS | |||
(Loss) gain on investments | (479) | $ 422 | |
Other Assets | Level 1 | |||
FAIR VALUE MEASUREMENTS | |||
Fair value of equity securities | $ 1,329 | $ 1,808 |
DEBT OBLIGATIONS (Details)
DEBT OBLIGATIONS (Details) $ in Millions | 4 Months Ended | |
May 22, 2021USD ($)Optionproperty | Jan. 30, 2021USD ($) | |
Debt | ||
Total debt, excluding obligations under finance leases | $ 12,723 | $ 12,410 |
Less current portion | (1,049) | (844) |
Total long-term debt, excluding obligations under finance leases | 11,674 | 11,566 |
Fair value of total debt | $ 14,375 | 14,680 |
Number of leased propertied acquired | property | 28 | |
Purchase price | $ 455 | |
Proceeds from sale of lease assets | 621 | |
Proceeds from lease transactions | 166 | |
Finance lease assets | 455 | |
Lease financing obligation | $ 621 | |
Leases base term | 25 years | |
Number of options | Option | 12 | |
Renewal Term | 5 years | |
Obligation to repurchase the property | $ 300 | |
Senior Notes due through 2049 | ||
Debt | ||
Total debt, excluding obligations under finance leases | $ 11,602 | 11,899 |
Senior Notes due through 2049 | Minimum | ||
Debt | ||
Interest rate (as a percent) | 1.70% | |
Senior Notes due through 2049 | Maximum | ||
Debt | ||
Interest rate (as a percent) | 8.00% | |
Senior notes 2.60% due 2021 | ||
Debt | ||
Repayment of debt | $ 300 | |
Interest rate (as a percent) | 2.60% | |
Other | ||
Debt | ||
Total debt, excluding obligations under finance leases | $ 1,121 | $ 511 |
BENEFIT PLANS - COMPONENTS OF N
BENEFIT PLANS - COMPONENTS OF NET PERIODIC BENEFIT COSTS (Details) - USD ($) $ in Millions | 4 Months Ended | |
May 22, 2021 | May 23, 2020 | |
Pension Benefits | ||
Components of net periodic benefit cost: | ||
Service cost | $ 3 | $ 4 |
Interest cost | 32 | 34 |
Expected return on plan assets | (53) | (52) |
Amortization of: | ||
Actuarial loss (gain) | 12 | 11 |
Net periodic benefit cost | (6) | (3) |
Contributions into Fund | 0 | 0 |
Other Benefits | ||
Components of net periodic benefit cost: | ||
Service cost | 1 | 2 |
Interest cost | 1 | 2 |
Amortization of: | ||
Prior service cost | (4) | (4) |
Actuarial loss (gain) | (6) | (2) |
Net periodic benefit cost | $ (8) | $ (2) |
BENEFIT PLANS - DEFINED CONTRIB
BENEFIT PLANS - DEFINED CONTRIBUTION PLAN INFORMATION (Details) - USD ($) $ in Millions | 4 Months Ended | |
May 22, 2021 | May 23, 2020 | |
BENEFIT PLANS | ||
Contribution to 401(k) retirement savings accounts | $ 95 | $ 96 |
BENEFIT PLANS - MULTI EMPLOYER
BENEFIT PLANS - MULTI EMPLOYER PLAN (Details) - Pension Benefits $ in Millions | 4 Months Ended |
May 22, 2021USD ($) | |
Multiemployer Plans | |
Net accrued pension liabilities and prepaid escrow funds - before tax | $ 449 |
Net accrued pension liabilities and prepaid escrow funds - after tax | $ 344 |
Repayment period of commitments to transition reserve liability | 7 years |
EARNINGS PER COMMON SHARE (Deta
EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 4 Months Ended | |
May 22, 2021 | May 23, 2020 | |
EARNINGS PER COMMON SHARE | ||
Net earnings numerator (basic) | $ 139 | $ 1,197 |
Net earnings numerator (diluted) | $ 139 | $ 1,197 |
Average number of common shares used in basic calculation | 752 | 780 |
Net earnings attributable to The Kroger Co. per basic common share | $ 0.18 | $ 1.53 |
Dilutive effect of stock options (in shares) | 8 | 8 |
Average number of common shares used in diluted calculation | 760 | 788 |
Net earnings attributable to The Kroger Co. per diluted common share | $ 0.18 | $ 1.52 |
Undistributed and distributed earnings to participating securities | $ 1 | $ 15 |
Shares excluded from the earnings per share calculation due to anti-dilutive effect on earnings per share | 8 | 11 |
LEASES AND LEASE-FINANCED TRA_2
LEASES AND LEASE-FINANCED TRANSACTIONS (Details) $ in Millions | 4 Months Ended |
May 22, 2021USD ($)facilitylocation | |
LEASES AND LEASE-FINANCED TRANSACTIONS | |
Term - Finance | 25 years |
Finance lease assets | $ 455 |
Present value of lease liabilities | $ 621 |
Digital and Robotic Facilities | |
LEASES AND LEASE-FINANCED TRANSACTIONS | |
Number of delivery facilities | facility | 2 |
Percentage of increase in borrowing | 1.66% |
Term - Finance | 10 years |
Option to renew - Finance | true |
Finance lease assets | $ 267 |
Present value of lease liabilities | $ 249 |
Number of locations | location | 2 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - CHANGES IN AOCI BY COMPONENT (Details) - USD ($) $ in Millions | 3 Months Ended | 4 Months Ended | |||
Jan. 30, 2021 | Nov. 07, 2020 | Aug. 15, 2020 | May 22, 2021 | May 23, 2020 | |
Accumulated other comprehensive income (loss) | |||||
Balance at the beginning of the period | $ 9,576 | ||||
Amounts reclassified out of AOCI | 3 | $ 4 | |||
Total other comprehensive income (loss) | $ (9) | $ 30 | $ 7 | 3 | (18) |
Balance at the end of the period | 9,576 | 9,249 | |||
Accumulated Other Comprehensive Loss | |||||
Accumulated other comprehensive income (loss) | |||||
Balance at the beginning of the period | (658) | (630) | (640) | ||
OCI before reclassifications | (22) | ||||
Amounts reclassified out of AOCI | 3 | 4 | |||
Total other comprehensive income (loss) | (9) | $ 30 | 7 | 3 | (18) |
Balance at the end of the period | (630) | (627) | (658) | ||
Cash Flow Hedging Activities | |||||
Accumulated other comprehensive income (loss) | |||||
Balance at the beginning of the period | (63) | (54) | (42) | ||
OCI before reclassifications | (22) | ||||
Amounts reclassified out of AOCI | 2 | 1 | |||
Total other comprehensive income (loss) | 2 | (21) | |||
Balance at the end of the period | (54) | (52) | (63) | ||
OCI before reclassifications, tax | (11) | ||||
Amounts reclassified out of AOCI, tax | 1 | 1 | |||
Pension and Postretirement Defined Benefit Plans | |||||
Accumulated other comprehensive income (loss) | |||||
Balance at the beginning of the period | $ (595) | (576) | (598) | ||
Amounts reclassified out of AOCI | 1 | 3 | |||
Total other comprehensive income (loss) | 1 | 3 | |||
Balance at the end of the period | $ (576) | (575) | (595) | ||
Amounts reclassified out of AOCI, tax | $ 1 | $ 2 |
ACCUMULATED OTHER COMPREHENSI_4
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - ITEMS RECLASSIFIED OUT OF AOCI (Details) - USD ($) $ in Millions | 4 Months Ended | |
May 22, 2021 | May 23, 2020 | |
Reclassification out of AOCI and the related tax effects | ||
Amortization of gains and losses on cash flow hedging activities | $ 165 | $ 174 |
Income tax expense | 36 | 373 |
Net of tax | (140) | (1,212) |
Total reclassifications, net of tax | 3 | 4 |
Cash Flow Hedging Activities | ||
Reclassification out of AOCI and the related tax effects | ||
Tax expense | (1) | (1) |
Total reclassifications, net of tax | 2 | 1 |
Pension and Postretirement Defined Benefit Plans | ||
Reclassification out of AOCI and the related tax effects | ||
Amortization of amounts included in net periodic pension cost | 2 | 5 |
Tax expense | (1) | (2) |
Total reclassifications, net of tax | 1 | 3 |
Reclassification out of AOCI | Cash Flow Hedging Activities | ||
Reclassification out of AOCI and the related tax effects | ||
Amortization of gains and losses on cash flow hedging activities | 3 | 2 |
Income tax expense | (1) | (1) |
Net of tax | $ 2 | $ 1 |
INCOME TAXES - EFFECTIVE INCOME
INCOME TAXES - EFFECTIVE INCOME TAX RATE (Details) - USD ($) $ in Millions | 4 Months Ended | ||
May 22, 2021 | May 23, 2020 | Jan. 30, 2021 | |
Effective income tax rate (as a percent) | 20.20% | 23.50% | |
CARES Act- Deferred social security tax payment period | 2 years | ||
CARES Act - Deferred payment of social security taxes | $ 622 | ||
Other current liabilities | |||
CARES Act - Deferred payment of social security taxes | 311 | ||
Other long-term liabilities | |||
CARES Act - Deferred payment of social security taxes | $ 311 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) $ in Millions | Jun. 16, 2021USD ($) |
Subsequent event | |
SUBSEQUENT EVENTS | |
Share repurchase authorized amount | $ 1,000 |