[Company Information](index=1&type=section&id=Company%20Information) This section provides essential details about The Kroger Co., including its filing status and stock exchange listing [Filing Details](index=1&type=section&id=Filing%20Details) This report is The Kroger Co.'s quarterly report (Form 10-Q) for the period ended August 16, 2025, with the company designated as a large accelerated filer - The Kroger Co.'s quarterly report (Form 10-Q) is for the period ended August 16, 2025[2](index=2&type=chunk) - The company's stock ticker is KR, listed on the New York Stock Exchange[3](index=3&type=chunk) Company Filing Status | Metric | Status | | :--- | :--- | | Large Accelerated Filer | ☒ | | Accelerated Filer | ☐ | | Non-Accelerated Filer | ☐ | | Smaller Reporting Company | ☐ | | Emerging Growth Company | ☐ | [PART I – FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part contains Kroger's unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements.) This section presents The Kroger Co.'s unaudited consolidated financial statements, including statements of operations, comprehensive income, balance sheets, cash flows, and changes in shareholders' equity, along with related notes [Consolidated Statements of Operations](index=2&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section presents the company's consolidated statements of operations, detailing key financial performance metrics for the reported periods Key Financial Performance ($ million, except per share amounts) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Sales | $33,940 | $33,912 | $79,058 | $79,181 | | Operating Profit | $863 | $815 | $2,185 | $2,109 | | Net Earnings Attributable to The Kroger Co. | $609 | $466 | $1,475 | $1,413 | | Net Earnings Per Diluted Share Attributable to The Kroger Co. | $0.91 | $0.64 | $2.20 | $1.93 | - Net earnings attributable to The Kroger Co. increased by **30.7%** in the second quarter of 2025 and **4.4%** in the first two quarters year-over-year[6](index=6&type=chunk) - Diluted net earnings per share increased by **42.2%** in the second quarter of 2025 (from **$0.64** to **$0.91**) and **14.0%** in the first two quarters (from **$1.93** to **$2.20**)[6](index=6&type=chunk) [Consolidated Statements of Comprehensive Income](index=3&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) This section provides the consolidated statements of comprehensive income, outlining net earnings and other comprehensive income components Comprehensive Income Overview ($ million) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Net Earnings Including Noncontrolling Interests | $610 | $465 | $1,478 | $1,421 | | Total Other Comprehensive Income (Loss) | $4 | $(121) | $6 | $(51) | | Comprehensive Income Attributable to The Kroger Co. | $613 | $345 | $1,481 | $1,362 | - Total other comprehensive income (loss) shifted from a **$(121) million** loss in the second quarter of 2024 to a **$4 million** gain in the second quarter of 2025, significantly contributing to comprehensive income growth[8](index=8&type=chunk) [Consolidated Balance Sheets](index=4&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) This section presents the consolidated balance sheets, detailing the company's assets, liabilities, and equity at specific reporting dates Balance Sheet Highlights ($ million) | Metric | As of August 16, 2025 | As of February 1, 2025 | | :--- | :--- | :--- | | Total Assets | $53,590 | $52,616 | | Total Liabilities | $44,313 | $44,335 | | Total Equity | $9,277 | $8,281 | | Cash and Temporary Cash Investments | $4,883 | $3,959 | - Cash and temporary cash investments increased by **$924 million**, from **$3,959 million** as of February 1, 2025, to **$4,883 million** as of August 16, 2025[13](index=13&type=chunk) - The current portion of long-term debt, including financing lease obligations, significantly increased from **$272 million** to **$827 million**[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section outlines the consolidated statements of cash flows, categorizing cash movements from operating, investing, and financing activities Cash Flow Summary ($ million) | Metric | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $3,688 | $3,464 | | Net Cash Used in Investing Activities | $(2,107) | $(1,905) | | Net Cash Used in Financing Activities | $(657) | $(642) | | Net Increase in Cash and Temporary Cash Investments | $924 | $917 | - Net cash provided by operating activities increased by **6%** to **$3,688 million** in the first two quarters[15](index=15&type=chunk) - Net cash used in investing activities increased, primarily due to a decrease in proceeds from asset sales, from **$309 million** in the first two quarters of 2024 to **$36 million** in the first two quarters of 2025[15](index=15&type=chunk) [Consolidated Statements of Changes in Shareowners' Equity](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20SHAREOWNERS'%20EQUITY) This section details the consolidated statements of changes in shareholders' equity, showing movements in capital, retained earnings, and other comprehensive income Shareowners' Equity Changes ($ million) | Metric | As of February 1, 2025 | As of May 24, 2025 | As of August 16, 2025 | | :--- | :--- | :--- | :--- | | Total Shareowners' Equity Attributable to The Kroger Co. | $8,281 | $8,908 | $9,277 | | Net Earnings Including Noncontrolling Interests | N/A | $868 | $610 | | Cash Dividends Declared | N/A | $(211) | $(234) | - Total shareowners' equity attributable to The Kroger Co. increased from **$8,281 million** as of February 1, 2025, to **$9,277 million** as of August 16, 2025[20](index=20&type=chunk) - Net earnings (including noncontrolling interests) contributed **$868 million** in the first quarter of 2025 and **$610 million** in the second quarter[20](index=20&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=NOTES%20TO%20UNAUDITED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed notes to the unaudited consolidated financial statements, explaining accounting policies and specific financial items [1. ACCOUNTING POLICIES](index=8&type=section&id=1.%20ACCOUNTING%20POLICIES) This section outlines the significant accounting policies used in preparing the financial statements, including fair value measurements and financing arrangements - The financial statements are unaudited, include normal recurring adjustments, and should not be considered indicative of full-year results[24](index=24&type=chunk) - Fair value measurements are categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[26](index=26&type=chunk) - The company has accounts payable financing arrangements with third parties, with **$266 million** outstanding under these arrangements as of August 16, 2025[32](index=32&type=chunk) [2. DEBT OBLIGATIONS](index=10&type=section&id=2.%20DEBT%20OBLIGATIONS) This section details the company's debt obligations, including long-term debt, interest expenses, and hedging activities Long-Term Debt Overview ($ million) | Metric | As of August 16, 2025 | As of February 1, 2025 | | :--- | :--- | :--- | | 1.70% to 8.00% Senior Notes (due 2064) | $14,859 | $14,854 | | Total Debt Excluding Financing Lease Obligations | $15,946 | $15,909 | | Fair Value of Total Debt | $14,886 | $14,648 | | Carrying Value of Total Debt | $15,946 | $15,909 | - Interest expense on long-term debt for the first two quarters of 2025 was **$485 million**, higher than **$265 million** for the same period in 2024[36](index=36&type=chunk) - In the second quarter of 2024, the company terminated **$5,350 million** of forward interest rate swaps and entered into **$5,350 million** of treasury lock agreements to hedge future fixed-rate debt issuances[34](index=34&type=chunk)[35](index=35&type=chunk) [3. BENEFIT PLANS](index=11&type=section&id=3.%20BENEFIT%20PLANS) This section provides information on the company's employee benefit plans, including pension and other post-retirement benefits Net Periodic Benefit Cost (Income) ($ million) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Net Periodic Benefit Cost (Income) for Pension Benefits | $4 | $(1) | $8 | $0 | | Net Periodic Benefit Cost (Income) for Other Benefits | $2 | $0 | $2 | $(1) | - The company contributed **$175 million** to employee 401(k) retirement savings accounts in the first two quarters of 2025, consistent with the prior year[39](index=39&type=chunk) [4. EARNINGS PER COMMON SHARE](index=13&type=section&id=4.%20EARNINGS%20PER%20COMMON%20SHARE) This section presents the calculation of basic and diluted earnings per common share, including adjustments for dilutive securities Earnings Per Share Reconciliation ($ million, except per share amounts) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Basic Net Earnings Per Common Share Attributable to The Kroger Co. | $0.91 | $0.64 | $2.22 | $1.94 | | Dilutive Effect of Stock Options (shares) | 3 | 4 | 3 | 6 | | Diluted Net Earnings Per Common Share Attributable to The Kroger Co. | $0.91 | $0.64 | $2.20 | $1.93 | | Average Number of Common Shares Used in Diluted Calculation | 665 | 727 | 664 | 728 | - Approximately **1 million** shares (second quarter 2025) and **4 million** shares (second quarter 2024) of options were excluded from diluted net earnings per share calculation due to their anti-dilutive effect[41](index=41&type=chunk) [5. COMMITMENTS AND CONTINGENCIES](index=14&type=section&id=5.%20COMMITMENTS%20AND%20CONTINGENCIES) This section discloses the company's commitments and contingent liabilities, including legal settlements and merger-related litigation - Kroger has reached an agreement in principle to resolve most opioid claims, agreeing to pay up to **$1,200 million** to states and local governments, **$36 million** to Native American tribes, plus approximately **$177 million** in attorneys' fees[47](index=47&type=chunk) - As of August 16, 2025, the company recorded **$137 million** of the estimated opioid settlement liability in "Other current liabilities" and **$982 million** in "Other long-term liabilities"[52](index=52&type=chunk) - The merger agreement with Albertsons Companies, Inc. was terminated on December 11, 2024, with Albertsons suing Kroger for a **$600 million** termination fee and additional damages, which Kroger denies and has counterclaimed[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) [6. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)](index=17&type=section&id=6.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)) This section details changes in accumulated other comprehensive income (loss), reflecting non-owner changes in equity Accumulated Other Comprehensive Income (Loss) Changes ($ million, net of tax) | Metric | As of February 1, 2025 | As of August 16, 2025 | | :--- | :--- | :--- | | Balance of Accumulated Other Comprehensive Income (Loss) | $(621) | $(615) | | Net Other Comprehensive Income for the Period | $6 | $6 | - Net other comprehensive income for the period was a **$6 million** gain in the first two quarters of 2025, a significant improvement from a **$(51) million** loss in the same period of 2024[60](index=60&type=chunk) [7. LEASES AND LEASE-FINANCED TRANSACTIONS](index=19&type=section&id=7.%20LEASES%20AND%20LEASE-FINANCED%20TRANSACTIONS) This section provides information on the company's lease arrangements and lease-financed transactions, including related assets and liabilities - As of August 16, 2025, net financing lease assets related to the Ocado agreement were **$907 million**, with total financing lease liabilities of **$857 million** (**$111 million** current and **$746 million** non-current)[63](index=63&type=chunk) - The company is conducting a comprehensive review of its e-commerce business to improve profitability, with potential significant impacts on its consolidated financial statements[64](index=64&type=chunk) [8. SEGMENT REPORTING](index=19&type=section&id=8.%20SEGMENT%20REPORTING) This section presents financial information by business segment, focusing on the company's primary retail operations - Retail operations account for **99%** of the company's consolidated sales and represent its sole reportable segment[65](index=65&type=chunk) Retail Segment FIFO EBITDA ($ million) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Retail Segment FIFO EBITDA | $1,521 | $1,436 | $3,717 | $3,543 | - Retail segment FIFO EBITDA increased by **$85 million** (**5.9%**) in the second quarter of 2025 and by **$174 million** (**4.9%**) in the first two quarters[67](index=67&type=chunk) [9. INCOME TAXES](index=20&type=section&id=9.%20INCOME%20TAXES) This section details the company's income tax provisions, including effective tax rates and their contributing factors Effective Income Tax Rate | Period | 2025 Effective Tax Rate | 2024 Effective Tax Rate | | :--- | :--- | :--- | | Second Quarter | 21.0% | 24.1% | | First Two Quarters | 21.2% | 21.2% | - The effective income tax rate for the second quarter of 2025 decreased, primarily because state income taxes were fully offset by tax credits and deductions, including equity-based payment benefits[69](index=69&type=chunk) [10. RECENTLY ISSUED ACCOUNTING STANDARDS](index=22&type=section&id=10.%20RECENTLY%20ISSUED%20ACCOUNTING%20STANDARDS) This section discusses recently issued accounting standards and their potential impact on the company's financial statements - FASB issued ASU 2024-03, requiring disclosure of specific expense categories, effective for annual periods beginning after December 15, 2026, with the company currently evaluating its impact[70](index=70&type=chunk) - FASB issued ASU 2023-09, amending income tax disclosure guidance, effective for annual periods beginning after December 15, 2024, and is not expected to have a material impact on the company's consolidated financial statements[71](index=71&type=chunk) [11. SUBSEQUENT EVENT](index=22&type=section&id=11.%20SUBSEQUENT%20EVENT) This section addresses subsequent events occurring after the balance sheet date, with specific disclosures marked as pending - The subsequent event section is marked as "To Be Determined" (TBD), indicating no specific disclosure information at the time of report submission[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's detailed analysis of Kroger's financial condition and operating results, covering forward-looking statements, value creation, operating performance, and liquidity [CAUTIONARY STATEMENT](index=23&type=section&id=CAUTIONARY%20STATEMENT) This section highlights that forward-looking statements are subject to various uncertainties and risks that could cause actual results to differ materially - Forward-looking statements are subject to uncertainties including financial market conditions, labor negotiations, competition, economic trends (inflation/deflation), geopolitical events, regulatory changes, and litigation outcomes (e.g., Albertsons merger, opioid settlements)[75](index=75&type=chunk) - The company does not undertake any obligation to update the information contained in this report, unless required by applicable law[76](index=76&type=chunk) [OUR VALUE CREATION MODEL – DELIVERING CONSISTENT AND ATTRACTIVE TOTAL SHAREHOLDER RETURN](index=25&type=section&id=OUR%20VALUE%20CREATION%20MODEL%20%E2%80%93%20DELIVERING%20CONSISTENT%20AND%20ATTRACTIVE%20TOTAL%20SHAREHOLDER%20RETURN) This section outlines Kroger's value creation model, centered on its omnichannel retail business and strategic pillars to drive customer loyalty and shareholder returns - Kroger's value creation model is centered on its omnichannel retail business, building customer loyalty and driving sales growth through four pillars: "Fresh," "Our Brands," "Personalization," and "eCommerce"[77](index=77&type=chunk) - The model aims to deliver a long-term total shareholder return of **8% to 11%**[80](index=80&type=chunk) - Key strategies include achieving identical sales growth excluding fuel (especially double-digit e-commerce sales growth) and expanding operating margin through gross margin improvement, alternative profit business growth, and cost savings initiatives[81](index=81&type=chunk) [EXECUTIVE SUMMARY](index=26&type=section&id=EXECUTIVE%20SUMMARY) This section provides an executive overview of Kroger's strong second-quarter performance, highlighting progress in organizational simplification, customer experience, and value creation - Kroger achieved strong results in the second quarter, making significant progress in simplifying its organization, improving customer experience, and focusing on value creation[82](index=82&type=chunk) - Sales growth was primarily driven by pharmacy, e-commerce, and fresh departments, with improved grocery volume[82](index=82&type=chunk) Executive Summary Financial Highlights ($ million, except per share amounts) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | % Change | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | % Change | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Sales | $33,940 | 0.1% | $33,912 | $79,058 | (0.2)% | $79,181 | | Sales Excluding Fuel | $30,671 | 1.3% | $30,276 | $71,449 | 1.2% | $70,587 | | Identical Sales Excluding Fuel and Adjustment Items | 3.4% | N/A | 1.2% | 3.3% | N/A | 0.8% | | Operating Profit | $863 | 5.9% | $815 | $2,185 | 3.6% | $2,109 | | Adjusted Diluted Net Earnings Per Share Attributable to The Kroger Co. | $1.04 | 11.8% | $0.93 | $2.53 | 7.2% | $2.36 | - E-commerce sales grew **16%** in the second quarter and **15%** in the first two quarters, driven by strong demand for delivery solutions (up **19%** in Q2 and **20%** in the first two quarters)[89](index=89&type=chunk) - In the first two quarters of 2025, the company returned **$625 million** to shareholders through share repurchases and dividend payments[89](index=89&type=chunk) [USE OF NON-GAAP FINANCIAL MEASURES](index=28&type=section&id=USE%20OF%20NON-GAAP%20FINANCIAL%20MEASURES) This section explains Kroger's use of non-GAAP financial measures like FIFO gross margin and adjusted net earnings to provide a clearer view of core operating performance - The company uses non-GAAP measures such as FIFO gross margin, FIFO operating profit, Adjusted Net Earnings, and Adjusted Diluted Net Earnings Per Share to more accurately compare core operating performance by excluding the impact of non-operating activities[90](index=90&type=chunk)[93](index=93&type=chunk) Adjusted Net Earnings Attributable to The Kroger Co. ($ million) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Net Earnings Attributable to The Kroger Co. | $609 | $466 | $1,475 | $1,413 | | Adjustment Items for 2025 and 2024 | $86 | $215 | $215 | $315 | | Adjusted Net Earnings Attributable to The Kroger Co. (Excluding Adjustment Items) | $695 | $681 | $1,690 | $1,728 | Adjusted Diluted Net Earnings Per Share Attributable to The Kroger Co. | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Diluted Net Earnings Per Share | $0.91 | $0.64 | $2.20 | $1.93 | | Adjustment Items for 2025 and 2024 | $0.13 | $0.29 | $0.33 | $0.43 | | Adjusted Diluted Net Earnings Per Share Attributable to The Kroger Co. (Excluding Adjustment Items) | $1.04 | $0.93 | $2.53 | $2.36 | - Key adjustment items for 2025 include **$100 million** in store closing costs, **$136 million** in merger-related litigation expenses, **$47 million** in severance costs, and **$56 million** in investment gains (second quarter)[95](index=95&type=chunk)[97](index=97&type=chunk) [RESULTS OF OPERATIONS](index=33&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed analysis of Kroger's operating performance, including sales, gross margin, operating expenses, interest, and taxes [Sales](index=33&type=section&id=Sales) This section analyzes the company's sales performance, including total sales, fuel-excluded sales, and comparable store sales Total Sales ($ million) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | % Change | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | % Change | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Sales | $33,940 | 0.1% | $33,912 | $79,058 | (0.2)% | $79,181 | | Total Retail Customer Sales Excluding Fuel | $30,352 | 1.2% | $30,005 | $70,753 | 1.1% | $69,973 | | Supermarket Fuel Sales | $3,269 | (10.1)% | $3,636 | $7,609 | (11.5)% | $8,594 | - Identical sales excluding fuel and adjustment items grew **3.4%** in the second quarter of 2025 and **3.3%** in the first two quarters, driven by pharmacy, e-commerce, and fresh sales[105](index=105&type=chunk)[106](index=106&type=chunk) - E-commerce sales increased by **16%** in the second quarter and **15%** in the first two quarters, with delivery solutions growing **19%** in the second quarter and **20%** in the first two quarters[103](index=103&type=chunk) [Gross Margin, LIFO and FIFO Gross Margin](index=36&type=section&id=Gross%20Margin,%20LIFO%20and%20FIFO%20Gross%20Margin) This section examines the company's gross margin, including the impact of LIFO accounting and FIFO gross margin trends Gross Margin | Period | 2025 Second Quarter | 2024 Second Quarter | 2025 First Two Quarters | 2024 First Two Quarters | | :--- | :--- | :--- | :--- | :--- | | Gross Margin | 22.5% | 22.1% | 22.8% | 22.0% | - LIFO charge increased to **$62 million** in the second quarter of 2025 (from **$21 million** in Q2 2024) and to **$102 million** in the first two quarters (from **$62 million** in the first two quarters of 2024), reflecting anticipated annual product cost inflation[118](index=118&type=chunk) - Excluding the impact of fuel, FIFO gross margin increased by **39 basis points** in the second quarter of 2025 and **62 basis points** in the first two quarters, primarily due to the sale of the lower-margin Kroger Specialty Pharmacy business, reduced shrink, and lower supply chain costs[119](index=119&type=chunk)[120](index=120&type=chunk) [Operating, General and Administrative Expenses](index=37&type=section&id=Operating,%20General%20and%20Administrative%20Expenses) This section details the company's operating, general, and administrative expenses, analyzing their impact on profitability OG&A Expense as a Percentage of Sales | Period | 2025 OG&A as % of Sales | 2024 OG&A as % of Sales | | :--- | :--- | :--- | | Second Quarter | 17.6% | 17.4% | | First Two Quarters | 17.6% | 17.0% | - Excluding the impact of fuel, Kroger Specialty Pharmacy, and adjustment items, the OG&A rate decreased by **41 basis points** in the second quarter of 2025 and **9 basis points** in the first two quarters, driven by broad-based cost savings and administrative efficiencies[125](index=125&type=chunk)[127](index=127&type=chunk) - Increased multi-employer pension contributions and healthcare costs in 2025 contributed to a higher OG&A rate in the first two quarters of 2025[123](index=123&type=chunk)[126](index=126&type=chunk) [Rent Expense](index=39&type=section&id=Rent%20Expense) This section discusses the company's rent expense and its stability relative to sales over the reporting periods - Rent expense as a percentage of sales remained relatively stable in the second quarter and first two quarters of 2025 compared to the same periods in 2024[128](index=128&type=chunk) [Depreciation and Amortization Expense](index=39&type=section&id=Depreciation%20and%20Amortization%20Expense) This section analyzes depreciation and amortization expenses, noting factors influencing their changes relative to sales - Depreciation and amortization expense as a percentage of sales increased in the second quarter and first two quarters of 2025, primarily due to the sale of the Kroger Specialty Pharmacy business, which had a lower depreciation and amortization rate[129](index=129&type=chunk) [Operating Profit and FIFO Operating Profit](index=39&type=section&id=Operating%20Profit%20and%20FIFO%20Operating%20Profit) This section presents the company's operating profit and FIFO operating profit, highlighting growth and contributing factors Operating Profit ($ million) | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Operating Profit | $863 | $815 | $2,185 | $2,109 | | FIFO Operating Profit | $925 | $836 | $2,287 | $2,171 | | Adjusted FIFO Operating Profit (Excluding Adjustment Items) | $1,091 | $984 | $2,610 | $2,483 | - Operating profit increased by **5.9%** in the second quarter of 2025 and **3.6%** in the first two quarters[84](index=84&type=chunk) - Adjusted FIFO operating profit, excluding adjustment items, increased by **10.9%** in the second quarter of 2025 and **5.1%** in the first two quarters[84](index=84&type=chunk) [Net Interest Expense](index=43&type=section&id=Net%20Interest%20Expense) This section details the company's net interest expense, explaining the drivers behind its changes Net Interest Expense ($ million) | Period | 2025 Second Quarter | 2024 Second Quarter | 2025 First Two Quarters | 2024 First Two Quarters | | :--- | :--- | :--- | :--- | :--- | | Net Interest Expense | $144 | $84 | $343 | $207 | - Net interest expense significantly increased, primarily due to higher average total outstanding debt resulting from senior notes issued in the third quarter of 2024[136](index=136&type=chunk) [Income Taxes](index=43&type=section&id=Income%20Taxes) This section provides an overview of the company's income tax expenses and effective tax rates for the reported periods Effective Income Tax Rate | Period | 2025 Second Quarter | 2024 Second Quarter | 2025 First Two Quarters | 2024 First Two Quarters | | :--- | :--- | :--- | :--- | :--- | | Effective Income Tax Rate | 21.0% | 24.1% | 21.2% | 21.2% | - The effective income tax rate for the second quarter of 2025 decreased to **21.0%**, mainly because state income taxes were fully offset by tax credits and deductions, including equity-based payment benefits[137](index=137&type=chunk) [Net Earnings and Net Earnings Per Diluted Share](index=43&type=section&id=Net%20Earnings%20and%20Net%20Earnings%20Per%20Diluted%20Share) This section analyzes the company's net earnings and diluted earnings per share, including adjusted figures and growth drivers Net Earnings and Diluted Net Earnings Per Share | Metric | For the 12 Weeks Ended August 16, 2025 (Second Quarter) | For the 12 Weeks Ended August 17, 2024 (Second Quarter) | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | :--- | :--- | | Diluted Net Earnings Per Share | $0.91 | $0.64 | $2.20 | $1.93 | | Adjusted Diluted Net Earnings Per Share | $1.04 | $0.93 | $2.53 | $2.36 | - Diluted net earnings per share increased by **42%** in the second quarter of 2025 and **14%** in the first two quarters[139](index=139&type=chunk)[140](index=140&type=chunk) - The growth in adjusted diluted net earnings per share was primarily driven by increased adjusted FIFO operating profit (excluding fuel), lower income tax expense, and a reduction in outstanding common shares, partially offset by higher net interest expense and lower fuel earnings[139](index=139&type=chunk)[140](index=140&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=44&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses Kroger's liquidity and capital resources, including cash flow, capital investments, debt management, and share repurchase programs [Cash Flow Information](index=44&type=section&id=Cash%20Flow%20Information) This section summarizes the company's cash flows from operating, investing, and financing activities Cash Flow Summary ($ million) | Metric | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $3,688 | $3,464 | | Net Cash Used in Investing Activities | $(2,107) | $(1,905) | | Net Cash Used in Financing Activities | $(657) | $(642) | - Net cash provided by operating activities increased by **6%** to **$3,688 million** in the first two quarters of 2025[143](index=143&type=chunk) - Net cash used in investing activities increased, primarily due to reduced proceeds from asset sales, while net cash used in financing activities remained consistent[144](index=144&type=chunk)[146](index=146&type=chunk) [Capital Investments](index=45&type=section&id=Capital%20Investments) This section details the company's capital investments, including expenditures for new stores and renovations Capital Investments ($ million) | Metric | For the 24 Weeks Ended August 16, 2025 (First Two Quarters) | For the 24 Weeks Ended August 17, 2024 (First Two Quarters) | | :--- | :--- | :--- | | Total Capital Investments (Excluding Lease Acquisitions) | $(2,030) | $(2,076) | - Total capital investments for the first two quarters of 2025 were **$2,030 million**, consistent with the prior year[147](index=147&type=chunk) - During the rolling four-quarter period ended second quarter 2025, the company opened, expanded, relocated, or acquired **25** supermarkets and completed **203** remodels, resulting in a **0.3%** year-over-year increase in total supermarket square footage[147](index=147&type=chunk) [Debt Management](index=45&type=section&id=Debt%20Management) This section discusses the company's debt management strategies, including total debt levels and credit facilities - As of August 16, 2025, total debt (including current and long-term financing lease obligations) increased by **$54 million** compared to the end of fiscal year 2024, primarily due to net increases in financing lease obligations and real estate transactions[150](index=150&type=chunk) - As of August 16, 2025, the company had no outstanding commercial paper and no borrowings under its revolving credit facilities[148](index=148&type=chunk) [Common Share Repurchase Programs](index=45&type=section&id=Common%20Share%20Repurchase%20Programs) This section outlines the company's common share repurchase programs, including amounts and shares repurchased Share Repurchases (First Two Quarters 2025) | Metric | Amount | | :--- | :--- | | Share Repurchases | $203 million | | Shares Repurchased | 3.0 million shares | | Average Repurchase Price | $68.21/share | - The Board of Directors authorized a **$7.5 billion** share repurchase program on December 11, 2024, with **$2.5 billion** remaining under the authorization as of August 16, 2025[152](index=152&type=chunk)[155](index=155&type=chunk) - In 2024, the company initiated a **$5.0 billion** accelerated share repurchase (ASR) agreement under the December 2024 repurchase program, with final settlement expected in the third quarter of 2025[153](index=153&type=chunk) [Liquidity Needs](index=47&type=section&id=Liquidity%20Needs) This section addresses the company's liquidity needs and how they are met through cash, operations, and financing sources - The company expects to meet its short-term and long-term liquidity needs through existing cash and temporary cash investments (**$4.9 billion** as of August 16, 2025), cash flow from operations, and other liquidity sources, including its commercial paper program and bank credit facilities[156](index=156&type=chunk)[157](index=157&type=chunk) - The company typically operates with a working capital deficit, which is supported by its efficient cash utilization and consistent access to capital markets[157](index=157&type=chunk) - The company is committed to maintaining its current investment grade debt ratings and effectively managing competitive conditions[157](index=157&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=47&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) This section confirms that no significant changes have occurred in the company's critical accounting estimates since the last annual report - There have been no significant changes in the company's critical accounting estimates since the filing of the annual report on Form 10-K for the fiscal year ended February 1, 2025[160](index=160&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This section confirms no significant changes in the company's market risk exposures since the last annual report - There have been no material changes in the company's market risks since the annual report on Form 10-K for the fiscal year ended February 1, 2025[161](index=161&type=chunk) - As of August 16, 2025, the company had no outstanding forward interest rate swap agreements or treasury lock agreements[161](index=161&type=chunk) [PART II - OTHER INFORMATION](index=49&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part contains additional information beyond the financial statements, including controls, legal proceedings, equity purchases, and exhibits [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures.) This section confirms the effectiveness of the company's disclosure controls and procedures and ongoing internal control enhancements - As of August 16, 2025, disclosure controls and procedures were deemed effective, providing reasonable assurance for timely and accurate financial reporting[162](index=162&type=chunk) - Kroger is implementing a multi-year technology transformation project to modernize systems and improve process efficiencies, continuously evaluating the effectiveness of internal controls[163](index=163&type=chunk) - No significant changes in internal control over financial reporting occurred during the quarter ended August 16, 2025[164](index=164&type=chunk) [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings.) This section refers to the detailed disclosures on legal proceedings found in the notes to the consolidated financial statements - Information regarding legal proceedings is disclosed by reference to Note 5, "Commitments and Contingencies," in the consolidated financial statements[165](index=165&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information.) This section provides additional information, including details on issuer purchases of equity securities during the quarter [ISSUER PURCHASES OF EQUITY SECURITIES](index=50&type=section&id=ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) This section details the company's equity security repurchase activities, including shares bought back and remaining authorization Issuer Purchases of Equity Securities (Second Quarter 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs ($ million) | | :--- | :--- | :--- | :--- | :--- | | May 25 to June 21, 2025 | 2,999 | $66.20 | 2,999 | $2,500 | | June 22 to July 19, 2025 | 944,754 | $71.50 | 250,355 | $2,500 | | July 20 to August 16, 2025 | 60,098 | $72.35 | 60,098 | $2,500 | | Total | 1,007,851 | $71.53 | 313,452 | $2,500 | - Repurchased shares include those bought under the 1999 repurchase program and shares surrendered by employees for tax withholding on restricted stock under long-term incentive plans[170](index=170&type=chunk) - As of August 16, 2025, **$2.5 billion** remained available under the December 2024 repurchase program[155](index=155&type=chunk)[170](index=170&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits.) This section lists all exhibits filed with the Form 10-Q, including key agreements and certification documents - Exhibits include the Merger Agreement (October 13, 2022), amended Articles of Incorporation, indentures, credit agreements, and various certification documents (e.g., Rule 13a-14(a) / 15d-14(a) Certifications)[171](index=171&type=chunk) [SIGNATURES](index=54&type=section&id=SIGNATURES) This section confirms the official signing of the report by the company's interim CEO and CFO - This report was signed on September 19, 2025, by Ronald L. Sargent (Interim Chief Executive Officer) and David J. C. Kennerley (Chief Financial Officer)[178](index=178&type=chunk)

Group 1 - Dickey's Barbecue Pit is launching its Rancher's Premium Smokehouse Sausage line in select Kroger stores in the Dallas-Fort Worth area starting September 20, 2025, for a limited four-week period [1] - The Rancher's Premium line, which debuted in spring 2024, has gained popularity for its authentic Texas-style smoked sausages available in bold flavors such as Brisket Burnt Ends, Bacon Cheddar, and Philly Cheese Steak [1] - The sausages are crafted using fine cuts of meat and a curated blend of ingredients, contributing to their appeal [1]

Company Overview - Kroger Co. is a leading American retail company known for its supermarkets and multi-department stores, competing with giants like Walmart and Costco [1] - It is one of the largest grocery retailers in the United States, offering a wide array of products including groceries, pharmaceuticals, and general merchandise [1] Investment Outlook - Argus Research set a price target of $85 for Kroger, suggesting a potential price increase of approximately 28.18% from its then-current price of $66.32 [2] - Zacks Investment Research recognizes Kroger as a strong value stock, indicating that it may be undervalued and presenting a promising opportunity for value-focused investors [3] Stock Performance - As of now, Kroger's stock price is $66.11, experiencing a slight decrease of approximately 1.27% or $0.85 [4] - The stock has fluctuated between a low of $65.95 and a high of $66.76 today, with a yearly trading range between $54.56 and $74.90, indicating some volatility [4][6] - Kroger has a market capitalization of approximately $43.71 billion and a trading volume of 1,846,386 shares on the New York Stock Exchange, underscoring its significant presence in the retail industry [5]

Core Points - The Kroger Co. is collaborating with first responders across the U.S. to recognize Hunger Action Month through the initiative "Heroes Fight Hunger" [1] - This initiative involves a food drive aimed at supporting local communities throughout the month of September [1]

Roth MKM将克罗格的目标价从66美元上调至75美元，评级从"中性"上调至"买入"。(格隆汇) ...

Core Insights - Kroger has launched a new exclusive line of protein products called Simple Truth™ Protein, which includes over 80 nutritious and affordable meals and snacks designed to help customers meet their protein goals [1][2][4] - The Simple Truth™ Protein line is Kroger's largest product expansion for the brand, emphasizing quality and affordability while catering to customers prioritizing wellness [4][5] - The new product offerings include a variety of convenient options, such as on-the-go meals and snacks, that are free from artificial ingredients [3][4] Product Details - The Simple Truth™ Protein line features items like Protein French Toast Sticks, Protein Instant Decaf Coffee with a superfood mushroom blend, Protein Jalapeno Cheddar Puffs, Protein Cacio E Pepe Chicken Bowl, and Protein Chocolate Fudge Brownie Mix [9] - These products are designed to support balanced routines and satisfy cravings while helping customers achieve their protein intake goals [4][5] Pricing and Promotions - Kroger is committed to providing customers with high-quality products at low prices, simplifying promotions, and lowering prices on thousands of items [6] - The company emphasizes that customers do not have to compromise on quality for affordability, supported by their Fresh & Quality Guarantees [6]

Upgrades Summary - Loop Capital upgraded Netflix (NFLX) to Buy from Hold with a price target of $1,350, increased from $1,150, citing "exceptional" engagement on the platform in Q3 and a "strong" Q4 content slate [2] - Guggenheim upgraded Workday (WDAY) to Buy from Neutral with a price target of $285, indicating that Workday will be well positioned to accelerate growth when the environment improves [2] - Piper Sandler also upgraded Workday to Neutral from Underweight with a price target of $235, up from $220 [2] - Bernstein upgraded Zillow Group (ZG) to Outperform from Market Perform with a price target of $105, increased from $75, highlighting mid-teens revenue growth with Rentals and Showcase as growth drivers [2] - Roth Capital upgraded Kroger (KR) to Buy from Neutral with a price target of $75, up from $66, noting strong alternative profit streams while the stock's valuation lags peers [2] - Berenberg upgraded AbbVie (ABBV) to Buy from Hold with a price target of $270, increased from $170, stating the company has "successfully navigated the largest drug patent expiry in the world" [2]

Group 1: Wearables and IPOs - Meta Platforms (META) is set to unveil new smart glasses named "Celeste" with a built-in display at a retail price of $800 [1] - StubHub (STUB) is going public today after several delays, pricing its shares amid a recovering IPO market in 2025 [1] Group 2: Manufacturing Investments - GSK (GSK) announced a $30 billion investment in R&D and manufacturing in the United States [2] - Eli Lilly (LLY) revealed plans for a new $5 billion production plant in Virginia [2] Group 3: Federal Reserve Insights - Danielle DiMartino Booth discussed significant changes at the Federal Reserve, highlighting the impact of easy credit on consumer spending [2] - The conversation noted the reality of stagflation at the company level, with a margin squeeze being observed [2] Group 4: Retail and Media Developments - Kroger (KR) is reintroducing paper coupons as part of its retail strategy [3] - Paramount Skydance's bid for Warner Bros. (WBD) may take longer than expected [3] - Apollo Global (APO) is exploring the sale of AOL, an internet pioneer [4] Group 5: Technology and Transportation - Baidu (BIDU) shares surged as investors anticipate growth in AI [4] - Waymo is set to test robotaxis at San Francisco International Airport [5] Group 6: Market Updates - In Asia, Japan's market decreased by 0.3%, while Hong Kong increased by 1.8% [6] - In Europe, London saw a slight increase of 0.2%, while Paris decreased by 0.1% [6] - Futures indicate a slight increase in Dow by 0.1%, with S&P flat and Nasdaq down by 0.1% [6]

Core Insights - Kroger is reintroducing paper coupons in all stores to simplify promotional offers and appeal to a broader customer base, particularly older consumers and those without access to the latest technology [2][3][4] - Customer price perception has improved across nearly all divisions, indicating positive reception to the changes made by Kroger [2] - The company aims to address the needs of low- and middle-income consumers who are increasingly using coupons to save money amid economic stress [5] Group 1 - Kroger's Chairman and CEO Ron Sargent emphasized the importance of paper coupons for older consumers who may not be digitally savvy, aiming to provide them with equal access to deals [3][4] - The reintroduction of paper coupons is expected to generate incremental business, as it caters to customers who feel disenfranchised by digital-only offers [3][4] - The CFO of Kroger noted measurable benefits from paper coupons, including increases in unit sales and positive customer feedback [4] Group 2 - In 2023, Kroger delivered over 4 billion digital coupons, which was 1 billion more than in 2022, indicating a growing reliance on couponing among consumers [5] - Sargent reported that low- and middle-income consumers are making smaller, more frequent shopping trips and are increasingly purchasing private-label products [5]

Group 1 - The Kroger Co. Foundation has granted over $5 million in scholarship funds [1] - For the 2025-2026 academic year, the foundation awarded $265,000 to 106 students [1]