Kroger(US:KR)2023-06-22 16:00Financial Performance - Net earnings attributable to The Kroger Co. per diluted common share reached $1.32, a 46.7% increase compared to the first quarter of 2022[68] - Adjusted net earnings attributable to The Kroger Co. per diluted common share was $1.51, reflecting a 4.1% increase compared to the first quarter of 2022[68] - Operating profit was $1.5 billion, consistent with the first quarter of 2022[68] - Adjusted FIFO operating profit was $1.7 billion, a 4.2% increase compared to the first quarter of 2022[68] - The adjusted net earnings for Q1 2023 were $1.104 billion, a 2.8% increase from $1.074 billion in Q1 2022[82] - Net earnings per diluted share increased by 47% to $1.32 in Q1 2023 from $0.90 in Q1 2022, while adjusted net earnings per diluted share rose 4% to $1.51[103] Sales and Revenue - Identical sales, excluding fuel, increased by 3.5%, with total sales growth in Our Brands categories of 4.9%[69] - Total sales for Q1 2023 were $45.165 billion, a 1.3% increase compared to $44.600 billion in Q1 2022[84] - Sales to retail customers without fuel increased by 3.4% to $39.748 billion in Q1 2023, compared to $38.449 billion in Q1 2022[84] - Identical sales excluding fuel rose by 3.5% to $39.574 billion in Q1 2023, compared to $38.235 billion in Q1 2022[88] - Digital sales grew by 15%, driven by a 30% increase in Delivery solutions and an 11% increase in Pickup solutions[70] - Digital sales increased approximately 15% in Q1 2023, driven by a 30% growth in Delivery solutions[85] Cash Flow and Investments - Generated cash from operations of $2.9 billion, representing a 160% increase compared to the first quarter of 2022[68] - Net cash provided by operating activities was $2.86 billion in Q1 2023, significantly up from $1.1 billion in Q1 2022[106] - Capital investments totaled $1.1 billion in Q1 2023, compared to $971 million in Q1 2022, with 11 supermarkets opened or expanded[110] - Cash used in investing activities increased to $947 million in Q1 2023 from $723 million in Q1 2022, primarily due to higher payments for property and equipment[108] - Cash and temporary cash investments increased by $1.6 billion to $2.6 billion as of May 20, 2023[68] - As of May 20, 2023, the company held $2.6 billion in cash and temporary cash investments, reflecting strong operating performance[116] Shareholder Returns - Dividends paid totaled $188 million, a 22.1% increase compared to the previous year[66] - The company expects total shareholder return within the target range of 8% to 11% over time, excluding the impact of the proposed merger with Albertsons[63] - In Q1 2023, the company repurchased 602,000 shares at an average price of $47.68, totaling $29 million[115] - The company has a $1.0 billion share repurchase program approved in September 2022, but no shares have been repurchased under this authorization[115] Costs and Expenses - The LIFO charge for Q1 2023 was $99 million, up from $93 million in Q1 2022, reflecting expected annualized product cost inflation for 2023[91] - The gross margin rate for Q1 2023 was 22.33%, up from 21.63% in Q1 2022, attributed to decreased fuel sales and effective management of product cost inflation[90] - OG&A expenses as a percentage of sales increased to 16.37% in Q1 2023 from 15.69% in Q1 2022, primarily due to decreased fuel sales and planned investments[94] - Operating profit was $1.5 billion, or 3.3% of sales, in Q1 2023, compared to $1.5 billion, or 3.4% of sales, in Q1 2022, reflecting a 12 basis point decrease[97] - FIFO operating profit was $1.6 billion, or 3.5% of sales, in Q1 2023, down from $1.6 billion, or 3.6% of sales, in Q1 2022, with a 10 basis point increase excluding adjusted items[98] Debt and Liquidity - Total debt increased by $55 million to $13.4 billion as of May 20, 2023, primarily due to a net increase in obligations under finance leases[114] - The effective income tax rate rose to 22.9% in Q1 2023 from 18.0% in Q1 2022, mainly due to a decrease in deductions from share-based payments[102] - The company expects to meet its liquidity needs through cash on hand, operating cash flows, and borrowings, including a commercial paper program[117] - The proposed merger with Albertsons is expected to be funded through cash and temporary cash investments, along with other financing sources[118] - The company maintains a working capital deficit due to efficient cash use and consistent access to capital markets[117] Legal and Regulatory - Legal settlement costs recognized in Q1 2023 amounted to $62 million related to opioid litigation, payable over 10 years[73] Market and Risk - There have been no material changes in critical accounting estimates since the last annual report[120] - The company has not experienced any material changes in market risk exposure since the last annual report[121]