Kroger Reiterates Its Commitment to Lower Prices and Initiates New $7.5B Share Buyback Program

Core Viewpoint - The Kroger Co. has terminated its merger agreement with Albertsons following a court ruling, and the company is now focused on investing in America to lower grocery prices, raise associate wages, and support local communities [1][2][3] Investment and Growth Strategy - Kroger's Chairman and CEO, Rodney McMullen, emphasized the company's strong position and commitment to a value creation model that includes investments in new stores and remodels, aiming for an 8-11% total shareholder return (TSR) over time [2][3] - The company has invested $5 billion in lowering prices since 2003 and$2.4 billion in wage increases since 2018, resulting in a 38% increase in average hourly rates [3] Share Repurchase Program - The Board of Directors has authorized a new share repurchase program of up to $7.5 billion, which includes an accelerated share repurchase of approximately$5 billion [4][5] - This marks the resumption of share repurchases after a two-year pause, reflecting Kroger's strengthened balance sheet and commitment to returning capital to shareholders [4][6] Community Support and Capital Investments - Kroger has committed $2.3 billion to support local communities through charitable giving since 2017, including$1.5 billion aimed at feeding hungry families [3] - The company plans to invest $3.6 to$3.8 billion annually in capital projects to enhance customer experience and create job opportunities [3] Debt Management - Following the termination of the merger agreement, Kroger will redeem $4.7 billion of senior notes issued in August 2024, which includes a special mandatory redemption provision [8] - The company has also terminated its previously announced exchange offers related to the merger, affecting the ACI Notes issued by Albertsons [9][10] Future Outlook - Kroger is expected to continue generating strong free cash flow and remains committed to its capital allocation priorities, including maintaining its investment-grade rating and returning excess cash to shareholders [6][7] - An Investor Day event is planned for late spring 2025 to update stakeholders on strategic priorities and growth prospects [7]