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Kroger Reports First Quarter 2025 Results and Updates Identical Sales without Fuel Guidance for 2025
Prnewswireยท 2025-06-20 12:00
Core Insights - Kroger reported solid first quarter results for 2025, with strong sales driven by pharmacy, eCommerce, and fresh products [2][3] - The company is focused on streamlining priorities and enhancing customer experience, which positions it well for future growth [3] Financial Performance - Identical sales without fuel increased by 3.2% compared to the previous year, while total company sales were $45.1 billion, slightly down from $45.3 billion [4][13] - Earnings per share (EPS) remained stable at $1.29, while adjusted EPS rose to $1.49 from $1.43 [3][4] - Operating profit for the quarter was $1,322 million, an increase from $1,294 million in the same period last year [4][46] - Gross margin improved to 23.0%, up from 22.0% year-over-year, primarily due to the sale of Kroger Specialty Pharmacy and lower supply chain costs [5][48] Operational Highlights - The FIFO gross margin rate increased by 79 basis points, attributed to the sale of Kroger Specialty Pharmacy and lower shrink [6][47] - The Operating, General and Administrative (OG&A) rate increased by 63 basis points, mainly due to the sale of Kroger Specialty Pharmacy and pension plan contributions [7] Strategic Initiatives - Kroger recognized a $100 million impairment charge related to the planned closure of approximately 60 stores, expecting modest financial benefits from these closures [8] - The company is committed to reinvesting savings from store closures into enhancing customer experience [8] Capital Allocation - Kroger anticipates strong free cash flow and plans to continue investing in the business while maintaining its investment-grade debt rating [9] - The company has initiated a $5 billion accelerated share repurchase program, expected to be completed by the third quarter of fiscal 2025 [10] Debt and Financial Ratios - Kroger's net total debt to adjusted EBITDA ratio is 1.69, up from 1.25 a year ago, with a target range of 2.30 to 2.50 [11][39] - The company maintains a strong balance sheet, providing opportunities for further investments and enhancing shareholder value [11] Guidance - The company raised its guidance for identical sales without fuel to a new range of 2.25% to 3.25% for the full year [14][17] - eCommerce sales saw a significant increase of 15% in the first quarter [13]