World News – USA – Kroger reports on the results for the third quarter of 2020 and sets the guidelines for the full year 2020

CINCINNATI, Dec. . Feb. 3, 2020 / PRNewswire / – The Kroger Co. . (NYSE: KR) today announced its third quarter 2020 results, announced an update to Restock Kroger’s progress on the three-year transformation plan, and an update to its COVID-19 response.

« Our Kroger employee family was downright incredible during the pandemic and inspires me every day. I am proud of our dedicated employees who have continued to diligently carry out our Restock Kroger transformation and at the same time have served our customers when they need us most.

We achieved strong results in the third quarter. Customers are at the center of what we do and revenue stays high as we continue to improve our competitive moats. Fresh, our brands, data & personalization and seamless. We will continue to implement our strategy during the pandemic and continue to expand our market share.

The strong momentum in our core supermarket business and the acceleration in the growth of our alternative income business show that we are successfully reshaping our business model to deliver consistently strong and attractive total returns for shareholders in 2020 and beyond. « 

The company’s total revenue was $ 29. 7 billion in the third quarter versus $ 28. 0 billion for the same period last year. Excluding fuel and divestments, sales increased 11. 3%.

The gross margin was 23. 0% of sales for the third quarter. The FIFO gross margin excluding fuel decreased 2 basis points from the same period last year. This decrease was mainly due to pricing investments and mix changes offset by sourcing efficiency, revenue leverage and growth in alternative profit streams.

The & operational general management rate decreased by 30 basis points (excluding fuel and adjustment items) due to the leverage of the sale and execution of Restock Kroger initiatives, partly due to continued COVID-19-related investments to protect health and Employee safety has been balanced. Customers and communities and increased incentive costs.

Kroger’s capital allocation strategy is to use the adjusted free cash flow to invest in the business and generate profitable growth while maintaining the current investment grade rating on debt and returning capital to shareholders. The company is actively offsetting using its adjusted free cash flow to achieve these goals.

Kroger’s ratio of net debt to adjusted EBITDA is 1. 74 compared to 2. 50 years ago (Table 5). The target range for the company’s net debt to Adjusted EBITDA is 2. 30 to 2. 50. Kroger held temporary investments of approx. 1 USD. 8 billion at the end of the quarter due to improved operating performance and a significant improvement in working capital.

During the quarter, Kroger purchased $ 304 million of shares as part of its Jan.. September 2020 announced approval of $ 1 billion. Since the beginning of the year, Kroger has repurchased shares valued at $ 989 million.

Earlier this year, Kroger increased the dividend by 13 percent, making it the 14th. Year in a row that the dividend was increased.

« Due to our continued strong performance, market share growth and the expectation of continuing trends in self-consumption of groceries for the remainder of our fiscal year, we are increasing our forecast for 2020 as a whole. For 2020 as a whole, we expect identical total sales excluding fuel of around 14% and adjusted EPS growth of 50% to 53%. .

Our guidelines provide for continued investment in employees and customers, as well as ongoing COVID-19-related costs, consistent with continued implementation of cost-saving initiatives and growth in alternative profit businesses.

Looking ahead to 2021, we believe our performance will be stronger than we would have expected before the pandemic, when viewed as a two-year stacked result for identical sales with no fuel growth and a compound growth rate over 2020 and 2021 for adjusted earnings per share growth. « 

* Possibly without customized elements; Identical sales are without fuel; The operating profit corresponds to the FIFO operating profit. Kroger has been unable to fully reconcile the GAAP and non-GAAP measures used in the 2020 guidelines without undue effort because it is impossible to predict certain of our adjustment items with reasonable assurance. This information depends on future events and may be beyond our control. Their unavailability could have a material impact on the 2020 GAAP financial results.

** This rate reflects typical tax adjustments and does not reflect changes in the rate after the income tax audit is complete that cannot be predicted.

At Kroger Co. . (NYSE: KR), we are fresh for everyone and we are dedicated to our purpose: to feed the human spirit. We are almost half a million employees in our corporate family who serve over 11 million customers every day through a seamless shopping experience under various banner names. We are determined to create # NullHungerZeroWaste communities by 2025. To find out more about us, visit our newsroom and investor relations website.

Note: Fuel sales have historically had low gross margins and operating expenses compared to their corresponding non-fuel sales rates. As a result, Kroger discusses the changes in these rates without the effect of fuel.

For information about the reconciliation of the non-GAAP financial measures used in this press release to the most comparable GAAP financial measures and related disclosures, see the supplementary information in the tables.

This press release contains certain statements that constitute « forward-looking statements » about the future performance of the company. These statements are based on management’s beliefs and beliefs in light of the information currently available to it. Such statements are indicated by words or expressions such as « achieve », « believe », « consider », « continue », « deliver », « expect », « future », « guidance », « strategy », « goal » « trends. » « and » will. « Various uncertainties and other factors could cause actual results to differ materially from those contained in the forward-looking statements. This includes the specific risk factors listed under « Risk Factors » in our Annual Report on Form 10-K for our most recent fiscal year and all subsequent filings, as well as the following:

Kroger assumes no obligation to update the information contained herein. Please see Kroger’s reports and filings with the Securities and Exchange Commission for more information about these risks and uncertainties.

Note: Kroger’s quarterly conference call with investors will be broadcast live at 10 a.m.. m. (ET) on 3. December 2020 at ir. Kroger. com. On-demand playback of the webcast is possible from approx. 1 am available. m. (ET) on Thursday 3. December 2020.

The company defines First-In First-Out (FIFO) gross profit as sales minus the cost of goods, including advertising, storage and transportation, but excluding the Last-In First-Out (LIFO) fee.

The above FIFO financial metrics are important management actions to evaluate operational effectiveness. Management believes these FIFO financial metrics will be useful to investors and analysts as they measure our day-to-day operational effectiveness.

Goods costs (« COGS ») as well as operating, general and administrative costs (« OG&A ») exclude depreciation and rental costs, which are contained in separate cost lines.

LIFO fees of $ 23 were posted in the third quarters of 2020 and 2019. For the previous period, LIFO fees of $ 77 and US $ 77, respectively, have been applied for 2020 and 2019. 69 USD posted.

The items listed below should not be viewed as alternatives to revenue or any other GAAP measure of performance. Â Identical sales are an industry measure and it is important to review them in conjunction with Kroger’s GAAP financial results. Â Other companies in our industry may calculate identical sales differently than Kroger, which limits the comparability of the measure.

Kroger defines identical non-fueled sales as sales to retail customers, including sales from all departments in identical market locations, Kroger specialty pharmacy, jewelry and ship-to-home solutions. Kroger defines a supermarket as identical if it has been in operation for five full quarters without expansion or relocation.

The items listed below should not be viewed as alternatives to GAAP measures for performance or access to liquidity. Â Net debt versus Adjusted EBITDA is an important management measure used in assessing the company’s access to liquidity. Â The following items should be reviewed in conjunction with Kroger’s reported GAAP financial results.

The following table reconciles the net income of The Kroger Co. . Adjusted EBITDA as defined in the company’s loan agreement on a rolling four-quarter basis.

(a) The adjustment for the depreciation of Lucky’s Market, which The Kroger Co. . In the rolling four quarters ending on Sept.. November 2019, excludes a net loss of $ 107 attributable to the minority stake in Lucky’s Market.

(b) Transformation costs primarily include costs related to store and business closure costs and third-party consulting fees related to business transformation and cost-saving initiatives.

The purpose of this table is to better present comparable results of operations from our ongoing business after eliminating the impact on net income per diluted common share for certain items described below. Adjusted Net Income and Adjusted Net Earnings per Diluted Share are useful metrics for investors and analysts as they provide more accurate year-on-year comparisons of Net Income and Net Earnings per Diluted Share because adjusted items are not the result of normal business operations. Â The items listed in this table should not be viewed as alternatives to The Kroger Co’s net income. or another GAAP measure of performance. Â These items should not be examined in isolation or used as a substitute for the company’s financial results reported under GAAP. Because of the nature of these items, as described below, it is important to identify these items and review them in conjunction with the company’s GAAP financial results.

The OG&A expense adjustment for pre-tax pension fund liabilities was $ 45 for the third quarter of 2019. The year-to-date OG&A expense adjustment for pension plan redemption obligations before tax was $ 131 for the first three quarters of 2019.

The pre-tax adjustments for investment income were in the third quarter of 2020 and. 2019 (162 USD) or. (106 USD). Â For the first three quarters of 2020 and 2019, the pre-tax adjustments for year-to-date investment income were $ 952 and $ 952, respectively. (166 USD).

The pre-tax adjustment for Lucky’s Market impairment was $ 238, including a net loss of $ 107 attributable to Lucky’s Market’s minority stake.

The adjustments to OG&A pre-tax expenses for the contingent consideration from Home Chef were in the third quarter of 2020 and. 2019 24 USD or. 4 USD. For the first three quarters of 2020 and 2019, OG&A expense adjustments for Home Chef’s contingent consideration were $ 109 and year-to-date, respectively. (18 USD).

The pre-tax OG&A expense adjustment for transformation costs was $ 33 for the third quarter of 2020. The year-to-date OG&A pre-tax transformation cost adjustment was $ 100 for the first three quarters of 2020. Â Transformation costs primarily include costs related to store and business closure costs and third party professional consulting fees related to business transformation and cost saving initiatives.

Adjustment items for Q3 2020 include adjustments to return on investment, adjustments to contingent consideration from the chef, and strategic transformation costs.

Adjustment items for 2020 include the adjustment items for the third quarter as well as the adjustments made in the first two quarters of 2020 to achieve the investment gain, the chef’s contingent consideration adjustment and the strategic transformation costs.

The adjustment items for the third quarter of 2019 include adjustments for retirement benefit obligations, investment income, severance pay, Lucky’s Market impairment, and Home Chef contingent consideration adjustment.

Adjustment items for 2019 include the adjustment items for the third quarter as well as the adjustments made in the first two quarters of 2019 for liabilities from the retirement of pension plans, the gain on the sale of Turkey Hill Dairy, the gain on the sale of You Technology and the profit from investment and adjustment of the conditional consideration of the chef.

The purpose of this table is to better present comparable operating results from our day-to-day operations after the operating result has been removed for certain items described below. Â FIFO Adjusted Operating Income is a useful measure for investors and analysts as it provides a more accurate year-over-year comparison of operating income because adjusted items are not the result of normal operations. Â The items listed in this table should not be viewed as alternatives to operating income or any other GAAP measure of performance. Â These items should not be examined in isolation or used as a substitute for the company’s financial results as reported under GAAP. Because of the nature of these items, as described below, it is important to identify these items and review them in conjunction with the company’s GAAP financial results.

The adjustment for Lucky’s Market depreciation includes a net loss of $ 107 attributable to Lucky’s Market’s minority stake.

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Kroger, Earnings, NYSE: KR, Stock