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Kroger 8-K Report, Financial Results (Mar 7, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed March 7, 2024
Period End
March 7, 2024
Security
KR
In the record · 2016–202610-K1210-Q328-K137

KR filed 12 annual reports (10-K), 32 quarterly reports (10-Q) and 137 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Aug ’17Aug ’17
  2. Leadership change8-K · Dec ’19Dec ’19
  3. Material agreement8-K · Nov ’22Nov ’22
  4. Leadership change8-K · Sep ’26Sep ’26

01—Abstract

Summary

Summary of the 8-K filed March 7, 2024. Cited figures are marked; the original filing is the authoritative source.

The Kroger Co. (NYSE: KR) reported fourth quarter and fiscal 2023 results on March 7, 2024, and provided full-year 2024 guidance.

Total company sales were $37.1 billiona in the fourth quarter, including $2.7 billion from the 53rd week, compared to $34.8 billion a year earlier. Fourth-quarter operating profit was $1,194 million and EPS was $1.01, while Adjusted FIFO Operating Profit was $1,307 million and Adjusted EPS was $1.34, both including a benefit of $187 million and $0.20 from the 53rd week. Identical Sales without fuel decreased 0.8% in the quarter, with underlying Identical Sales without fuel up 0.1%, and increased 0.9% for fiscal 2023 (underlying 2.3%).

Fiscal 2023 operating profit was $3.1 billionb, EPS was $2.96, and Adjusted EPS was $4.76, including the 53rd week benefit. For fiscal 2023, Kroger's net total debt to adjusted EBITDA ratio was 1.33 excluding the 53rd week, compared with 1.56 a year earlier, and remains below its target range of 2.30 to 2.50. Kroger has paused its share repurchase program to prioritize de-leveraging following the proposed merger with Albertsons.

The company expects to continue paying its quarterly dividend, which it expects to increase over time subject to board approval. Adjusted free cash flow for 2023 was $3,215 millionc, up from $1,703 million in 2022.

For 2024, Kroger guided to Identical Sales without fuel of 0.25% to 1.75%, Adjusted FIFO Operating Profit of $4.6 to $4.8 billiond, adjusted net earnings per diluted share of $4.30 to $4.50, Adjusted Free Cash Flow of $2.5 to $2.7 billion, and capital expenditures of $3.4 to $3.6 billion, with an adjusted effective tax rate of 23%. Investors should note the pending Albertsons merger, a proposed opioid litigation settlement, and the $1,475 million of opioid settlement charges recorded in 2023, which are significant drivers of GAAP results.

02—Key points

Key Highlights

  1. Fiscal 2023 Adjusted EPS of $4.76 versus $4.23 in 2022, and 2024 guidance for Adjusted EPS of $4.30 to $4.50 (Adjusted EPS excluding the 53rd week was $4.56 for 2023).
  2. Fourth-quarter total sales of $37.1 billion, including $2.7 billion from the 53rd week, versus $34.8 billion a year earlier.
  3. Identical Sales without fuel declined 0.8% in Q4 2023 but rose 0.9% for fiscal 2023 (underlying 2.3%, adjusted for the Express Scripts pharmacy agreement termination).
  4. Net total debt to adjusted EBITDA improved to 1.33 (excluding the 53rd week) from 1.56, below the 2.30 to 2.50 target range.
  5. Share repurchases paused to prioritize de-leveraging following the proposed Albertsons merger; quarterly dividend expected to continue and increase over time, subject to board approval.
  6. Fiscal 2023 operating profit fell to $3.1 billion from $4.1 billion, reflecting $1,475 million of opioid settlement charges and $316 million of merger-related costs among adjustment items.
  7. 2023 Adjusted Free Cash Flow of $3,215 million, with 2024 guidance of $2.5 to $2.7 billion, and capital expenditures guided to $3.4 to $3.6 billion.

03—Questions

Frequently Asked Questions

  1. How did Kroger perform in the fourth quarter of 2023?

    Total sales were $37.1 billion, including $2.7 billion from the 53rd week, compared with $34.8 billion a year earlier. Operating profit was $1,194 million and EPS was $1.01, versus $826 million and $0.62 in the prior-year quarter. Identical Sales without fuel decreased 0.8%.

  2. What is Kroger's 2024 guidance?

    Kroger expects Identical Sales without fuel of 0.25% to 1.75%, Adjusted FIFO Operating Profit of $4.6 to $4.8 billion, adjusted net earnings per diluted share of $4.30 to $4.50, Adjusted Free Cash Flow of $2.5 to $2.7 billion, and capital expenditures of $3.4 to $3.6 billion, with an adjusted effective tax rate of 23%.

  3. Why has Kroger paused its share repurchase program?

    Kroger has paused its share repurchase program to prioritize de-leveraging following the proposed merger with Albertsons. The company states it remains committed to maintaining its investment grade debt rating.

  4. How much did Kroger's debt levels change in 2023?

    Net total debt was $10,578 million as of February 3, 2024, down from $12,574 million a year earlier. The net total debt to adjusted EBITDA ratio was 1.33, excluding the 53rd week, compared with 1.56 a year ago.

  5. What items affected Kroger's 2023 GAAP results?

    Adjustment items for 2023 totaled $1,315 million after tax, including $1,163 million for opioid settlement charges, $268 million for merger-related costs, and a $116 million gain on investments. The opioid charges relate to the nationwide opioid settlement framework and settlements with West Virginia and New Mexico.

04—Continue

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