Fourth Quarter Highlights
- Identical Sales without fuel increased 6.2%
- Operating Profit of $826 million; Adjusted FIFO Operating Profit of $1,274 million
- EPS of $0.62; Adjusted EPS of $0.99
- Executed go-to-market strategy to deliver value for customers
- Our Brands identical sales increased 10.1%
- Digital sales grew 12%
Fiscal 2022 Highlights
- Identical Sales without fuel increased 5.6%
- Operating Profit of $4.1 billion; Adjusted FIFO Operating Profit of $5.1 billion
- EPS of $3.06; Adjusted EPS of $4.23
- Delivered Adjusted EPS growth of 15%
- Cost savings exceeded $1 billion for fifth consecutive year
- Significantly increased associate wages resulting in average hourly wage of $18 and rate of over $23 with comprehensive benefits factored in
- Announced definitive merger agreement with Albertsons Companies, Inc.
CINCINNATI, March 2, 2023 /PRNewswire/ — The Kroger Co. BB #:100073 today reported its fourth quarter and fiscal year 2022 results, provided 2023 guidance and updated investors on how Leading with Fresh and Accelerating with Digital continues to position Kroger for long-term sustainable growth.
Comments from Chairman and CEO Rodney McMullen
“Kroger achieved exceptional results in 2022 as we executed on our Leading with Fresh and Accelerating with Digital strategy, building on record years in 2020 and 2021.
We appreciate our associates for remaining customer-focused, delivering the products customers want, when and how they want them, with zero compromise on quality, convenience and selection. Our associates enable our success, and we are committed to investing in theirs by continuing to improve wages, comprehensive benefits and career development opportunities.
Providing affordable food is even more essential at a time when inflation is affecting so many of our customers’ lives. We do this by delivering fresh products at a great value, trusted Our Brands items, and personalized promotions.
Our proven go-to-market strategy enables Kroger to successfully navigate many operating environments. We believe that by delivering value for our customers, investing in our associates and serving our communities, Kroger will continue to achieve attractive and sustainable total returns for our shareholders.”
Fourth Quarter Financial Results
Total company sales were $34.8 billion in the fourth quarter, compared to $33.0 billion for the same period last year. Excluding fuel, sales increased 5.9% compared to the same period last year.
Gross margin was 21.8% of sales for the fourth quarter. The FIFO gross margin rate, excluding fuel, decreased 1 basis point compared to the same period last year. This result reflected Kroger’s ability to effectively manage higher product cost inflation through strong sourcing practices and lower supply chain costs, while maintaining competitive pricing and helping customers manage their budgets.
The LIFO charge for the quarter was $234 million, compared to a LIFO charge of $20 million for the same period last year, driven by higher product cost inflation primarily in grocery.
The Operating, General & Administrative rate decreased 56 basis points, excluding fuel and adjustment items, compared to the same period last year. The decrease in OG&A rate was driven by sales leverage, continued execution of cost savings initiatives and the cycling of several one-time expenses, partially offset by planned investments in associates.
Fiscal 2022 Financial Results
Total company sales were $148.3 billion in 2022, compared to $137.9 billion for the same period last year. Excluding fuel, sales increased 5.2% compared to the same period last year.
Gross margin was 21.4% of sales for 2022. The FIFO gross margin rate, excluding fuel, decreased 9 basis points compared to the same period last year. This result reflected Kroger’s ability to effectively manage higher product cost inflation through strong sourcing practices, while maintaining competitive prices and helping customers manage their budgets.
The LIFO charge for 2022 was $626 million, compared to a LIFO charge of $197 million for the same period last year, driven by higher product cost inflation.
The Operating, General & Administrative rate decreased 19 basis points, excluding fuel and adjustment items, compared to the same period last year. The decrease in OG&A rate was driven by sales leverage and the continued execution of cost savings initiatives partially offset by planned investments in associates.
Comments from CFO Gary Millerchip
“Kroger’s 2022 results demonstrate the strength of our value creation model. In 2023, we expect to build on this momentum and deliver revenue and EPS growth on top of the record results achieved over the past three years.
We expect to grow revenue by continuing to invest in our customers through competitive pricing and personalization, fresh products and a better shopping experience. Building on our significant investments over the past four years, we will also continue to increase associate wages. We will fund these investments through product mix improvements, cost saving initiatives and growth in our alternative profit businesses.
Looking forward, we believe Kroger is well positioned to successfully operate in an evolving economic environment and continue to deliver attractive total returns for our shareholders.”
Fourth Quarter 2022 Highlights
Leading with Fresh
-Celebrated the 10th anniversary of the Simple Truth brand, a greater than $3 billion brand providing customers with more than 1,500 unique natural and organic products
-Opened 1,000th Murray’s Cheese shop within Kroger stores offering customers a highly curated cheese selection in more than 30 states across America
-Announced the top 2023 food trends predicting customer behaviors and popular items for the year ahead
Accelerating with Digital
-Increased delivery sales by 22% over last year driven by our delivery solutions
-Opened a new Kroger Delivery Customer Fulfillment Center in the Denver Metro area, one of the fastest-growing areas in the country
-Increased digitally engaged households by approximately 900,000 compared to the same period last year
Associate Experience
-Invested approximately $600 million in incremental wages in 2022, for a total of $1.9 billion in incremental investments since 2018
-Named to Computerworld’s 2023 Top 100 Best Places to work in IT list, marking the fifth consecutive year the company achieved this distinction for having an innovative, industry-leading workplace culture
-Honored by Ripplematch with a 2023 Campus Forward Award for excellence in career hiring, including programs that embrace innovative recruitment strategies, make significant investments in diversity and inclusion, and support the next generation of talent through impactful internships and entry-level programs
-Supported the continuing education of associates with more than 5,000 associates, 90% of whom are hourly, taking advantage of Kroger’s best-in-class education assistance program in 2022
Live Our Purpose
-Recognized as one of Newsweek’s “Most Responsible Companies” for 2023, marking the fourth consecutive year of being recognized for its dedication to corporate responsibility
-Achieved 100% execution of Zero Hunger I Zero Waste food rescue activity in participating Kroger stores
-Celebrated Kroger Health’s recognition as Retailer of the Year by Mass Market Retailers, for elevating the connection between nutrition and health through its food as medicine initiative
About Kroger
At The Kroger Co. (NYSE: KR), we are dedicated to our Purpose: to Feed the Human Spirit™. We are, across our family of companies nearly half a million associates who serve over eleven million customers daily through a seamless digital shopping experience and retail food stores under a variety of banner names, serving America through food inspiration and uplift, and creating #ZeroHungerZeroWaste communities by 2025. To learn more about us, visit our newsroom and investor relations site.
Kroger’s fourth quarter 2022 ended on January 28, 2023.
