The Kroger Co. (KR) 10-Q 22 Sep 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Aug. 15, 2015	Sep. 18, 2015
Document and Entity Information
Entity Registrant Name	KROGER CO
Entity Central Index Key	56,873
Document Type	10-Q
Document Period End Date	Aug. 15, 2015
Amendment Flag	false
Current Fiscal Year End Date	--01-30
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		973,434,417
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Aug. 15, 2015	Aug. 16, 2014	Aug. 15, 2015	Aug. 16, 2014
CONSOLIDATED STATEMENTS OF OPERATIONS
Sales	$ 25,539	$ 25,310	$ 58,590	$ 58,271
Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below	20,065	20,136	45,825	46,201
Operating, general and administrative	4,068	3,920	9,422	9,088
Rent	155	166	370	383
Depreciation and amortization	477	444	1,097	1,025
Operating profit	774	644	1,876	1,574
Interest expense	114	112	262	259
Earnings before income tax expense	660	532	1,614	1,315
Income tax expense	227	182	557	456
Net earnings including noncontrolling interests	433	350	1,057	859
Net earnings attributable to noncontrolling interests		3	5	11
Net earnings attributable to The Kroger Co.	$ 433	$ 347	$ 1,052	$ 848
Net earnings attributable to The Kroger Co. per basic common share	$ 0.44	$ 0.35	$ 1.08	$ 0.85
Average number of common shares used in basic calculation	963	970	966	988
Net earnings attributable to The Kroger Co. per diluted common share	$ 0.44	$ 0.35	$ 1.06	$ 0.84
Average number of common shares used in diluted calculation	977	982	981	1,000
Dividends declared per common share	$ 0.105	$ 0.083	$ 0.198	$ 0.165

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Aug. 15, 2015	Aug. 16, 2014	Aug. 15, 2015	Aug. 16, 2014
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net earnings including noncontrolling interests		$ 433	$ 350	$ 1,057	$ 859
Other comprehensive income (loss)
Unrealized gains on available for sale securities, net of income tax	[1]	4	3	7	2
Amortization of amounts included in net periodic pension expense, net of income tax	[2]	13	5	29	13
Unrealized gains and losses on cash flow hedging activities, net of income tax	[3]	(3)		17
Total other comprehensive income		14	8	53	15
Comprehensive income		447	358	1,110	874
Comprehensive income attributable to noncontrolling interests			3	5	11
Comprehensive income attributable to The Kroger Co.		$ 447	$ 355	$ 1,105	$ 863
[1]	Amount is net of tax of $3 for the second quarter of 2015 and $1 for the second quarter of 2014. Amount is net of tax of $4 for the first two quarters of 2015.
[2]	Amount is net of tax of $8 for the second quarter of 2015 and $4 for the second quarter of 2014. Amount is net of tax of $17 for the first two quarters of 2015 and $8 for the first two quarters of 2014.
[3]	Amount is net of tax of $(2) for the second quarter of 2015 and $10 for the first two quarters of 2015.

CONSOLIDATED STATEMENTS OF COM4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Aug. 15, 2015	Aug. 16, 2014	Aug. 15, 2015	Aug. 16, 2014
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unrealized gains on available for sale securities, income tax	$ 3	$ 1	$ 4
Amortization of amounts included in net periodic pension expense, income tax	8	$ 4	17	$ 8
Unrealized gains and losses on cash flow hedging activities, income tax	$ (2)		$ 10

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Aug. 15, 2015	Jan. 31, 2015
Current assets
Cash and temporary cash investments	$ 268	$ 268
Store deposits in-transit	934	988
Receivables	1,319	1,266
FIFO inventory	6,841	6,933
LIFO reserve	(1,293)	(1,245)
Prepaid and other current assets	457	701
Total current assets	8,526	8,911
Property, plant and equipment, net	18,573	17,912
Intangibles, net	736	757
Goodwill	2,307	2,304
Other assets	639	613
Total Assets	30,781	30,497
Current liabilities
Current portion of long-term debt including obligations under capital leases and financing obligations	1,527	1,885
Trade accounts payable	5,261	5,052
Accrued salaries and wages	1,221	1,291
Deferred income taxes	286	287
Other current liabilities	3,068	2,888
Total current liabilities	11,363	11,403
Long-term debt including obligations under capital leases and financing obligations
Face-value of long-term debt including obligations under capital leases and financing obligations	9,744	9,712
Adjustment to reflect fair-value interest rate hedges	(1)
Long-term debt including obligations under capital leases and financing obligations	9,743	9,712
Deferred income taxes	1,157	1,209
Pension and postretirement benefit obligations	1,460	1,463
Other long-term liabilities	1,176	1,268
Total Liabilities	$ 24,899	$ 25,055
Commitments and contingencies (see Note 9)
SHAREOWNERS' EQUITY
Preferred shares, $100 per share, 5 shares authorized and unissued
Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2015 and 2014	$ 1,918	$ 1,918
Additional paid-in capital	2,901	2,748
Accumulated other comprehensive loss	(759)	(812)
Accumulated earnings	13,228	12,367
Common shares in treasury, at cost, 953 shares in 2015 and 944 shares in 2014	(11,384)	(10,809)
Total Shareowners' Equity - The Kroger Co.	5,904	5,412
Noncontrolling interests	(22)	30
Total Equity	5,882	5,442
Total Liabilities and Equity	$ 30,781	$ 30,497

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Millions	Aug. 15, 2015	Jan. 31, 2015
CONSOLIDATED BALANCE SHEETS
Preferred shares, per share (in dollars per share)	$ 100	$ 100
Preferred shares, shares authorized	5	5
Preferred shares, shares unissued	5	5
Common shares, par per share (in dollars per share)	$ 1	$ 1
Common shares, shares authorized	2,000	2,000
Common shares, shares issued	1,918	1,918
Common shares in treasury, shares	953	944

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Aug. 15, 2015	Aug. 16, 2014
Cash Flows From Operating Activities:
Net earnings including noncontrolling interests	$ 1,057	$ 859
Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities:
Depreciation and amortization	1,097	1,025
LIFO charge	48	54
Stock-based employee compensation	95	76
Expense for Company-sponsored pension plans	56	21
Deferred income taxes	(82)	(103)
Other	54	53
Changes in operating assets and liabilities net of effects from acquisitions of businesses:
Store deposits in-transit	54	2
Receivables	(26)	(47)
Inventories	92	102
Prepaid and other current assets	235	274
Trade accounts payable	210	194
Accrued expenses	(21)	62
Income taxes receivable and payable	(32)	(47)
Other	(82)	67
Net cash provided by operating activities	2,755	2,592
Cash Flows From Investing Activities:
Payments for property and equipment, including payments for lease buyouts	(1,696)	(1,347)
Proceeds from sale of assets	24	18
Other	(38)	16
Net cash used by investing activities	(1,710)	(1,313)
Cash Flows From Financing Activities:
Proceeds from issuance of long-term debt	24	48
Payments on long-term debt	(34)	(26)
Net payments of commercial paper	(347)	(160)
Dividends paid	(181)	(166)
Excess tax benefits on stock-based awards	73	32
Proceeds from issuance of capital stock	74	66
Treasury stock purchases	(628)	(1,221)
Investment in the remaining equity of a noncontrolling interest	(26)
Other		(5)
Net cash used by financing activities	(1,045)	(1,432)
Net decrease in cash and temporary cash investments		(153)
Cash and temporary cash investments:
Beginning of year	268	401
End of quarter	268	248
Reconciliation of capital investments:
Payments for property and equipment, including payments for lease buyouts	(1,696)	(1,347)
Payments for lease buyouts	16	28
Changes in construction-in-progress payables	(47)	(63)
Total capital investments, excluding lease buyouts	(1,727)	(1,382)
Disclosure of cash flow information:
Cash paid during the year for interest	279	282
Cash paid during the year for income taxes	$ 651	$ 582

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY - USD ($) shares in Millions, $ in Millions	Common Stock	Additional Paid-In Capital	Treasury Stock	Accumulated Other Comprehensive Gain (Loss)	Accumulated Earnings	Noncontrolling Interest	Total
Balance at Feb. 01, 2014	$ 1,918	$ 2,590	$ (9,641)	$ (464)	$ 10,981	$ 11	$ 5,395
Balance (in shares) at Feb. 01, 2014	1,918		902
Issuance of common stock:
Stock options exercised			$ 66				66
Stock options exercised (in shares)			(6)
Restricted stock issued		(83)	$ 37				(46)
Restricted stock issued (in shares)			(4)
Treasury stock activity:
Treasury stock purchases, at cost			$ (1,129)				(1,129)
Treasury stock purchases, at cost (in shares)			50
Stock options exchanged			$ (92)				(92)
Stock options exchanged (in shares)			4
Share-based employee compensation		76					76
Other comprehensive gain net of income tax of $31 and $8 for the first two quarters of 2015 and 2014, respectively				15			15
Other		63	$ (26)			3	40
Cash dividends declared ($0.198 and $0.165 per common share for the first two quarters of 2015 and 2014, respectively)					(162)		(162)
Net earnings including noncontrolling interests					848	11	859
Balance at Aug. 16, 2014	$ 1,918	2,646	$ (10,785)	(449)	11,667	25	5,022
Balance (in shares) at Aug. 16, 2014	1,918		946
Balance at Jan. 31, 2015	$ 1,918	2,748	$ (10,809)	(812)	12,367	30	5,442
Balance (in shares) at Jan. 31, 2015	1,918		944
Issuance of common stock:
Stock options exercised			$ 74				74
Stock options exercised (in shares)			(6)
Restricted stock issued		(110)	$ 33				(77)
Restricted stock issued (in shares)			(3)
Treasury stock activity:
Treasury stock purchases, at cost			$ (500)				(500)
Treasury stock purchases, at cost (in shares)			14
Stock options exchanged			$ (128)				(128)
Stock options exchanged (in shares)			4
Share-based employee compensation		95					95
Other comprehensive gain net of income tax of $31 and $8 for the first two quarters of 2015 and 2014, respectively				53			53
Investment in the remaining equity of a noncontrolling interest		40				(57)	(17)
Other		128	$ (54)				74
Cash dividends declared ($0.198 and $0.165 per common share for the first two quarters of 2015 and 2014, respectively)					(191)		(191)
Net earnings including noncontrolling interests					1,052	5	1,057
Balance at Aug. 15, 2015	$ 1,918	$ 2,901	$ (11,384)	$ (759)	$ 13,228	$ (22)	$ 5,882
Balance (in shares) at Aug. 15, 2015	1,918		953

CONSOLIDATED STATEMENTS OF CHA9

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY (Parenthetical) - USD ($) $ in Millions	6 Months Ended
	Aug. 15, 2015	Aug. 16, 2014
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY
Other comprehensive gain (loss), income tax	$ 31	$ 8
Cash dividends declared per common share (in dollars per share)	$ 0.198	$ 0.165

ACCOUNTING POLICIES

ACCOUNTING POLICIES	6 Months Ended
	Aug. 15, 2015
ACCOUNTING POLICIES
ACCOUNTING POLICIES	1. A CCOUNTING P OLICIES Basis of Presentation and Principles of Consolidation The accompanying financial statements include the consolidated accounts of The Kroger Co., its wholly-owned subsidiaries, and the Variable Interest Entities in which the Company is the primary beneficiary. The January 31, 2015 balance sheet was derived from audited financial statements and, due to its summary nature, does not include all disclosures required by generally accepted accounting principles (“GAAP”). Significant intercompany transactions and balances have been eliminated. References to the “Company” in these Consolidated Financial Statements mean the consolidated company. In the opinion of management, the accompanying unaudited Consolidated Financial Statements include all normal, recurring adjustments that are necessary for a fair presentation of results of operations for such periods but should not be considered as indicative of results for a full year. The financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted, pursuant to SEC regulations. Accordingly, the accompanying Consolidated Financial Statements should be read in conjunction with the financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2015. The unaudited information in the Consolidated Financial Statements for the second quarter and two quarters ended August 15, 2015 and August 16, 2014, includes the results of operations of the Company for the 12 and 28-week periods then ended. The net increase (decrease) in book overdrafts previously reported in financing activities in the Consolidated Statements of Cash Flows is now reported within operating activities. Prior year amounts have been revised to the current year presentation. These revisions were not material to the prior years. Refer to Note 7 for an additional change to the Consolidated Balance Sheets for a recently adopted accounting standard regarding the presentation of debt issuance costs. On June 25, 2015, the Company’s Board of Directors approved a two-for-one stock split of The Kroger Co.’s common shares in the form of a 100% stock dividend, which was effective July 13, 2015. All share and per share amounts in our Consolidated Financial Statements and related notes have been retroactively adjusted to reflect the stock split for all periods presented.

MERGER

MERGER	6 Months Ended
	Aug. 15, 2015
MERGER
MERGER	2. M ERGER On August 18, 2014, the Company closed its merger with Vitacost.com, Inc. (“Vitacost.com”). The Company’s purchase price allocation was finalized in the second quarter of 2015 and t he changes in the fair values assumed from the preliminary amounts were not material. Pro forma results of operations, assuming the transaction had taken place at the beginning of 2013, are included in the following table. The pro forma information includes historical results of operations of Vitacost.com and adjustments for interest expense that would have been incurred due to financing the merger, depreciation and amortization of the assets acquired and excludes the pre-merger transaction related expenses incurred by Vitacost.com and the Company. The pro forma information does not include efficiencies, cost reductions or synergies expected to result from the merger. The unaudited pro forma financial information is not necessarily indicative of the results that actually would have occurred had the merger been completed at the beginning of the 2013. Second Quarter Ended August 16, 2014 Two Quarters Ended August 16, 2014 Sales $ $ Net earnings including noncontrolling interests Net earnings attributable to noncontrolling interests Net earnings attributable to The Kroger Co. $ $

STOCK OPTION PLANS

STOCK OPTION PLANS	6 Months Ended
	Aug. 15, 2015
STOCK OPTION PLANS
STOCK OPTION PLANS	3. S TOCK O PTION P LANS The Company recognized total share-based compensation of $44 and $36 in the second quarters ended August 15, 2015 and August 16, 2014, respectively. The Company recognized total share-based compensation of $95 and $76 in the first two quarters of 2015 and 2014, respectively. These costs were recognized as operating, general and administrative costs in the Company’s Consolidated Statements of Operations. The Company grants options for common shares (“stock options”) to employees under various plans at an option price equal to the fair market value of a common share on the date of grant. In addition to stock options, the Company awards restricted stock to employees and its non-employee directors under various plans. Equity awards may be made once each quarter on a predetermined date. It has been the Company’s practice to make an annual grant to employees, which occurred in the second quarter of 2015. Special grants may be made in the other three quarters. Grants to non-employee directors occur on the same date that the annual grant to employees occurs. Stock options granted in the first two quarters of 2015 expire 10 years from the date of grant and vest between one year and five years from the date of grant. Restricted stock awards granted in the first two quarters of 2015 have restrictions that lapse between one year and five years from the date of the awards. All grants and awards become immediately exercisable, in the case of options, and restrictions lapse, in the case of restricted stock, upon certain changes in control of the Company. Changes in equity awards outstanding under the plans are summarized below. Stock Options Shares subject to option Weighted-average exercise price Outstanding, January 31, 2015 $ Granted $ Exercised ) $ Canceled or Expired ) $ Outstanding, August 15, 2015 $ Restricted Stock Restricted shares outstanding Weighted-average grant-date fair value Outstanding, January 31, 2015 $ Granted $ Vested ) $ Forfeited ) $ Outstanding, August 15, 2015 $ The weighted-average grant date fair value of stock options granted during the first two quarters of 2015 and 2014, was $9.76 and $5.98, respectively. The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model, based on the assumptions shown in the table below. The Black-Scholes model utilizes accounting judgment and financial estimates, including the term option holders are expected to retain their stock options before exercising them, the volatility of the Company’s share price over that expected term, the dividend yield over the term, and the number of awards expected to be forfeited before they vest. Using alternative assumptions in the calculation of fair value would produce fair values for stock option grants that could be different than those used to record stock-based compensation expense in the Consolidated Statements of Operations. The increase in the fair value of the stock options granted during the first two quarters of 2015, compared to the first two quarters of 2014, resulted primarily from an increase in the Company’s share price, which decreased the expected dividend yield. The following table reflects the weighted-average assumptions used for grants awarded to option holders: 2015 2014 Risk-free interest rate 2.12% 2.06% Expected dividend yield 1.20% 1.51% Expected volatility 24.07% 25.29% Expected term 7.2 Years 6.6 Years

DEBT OBLIGATIONS

DEBT OBLIGATIONS	6 Months Ended
	Aug. 15, 2015
DEBT OBLIGATIONS
DEBT OBLIGATIONS	4. D EBT O BLIGATIONS Long-term debt consists of: August 15, January 31, 2015 2015 0.76% to 8.00% Senior Notes due through 2043 $ $ 5.00% to 12.75% Mortgages due in varying amounts through 2027 0.37% to 0.38% Commercial paper borrowings due through October 2015 Other Total debt, excluding capital leases and financing obligations Less current portion ) ) Total long-term debt, excluding capital leases and financing obligations $ $

BENEFIT PLANS

BENEFIT PLANS	6 Months Ended
	Aug. 15, 2015
BENEFIT PLANS
BENEFIT PLANS	5. B ENEFIT P LANS The following table provides the components of net periodic benefit cost for the Company-sponsored defined benefit pension plans and other post-retirement benefit plans for the second quarters of 2015 and 2014. Second Quarter Ended Pension Benefits Other Benefits August 15, 2015 August 16, 2014 August 15, 2015 August 16, 2014 Components of net periodic benefit cost: Service cost $ $ $ $ Interest cost Expected return on plan assets ) ) — — Amortization of: Prior service cost — — ) ) Actuarial loss (gain) ) ) Net periodic benefit cost $ $ $ $ The following table provides the components of net periodic benefit cost for the Company-sponsored defined benefit pension plans and other post-retirement benefit plans for the first two quarters of 2015 and 2014. Two Quarters Ended Pension Benefits Other Benefits August 15, 2015 August 16, 2014 August 15, 2015 August 16, 2014 Components of net periodic benefit cost: Service cost $ $ $ $ Interest cost Expected return on plan assets ) ) — — Amortization of: Prior service cost — — ) ) Actuarial loss (gain) ) ) Net periodic benefit cost $ $ $ $ The Company contributed $5 to its Company-sponsored defined benefit pension plans in the first two quarters of 2015. The Company is not required and does not expect to make any additional contributions in 2015. The Company contributed $107 and $98 to employee 401(k) retirement savings accounts in the first two quarters of 2015 and 2014, respectively. During the first quarter of 2014, the Company incurred a charge of $56 (after-tax) due to commitments and withdrawal liabilities arising from the restructuring of certain multi-employer pension plan obligations. The Company also contributes to various multi-employer pension plans based on obligations arising from most of its collective bargaining agreements. These plans provide retirement benefits to participants based on their service to contributing employers. The Company recognizes expense in connection with these plans as contributions are funded.

EARNINGS PER COMMON SHARE

EARNINGS PER COMMON SHARE	6 Months Ended
	Aug. 15, 2015
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE	6. E ARNINGS P ER C OMMON S HARE Net earnings attributable to The Kroger Co. per basic common share equal net earnings attributable to The Kroger Co. less income allocated to participating securities divided by the weighted-average number of common shares outstanding. Net earnings attributable to The Kroger Co. per diluted common share equal net earnings attributable to The Kroger Co. less income allocated to participating securities divided by the weighted-average number of common shares outstanding, after giving effect to dilutive stock options. The following table provides a reconciliation of net earnings attributable to The Kroger Co. and shares used in calculating net earnings attributable to The Kroger Co. per basic common share to those used in calculating net earnings attributable to The Kroger Co. per diluted common share: Second Quarter Ended Second Quarter Ended August 15, 2015 August 16, 2014 Earnings (Numerator) Shares (Denominator) Per Share Amount Earnings (Numerator) Shares (Denominator) Per Share Amount Net earnings attributable to The Kroger Co. per basic common share $ $ $ $ Dilutive effect of stock options Net earnings attributable to The Kroger Co. per diluted common share $ $ $ $ Two Quarters Ended Two Quarters Ended August 15, 2015 August 16, 2014 Earnings (Numerator) Shares (Denominator) Per Share Amount Earnings (Numerator) Shares (Denominator) Per Share Amount Net earnings attributable to The Kroger Co. per basic common share $ $ $ $ Dilutive effect of stock options Net earnings attributable to The Kroger Co. per diluted common share $ $ $ $ The Company had combined undistributed and distributed earnings to participating securities totaling $4 in the second quarters of 2015 and 2014. For the first two quarters of 2015 and 2014, the Company had combined undistributed and distributed earnings to participating securities of $10 and $8, respectively. The Company had options outstanding for approximately 2 million and 3 million shares during the second quarters of 2015 and 2014, respectively, that were excluded from the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive effect on net earnings per share. The Company had options outstanding for approximately 1 million shares in the first two quarters of 2015 and 3 million shares in the first two quarters of 2014 that were excluded from the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive effect on earnings per share.

RECENTLY ADOPTED ACCOUNTING STA

RECENTLY ADOPTED ACCOUNTING STANDARDS	6 Months Ended
	Aug. 15, 2015
RECENTLY ADOPTED ACCOUNTING STANDARDS
RECENTLY ADOPTED ACCOUNTING STANDARDS	7. R ECENTLY A DOPTED A CCOUNTING S TANDARDS In 2015, the Financial Accounting Standards Board (“FASB”) amended Accounting Standards Codification 835, “Interest-Imputation of Interest.” The amendment simplifies the presentation of debt issuance costs related to a recognized debt liability by requiring it be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This amendment became effective for the Company beginning February 1, 2015, and was adopted retrospectively in accordance with the standard. The adoption of this amendment resulted in amounts previously reported in other assets to now be reported within long-term debt including obligations under capital leases and financing obligations in the Consolidated Balance Sheets. These amounts were not material to the prior year. The adoption of this amendment did not have an effect on the Company’s Consolidated Statements of Operations.

RECENTLY ISSUED ACCOUNTING STAN

RECENTLY ISSUED ACCOUNTING STANDARDS	6 Months Ended
	Aug. 15, 2015
RECENTLY ISSUED ACCOUNTING STANDARDS
RECENTLY ISSUED ACCOUNTING STANDARDS	8. R ECENTLY I SSUED A CCOUNTING S TANDARDS In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “ Revenue from Contracts with Customers,” which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Per ASU 2015-14, “Deferral of Effective Date,” this guidance will be effective for the Company in the first quarter of its fiscal year ending February 2, 2019. Early adoption is permitted as of the first quarter of the Company’s fiscal year ending February 3, 2018. The Company is currently in the process of evaluating the effect of adoption of this ASU on the Company’s Consolidated Financial Statements. In April 2015, the FASB issued ASU 2015-04, “Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets.” This amendment permits an entity to measure defined benefit plan assets and obligations using the month end that is closest to the entity’s fiscal year end for all plans. This guidance will be effective for the Company in its fiscal year ending January 28, 2017. The implementation of this amendment will not have an effect on the Company’s Consolidated Statements of Operations and will not have a significant effect on the Company’s Consolidated Balance Sheets. In April 2015, the FASB issued ASU 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).” This amendment removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share. This guidance will be effective for the Company in its fiscal year ending January 28, 2017. The implementation of this amendment will have an effect on the Company’s Notes to the Consolidated Financial Statements and will not have an effect on the Company’s Consolidated Statements of Operations or Consolidated Balance Sheets.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Aug. 15, 2015
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	9. C OMMITMENTS AND C ONTINGENCIES The Company continuously evaluates contingencies based upon the best available evidence. The Company believes that allowances for loss have been provided to the extent necessary and that its assessment of contingencies is reasonable. To the extent that resolution of contingencies results in amounts that vary from the Company’s estimates, future earnings will be charged or credited. Litigation — Various claims and lawsuits arising in the normal course of business, including suits charging violations of certain antitrust, wage and hour, or civil rights laws, as well as product liability cases, are pending against the Company. Some of these suits purport or have been determined to be class actions and/or seek substantial damages. Any damages that may be awarded in antitrust cases will be automatically trebled. Although it is not possible at this time to evaluate the merits of all of these claims and lawsuits, nor their likelihood of success, the Company is of the belief that any resulting liability will not have a material effect on the Company’s financial position, results of operations, or cash flows. The Company continually evaluates its exposure to loss contingencies arising from pending or threatened litigation and believes it has made provisions where it is reasonably possible to estimate and where an adverse outcome is probable. Nonetheless, assessing and predicting the outcomes of these matters involve substantial uncertainties. Management currently believes that the aggregate range of loss for the Company’s exposure is not material to the Company. It remains possible that despite management’s current belief, material differences in actual outcomes or changes in management’s evaluation or predictions could arise that could have a material adverse effect on the Company’s financial condition , results of operations, or cash flows.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	6 Months Ended
	Aug. 15, 2015
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	10. F AIR V ALUE M EASUREMENTS GAAP establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of the fair value hierarchy defined in the standards are as follows: Level 1 — Quoted prices are available in active markets for identical assets or liabilities; Level 2 — Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable; Level 3 — Unobservable pricing inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing an asset or liability. For items carried at (or adjusted to) fair value in the Consolidated Financial Statements, the following tables summarize the fair value of these instruments at August 15, 2015 and January 31, 2015: August 15, 2015 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Trading Securities $ $ — $ — $ Available-for-Sale Securities — — Warrants — — Long-Lived Assets — — Interest Rate Hedges — ) — ) Total $ $ $ $ January 31, 2015 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Trading Securities $ $ — $ — $ Available-for-Sale Securities — — Warrants — — Long-Lived Assets — — Interest Rate Hedges — ) — ) Total $ $ ) $ $ In the first two quarters of 2015, unrealized gains on the Level 1 available-for-sale securities totaled $11. The Company values warrants using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model is classified as a Level 2 input. The Company values interest rate hedges using observable forward yield curves. These forward yield curves are classified as Level 2 inputs. Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analysis of goodwill, other intangible assets, and long-lived assets, and in the valuation of store lease exit costs. The Company reviews goodwill and other intangible assets for impairment annually, during the fourth quarter of each fiscal year, and as circumstances indicate the possibility of impairment. See Note 3 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the fiscal year ended January 31, 2015 for further discussion related to the Company’s carrying value of goodwill. Long-lived assets and store lease exit costs were measured at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. See Note 1 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the fiscal year ended January 31, 2015 for further discussion of the Company’s policies regarding the valuation of long-lived assets and store lease exit costs. For the first two quarters of 2015, long-lived assets with a carrying amount of $30 were written down to their fair value of $4 resulting in an impairment charge of $26. For the first two quarters of 2014, long-lived assets with a carrying amount of $27 were written down to their fair value of $10 resulting in an impairment charge of $17. In fiscal year 2014, long-lived assets with a carrying amount of $59 were written down to their fair value of $22, resulting in an impairment charge of $37. Fair Value of Other Financial Instruments Current and Long-term Debt The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted market prices for the same or similar issues adjusted for illiquidity based on available market evidence. If quoted market prices were not available, the fair value was based upon the net present value of the future cash flow using the forward interest rate yield curve in effect at August 15, 2015 and January 31, 2015. At August 15, 2015, the fair value of total debt was $11,509 compared to a carrying value of $10,695. At January 31, 2015, the fair value of total debt was $12,319 compared to a carrying value of $11,026. The reduction in the fair value of total debt from January 31, 2015, compared to August 15, 2015, is primarily due to a decrease in the forward interest rate yield curve and a reduction in the amount of outstanding commercial paper. Cash and Temporary Cash Investments, Store Deposits In-Transit, Receivables, Prepaid and Other Current Assets, Trade Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities The carrying amounts of these items approximated fair value. Other Assets The fair values of these investments were estimated based on quoted market prices for those or similar investments, or estimated cash flows, if appropriate. At August 15, 2015 and January 31, 2015, the carrying and fair value of long-term investments for which fair value is determinable was $137 and $133, respectively. At August 15, 2015 and January 31, 2015, the carrying value of notes receivable for which fair value is determinable was $112 and $98, respectively.

ACCUMULATED OTHER COMPREHENSIVE

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	6 Months Ended
	Aug. 15, 2015
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	11. A CCUMULATED O THER C OMPREHENSIVE I NCOME (L OSS ) The following table represents the changes in AOCI by component for the first two quarters of 2014 and 2015 : Cash Flow Hedging Activities(1) Available for sale Securities(1) Pension and Postretirement Defined Benefit Plans(1) Total(1) Balance at February 1, 2014 $ ) $ $ ) $ ) OCI before reclassifications — — Amounts reclassified out of AOCI(3) — — Net current-period OCI — Balance at August 16, 2014 $ ) $ $ ) $ ) Balance at January 31, 2015 $ ) $ $ ) $ ) OCI before reclassifications(2) — Amounts reclassified out of AOCI(3) — — Net current-period OCI Balance at August 15, 2015 $ ) $ $ ) $ ) (1) All amounts are net of tax. (2) Net of tax of $10 and $4 for cash flow hedging activities and available for sale securities, respectively, for the first two quarters of 2015. (3) Net of tax of $8 for pension and postretirement defined benefit plans for the first two quarters of 2014 and $17 for pension and postretirement defined benefit plans for the first two quarters of 2015. The following table represents the items reclassified out of AOCI and the related tax effects for the second quarter and first two quarters of 2015 and 2014: Second Quarter Ended Two Quarters Ended August 15, 2015 August 16, 2014 August 15, 2015 August 16, 2014 Pension and postretirement defined benefit plan items Amortization of amounts included in net periodic pension expense(1) Tax expense ) ) ) ) Net of tax Total reclassifications, net of tax $ $ $ $ (1) Reclassified from AOCI into merchandise costs and operating, general and administrative expense. These components are included in the computation of net periodic pension expense (see Note 5 to the Company’s Consolidated Financial Statements for additional details).

INCOME TAXES

INCOME TAXES	6 Months Ended
	Aug. 15, 2015
INCOME TAXES
INCOME TAXES	12. I NCOME T AXES The effective income tax rate was 34.4% in the second quarter of 2015, compared to 34.2% for the second quarter of 2014. The effective income tax rate was 34.5% for the first two quarters of 2015, compared to 34.7% for the first two quarters of 2014. The effective income tax rate for the second quarter of 2015 and the first two quarters of 2015 differed from the federal statutory rate primarily due to the benefit from the favorable conclusion of certain tax audits and utilization of tax credits and deductions, partially offset by the effect of state income taxes. The effective income tax rate for the second quarter of 2014 and the first two quarters of 2014 differed from the federal statutory rate primarily due to the utilization of tax credits and deductions, partially offset by the effect of state income taxes.

ACCOUNTING POLICIES (Policies)

ACCOUNTING POLICIES (Policies)	6 Months Ended
	Aug. 15, 2015
ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation	Basis of Presentation and Principles of Consolidation The accompanying financial statements include the consolidated accounts of The Kroger Co., its wholly-owned subsidiaries, and the Variable Interest Entities in which the Company is the primary beneficiary. The January 31, 2015 balance sheet was derived from audited financial statements and, due to its summary nature, does not include all disclosures required by generally accepted accounting principles (“GAAP”). Significant intercompany transactions and balances have been eliminated. References to the “Company” in these Consolidated Financial Statements mean the consolidated company. In the opinion of management, the accompanying unaudited Consolidated Financial Statements include all normal, recurring adjustments that are necessary for a fair presentation of results of operations for such periods but should not be considered as indicative of results for a full year. The financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted, pursuant to SEC regulations. Accordingly, the accompanying Consolidated Financial Statements should be read in conjunction with the financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2015. The unaudited information in the Consolidated Financial Statements for the second quarter and two quarters ended August 15, 2015 and August 16, 2014, includes the results of operations of the Company for the 12 and 28-week periods then ended. The net increase (decrease) in book overdrafts previously reported in financing activities in the Consolidated Statements of Cash Flows is now reported within operating activities. Prior year amounts have been revised to the current year presentation. These revisions were not material to the prior years. Refer to Note 7 for an additional change to the Consolidated Balance Sheets for a recently adopted accounting standard regarding the presentation of debt issuance costs. On June 25, 2015, the Company’s Board of Directors approved a two-for-one stock split of The Kroger Co.’s common shares in the form of a 100% stock dividend, which was effective July 13, 2015. All share and per share amounts in our Consolidated Financial Statements and related notes have been retroactively adjusted to reflect the stock split for all periods presented.

MERGER (Tables)

MERGER (Tables)	6 Months Ended
	Aug. 15, 2015
MERGER
Schedule of pro forma results of operations	Second Quarter Ended August 16, 2014 Two Quarters Ended August 16, 2014 Sales $ $ Net earnings including noncontrolling interests Net earnings attributable to noncontrolling interests Net earnings attributable to The Kroger Co. $ $

STOCK OPTION PLANS (Tables)

STOCK OPTION PLANS (Tables)	6 Months Ended
	Aug. 15, 2015
STOCK OPTION PLANS
Summary of changes in stock options outstanding	Shares subject to option Weighted-average exercise price Outstanding, January 31, 2015 $ Granted $ Exercised ) $ Canceled or Expired ) $ Outstanding, August 15, 2015 $
Summary of changes in restricted stock outstanding	Restricted shares outstanding Weighted-average grant-date fair value Outstanding, January 31, 2015 $ Granted $ Vested ) $ Forfeited ) $ Outstanding, August 15, 2015 $
Summary of weighted-average assumptions used for grants awarded to option holders	2015 2014 Risk-free interest rate 2.12% 2.06% Expected dividend yield 1.20% 1.51% Expected volatility 24.07% 25.29% Expected term 7.2 Years 6.6 Years

DEBT OBLIGATIONS (Tables)

DEBT OBLIGATIONS (Tables)	6 Months Ended
	Aug. 15, 2015
DEBT OBLIGATIONS
Schedule of long-term debt	August 15, January 31, 2015 2015 0.76% to 8.00% Senior Notes due through 2043 $ $ 5.00% to 12.75% Mortgages due in varying amounts through 2027 0.37% to 0.38% Commercial paper borrowings due through October 2015 Other Total debt, excluding capital leases and financing obligations Less current portion ) ) Total long-term debt, excluding capital leases and financing obligations $ $

BENEFIT PLANS (Tables)

BENEFIT PLANS (Tables)	6 Months Ended
	Aug. 15, 2015
BENEFIT PLANS
Schedule of components of net periodic benefit cost	Second Quarter Ended Pension Benefits Other Benefits August 15, 2015 August 16, 2014 August 15, 2015 August 16, 2014 Components of net periodic benefit cost: Service cost $ $ $ $ Interest cost Expected return on plan assets ) ) — — Amortization of: Prior service cost — — ) ) Actuarial loss (gain) ) ) Net periodic benefit cost $ $ $ $ Two Quarters Ended Pension Benefits Other Benefits August 15, 2015 August 16, 2014 August 15, 2015 August 16, 2014 Components of net periodic benefit cost: Service cost $ $ $ $ Interest cost Expected return on plan assets ) ) — — Amortization of: Prior service cost — — ) ) Actuarial loss (gain) ) ) Net periodic benefit cost $ $ $ $

EARNINGS PER COMMON SHARE (Tabl

EARNINGS PER COMMON SHARE (Tables)	6 Months Ended
	Aug. 15, 2015
EARNINGS PER COMMON SHARE
Schedule of earnings per common and diluted shares	Second Quarter Ended Second Quarter Ended August 15, 2015 August 16, 2014 Earnings (Numerator) Shares (Denominator) Per Share Amount Earnings (Numerator) Shares (Denominator) Per Share Amount Net earnings attributable to The Kroger Co. per basic common share $ $ $ $ Dilutive effect of stock options Net earnings attributable to The Kroger Co. per diluted common share $ $ $ $ Two Quarters Ended Two Quarters Ended August 15, 2015 August 16, 2014 Earnings (Numerator) Shares (Denominator) Per Share Amount Earnings (Numerator) Shares (Denominator) Per Share Amount Net earnings attributable to The Kroger Co. per basic common share $ $ $ $ Dilutive effect of stock options Net earnings attributable to The Kroger Co. per diluted common share $ $ $ $

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	6 Months Ended
	Aug. 15, 2015
FAIR VALUE MEASUREMENTS
Summary of fair value measurements	August 15, 2015 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Trading Securities $ $ — $ — $ Available-for-Sale Securities — — Warrants — — Long-Lived Assets — — Interest Rate Hedges — ) — ) Total $ $ $ $ January 31, 2015 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Trading Securities $ $ — $ — $ Available-for-Sale Securities — — Warrants — — Long-Lived Assets — — Interest Rate Hedges — ) — ) Total $ $ ) $ $

ACCUMULATED OTHER COMPREHENSI29

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)	6 Months Ended
	Aug. 15, 2015
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Schedule of changes in AOCI by component	Cash Flow Hedging Activities(1) Available for sale Securities(1) Pension and Postretirement Defined Benefit Plans(1) Total(1) Balance at February 1, 2014 $ ) $ $ ) $ ) OCI before reclassifications — — Amounts reclassified out of AOCI(3) — — Net current-period OCI — Balance at August 16, 2014 $ ) $ $ ) $ ) Balance at January 31, 2015 $ ) $ $ ) $ ) OCI before reclassifications(2) — Amounts reclassified out of AOCI(3) — — Net current-period OCI Balance at August 15, 2015 $ ) $ $ ) $ ) (1) All amounts are net of tax. (2) Net of tax of $10 and $4 for cash flow hedging activities and available for sale securities, respectively, for the first two quarters of 2015. (3) Net of tax of $8 for pension and postretirement defined benefit plans for the first two quarters of 2014 and $17 for pension and postretirement defined benefit plans for the first two quarters of 2015.
Schedule of items reclassified out of AOCI and the related tax effects	Second Quarter Ended Two Quarters Ended August 15, 2015 August 16, 2014 August 15, 2015 August 16, 2014 Pension and postretirement defined benefit plan items Amortization of amounts included in net periodic pension expense(1) Tax expense ) ) ) ) Net of tax Total reclassifications, net of tax $ $ $ $ (1) Reclassified from AOCI into merchandise costs and operating, general and administrative expense. These components are included in the computation of net periodic pension expense (see Note 5 to the Company’s Consolidated Financial Statements for additional details).

ACCOUNTING POLICIES (Details)

ACCOUNTING POLICIES (Details)	Jun. 25, 2015	Aug. 15, 2015	Aug. 16, 2014	Aug. 15, 2015	Aug. 16, 2014
Basis of Presentation and Principles of Consolidation
Length of fiscal period		84 days	84 days	196 days	196 days
Stock split conversion ratio	2
Common stock dividend rate percentage	100.00%

MERGER (Details)

MERGER (Details) - Aug. 16, 2014 - USD ($) $ in Millions	Total	Total
Pro forma results of operations
Sales	$ 25,402	$ 58,494
Net earnings including noncontrolling interests	346	848
Net earnings attributable to noncontrolling interests	3	11
Net earnings attributable to The Kroger Co.	$ 343	$ 837

STOCK OPTION PLANS (Details)

STOCK OPTION PLANS (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	Jan. 31, 2015	Aug. 15, 2015	Aug. 16, 2014	Aug. 15, 2015	Aug. 16, 2014
STOCK OPTION PLANS
Share-based employee compensation		$ 44	$ 36	$ 95	$ 76
Stock options
Stock Options Plans
Stock options, expiration period from date of grant				10 years
Shares subject to option
Outstanding at the beginning of the period (in shares)				40.8
Granted (in shares)				3.3
Exercised (in shares)				(5.7)
Canceled or Expired (in shares)				(0.2)
Outstanding at the end of the period (in shares)	40.8	38.2		38.2
Weighted-average exercise price
Outstanding at the beginning of the period (in dollars per share)				$ 15.56
Granted (in dollars per share)				38.33
Exercised (in dollars per share)				12.99
Canceled or Expired (in dollars per share)				17.05
Outstanding at the end of the period (in dollars per share)	$ 15.56	$ 17.90		17.90
Weighted-average grant-date fair value
Weighted-average grant date fair value of stock options granted in period (in dollars per share)				$ 9.76	$ 5.98
Weighted average assumptions for grants awarded to option holders
Risk-free interest rate	2.06%			2.12%
Expected dividend yield	1.51%			1.20%
Expected volatility	25.29%			24.07%
Expected term	6 years 7 months 6 days			7 years 2 months 12 days
Stock options | Minimum
Stock Options Plans
Vesting period from date of grant				1 year
Stock options | Maximum
Stock Options Plans
Vesting period from date of grant				5 years
Restricted stock
Restricted shares outstanding
Outstanding at the beginning of the period (in shares)				10.2
Granted (in shares)				3.1
Vested (in shares)				(4.9)
Forfeited (in shares)				(0.2)
Outstanding at the end of the period (in shares)	10.2	8.2		8.2
Weighted-average grant-date fair value
Outstanding at the beginning of the period (in dollars per share)				$ 21.04
Granted (in dollars per share)				38.32
Vested (in dollars per share)				21.43
Forfeited (in dollars per share)				21.68
Outstanding at the end of the period (in dollars per share)	$ 21.04	$ 27.38		$ 27.38
Restricted stock | Minimum
Stock Options Plans
Vesting period from date of grant				1 year
Restricted stock | Maximum
Stock Options Plans
Vesting period from date of grant				5 years

DEBT OBLIGATIONS (Details)

DEBT OBLIGATIONS (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Aug. 15, 2015	Jan. 31, 2015
Debt
Total debt, excluding capital leases and financing obligations	$ 10,695	$ 11,026
Less current portion	(1,484)	(1,844)
Total long-term debt, excluding capital leases and financing obligations	9,211	9,182
Senior Notes due through 2043
Debt
Total debt, excluding capital leases and financing obligations	$ 9,231	$ 9,224
Interest rate, minimum range (as a percent)	0.76%	0.76%
Interest rate, maximum range (as a percent)	8.00%	8.00%
Mortgages due in varying amounts through 2027
Debt
Total debt, excluding capital leases and financing obligations	$ 69	$ 73
Interest rate, minimum range (as a percent)	5.00%	5.00%
Interest rate, maximum range (as a percent)	12.75%	12.75%
Other
Debt
Total debt, excluding capital leases and financing obligations	$ 467	$ 454
Commercial paper borrowings due through October 2015
Debt
Total debt, excluding capital leases and financing obligations	$ 928	$ 1,275
Interest rate, minimum range (as a percent)	0.37%	0.37%
Interest rate, maximum range (as a percent)	0.38%	0.38%

BENEFIT PLANS (Details)

BENEFIT PLANS (Details) - USD ($) $ in Millions	3 Months Ended		4 Months Ended	6 Months Ended
	Aug. 15, 2015	Aug. 16, 2014	May. 24, 2014	Aug. 15, 2015	Aug. 16, 2014
BENEFIT PLANS
Cost of other defined contribution plans				$ 107	$ 98
Multiemployer pension plan charge (after-tax)			$ 56
Pension Benefits
Components of net periodic benefit cost:
Service cost	$ 16	$ 10		35	24
Interest cost	39	42		90	98
Expected return on plan assets	(53)	(56)		(124)	(130)
Amortization of:
Actuarial loss (gain)	24	12		55	28
Net periodic benefit expense	26	8		56	20
Contributions into Fund				5
Other Benefits
Components of net periodic benefit cost:
Service cost	3	2		6	6
Interest cost	2	3		6	7
Amortization of:
Prior service cost	(3)	(2)		(6)	(4)
Actuarial loss (gain)	(1)	(1)		(3)	(3)
Net periodic benefit expense	$ 1	$ 2		$ 3	$ 6

EARNINGS PER COMMON SHARE (Deta

EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Aug. 15, 2015	Aug. 16, 2014	Aug. 15, 2015	Aug. 16, 2014
EARNINGS PER COMMON SHARE
Net earnings attributable to The Kroger Co. per basic common share	$ 429	$ 343	$ 1,042	$ 840
Average number of common shares used in basic calculation	963	970	966	988
Net earnings attributable to The Kroger Co. per basic common share	$ 0.44	$ 0.35	$ 1.08	$ 0.85
Dilutive effect of stock options (in shares)	14	12	15	12
Net earnings attributable to The Kroger Co. per diluted common share	$ 429	$ 343	$ 1,042	$ 840
Average number of common shares used in diluted calculation	977	982	981	1,000
Net earnings attributable to The Kroger Co. per diluted common share	$ 0.44	$ 0.35	$ 1.06	$ 0.84
Undistributed and distributed earnings to participating securities	$ 4	$ 4	$ 10	$ 8
Shares excluded from the earnings per share calculation due to anti-dilutive effect on earnings per share	2	3	1	3

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions	6 Months Ended		12 Months Ended
	Aug. 15, 2015	Aug. 16, 2014	Jan. 31, 2015
Fair value of financial instruments carried at fair value
Asset impairment charge	$ 26	$ 17	$ 37
Carrying Value
Fair value of financial instruments carried at fair value
Total debt	10,695		11,026
Long-term investments	137		133
Notes receivable	112		98
Carrying Value | Before impairment
Fair value of financial instruments carried at fair value
Long-Lived Assets	30	27	59
Fair value
Fair value of financial instruments carried at fair value
Total	136		92
Total debt	11,509		12,319
Long-term investments	137		133
Notes receivable	112		98
Recurring | Fair value
Fair value of financial instruments carried at fair value
Trading Securities	49		47
Available-for-Sale Securities	47		36
Warrants	37		26
Recurring | Fair value | Interest Rate Hedges
Fair value of financial instruments carried at fair value
Interest Rate Hedges	(1)		(39)
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair value of financial instruments carried at fair value
Trading Securities	49		47
Available-for-Sale Securities	47		36
Total	96		83
Unrealized gains on Available-for-Sale Securities	11
Recurring | Significant Other Observable Inputs (Level 2)
Fair value of financial instruments carried at fair value
Warrants	37		26
Total	36		(13)
Recurring | Significant Other Observable Inputs (Level 2) | Interest Rate Hedges
Fair value of financial instruments carried at fair value
Interest Rate Hedges	(1)		(39)
Nonrecurring | Fair value
Fair value of financial instruments carried at fair value
Long-Lived Assets	4	$ 10	22
Nonrecurring | Significant Unobservable Inputs (Level 3)
Fair value of financial instruments carried at fair value
Long-Lived Assets	4		22
Total	$ 4		$ 22

ACCUMULATED OTHER COMPREHENSI37

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Aug. 15, 2015	Aug. 16, 2014	Aug. 15, 2015	Aug. 16, 2014
Accumulated other comprehensive income (loss)
Balance at the beginning of the period			$ (812)	$ (464)
OCI before reclassifications			24	2
Amounts reclassified out of AOCI			29	13
Total other comprehensive income	$ 14	$ 8	53	15
Balance at the end of the period	(759)	(449)	(759)	(449)
OCI before reclassifications, tax	(2)		10
Cash Flow Hedging Activities
Accumulated other comprehensive income (loss)
Balance at the beginning of the period			(49)	(25)
OCI before reclassifications			17
Total other comprehensive income			17
Balance at the end of the period	(32)	(25)	(32)	(25)
OCI before reclassifications, tax			10
Available for sale Securities
Accumulated other comprehensive income (loss)
Balance at the beginning of the period			17	12
OCI before reclassifications			7	2
Total other comprehensive income			7	2
Balance at the end of the period	24	14	24	14
OCI before reclassifications, tax			4
Pension and Postretirement Defined Benefit Plans
Accumulated other comprehensive income (loss)
Balance at the beginning of the period			(780)	(451)
Amounts reclassified out of AOCI			29	13
Total other comprehensive income			29	13
Balance at the end of the period	$ (751)	$ (438)	(751)	(438)
Amounts reclassified out of AOCI, tax			$ 17	$ 8

ACCUMULATED OTHER COMPREHENSI38

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details 2) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Aug. 15, 2015	Aug. 16, 2014	Aug. 15, 2015	Aug. 16, 2014
Reclassification out of AOCI and the related tax effects
Tax expense	$ (227)	$ (182)	$ (557)	$ (456)
Net earnings attributable to The Kroger Co.	433	347	1,052	848
Reclassification out of AOCI
Reclassification out of AOCI and the related tax effects
Net earnings attributable to The Kroger Co.	13	5	29	13
Reclassification out of AOCI | Pension and Postretirement Defined Benefit Plans
Reclassification out of AOCI and the related tax effects
Amortization of amounts included in net periodic pension expense	21	9	46	21
Tax expense	(8)	(4)	(17)	(8)
Net earnings attributable to The Kroger Co.	$ 13	$ 5	$ 29	$ 13

INCOME TAXES (Details)

INCOME TAXES (Details)	3 Months Ended		6 Months Ended
	Aug. 15, 2015	Aug. 16, 2014	Aug. 15, 2015	Aug. 16, 2014
INCOME TAXES
Effective income tax rate (as a percent)	34.40%	34.20%	34.50%	34.70%