The Kroger Co. (KR) 10-Q 26 Jun 20 2020 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - $ / shares	4 Months Ended
	May 23, 2020	Jun. 23, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	May 23, 2020
Entity File Number	1-303
Entity Registrant Name	The Kroger Co.
Entity Incorporation, State or Country Code	OH
Entity Tax Identification Number	31-0345740
Entity Address, Address Line One	1014 Vine Street
Entity Address, City or Town	Cincinnati
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	45202
City Area Code	513
Local Phone Number	762-4000
Title of 12(b) Security	Common, $1.00 Par Value
Trading Symbol	KR
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		777,925,812
Entity Listing, Par Value Per Share	$ 1
Current Fiscal Year End Date	--01-30
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Entity Central Index Key	0000056873
Amendment Flag	false

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	4 Months Ended
	May 23, 2020	May 25, 2019
CONSOLIDATED STATEMENTS OF OPERATIONS
Sales	$ 41,549	$ 37,251
Operating expenses
Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below	31,454	28,983
Operating, general and administrative	7,671	6,314
Rent	273	274
Depreciation and amortization	825	779
Operating profit	1,326	901
Other income (expense)
Interest expense	(174)	(197)
Non-service component of company-sponsored pension plan costs	11	3
Mark to market gain on Ocado securities	422	106
Gain on sale of businesses		176
Net earnings before income tax expense	1,585	989
Income tax expense	373	226
Net earnings including noncontrolling interests	1,212	763
Net loss attributable to noncontrolling interests		(9)
Net earnings attributable to The Kroger Co.	$ 1,212	$ 772
Net earnings attributable to The Kroger Co. per basic common share	$ 1.53	$ 0.96
Average number of common shares used in basic calculation	780	798
Net earnings attributable to The Kroger Co. per diluted common share	$ 1.52	$ 0.95
Average number of common shares used in diluted calculation	788	805

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions		4 Months Ended
		May 23, 2020	May 25, 2019
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net earnings including noncontrolling interests		$ 1,212	$ 763
Other comprehensive income (loss)
Change in pension and other postretirement defined benefit plans, net of income tax	[1]	3	7
Unrealized gains and losses on cash flow hedging activities, net of income tax	[2]	(22)	(8)
Amortization of unrealized gains and losses on cash flow hedging activities, net of income tax	[3]	(1)	(1)
Cumulative effect of accounting change	[4]		(146)
Total other comprehensive loss		(18)	(146)
Comprehensive income		1,194	617
Comprehensive loss attributable to noncontrolling interests			(9)
Comprehensive income attributable to The Kroger Co.		$ 1,194	$ 626
[1]	Amount is net of tax of $2 for the first quarter of 2020 and $3 for the first quarter of 2019.
[2]	Amount is net of tax of ($11) for the first quarter of 2020 and ($9) for the first quarter of 2019.
[3]	Amount is net of tax of $1 for the first quarters of 2020 and 2019.
[4]	Related to the adoption of Accounting Standards Update (“ASU”) 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income."

CONSOLIDATED STATEMENTS OF CO_2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions	4 Months Ended
	May 23, 2020	May 25, 2019
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Change in pension and other postretirement defined benefit plans, income tax	$ 2	$ 3
Unrealized gains and losses on cash flow hedging activities, income tax	(11)	(9)
Amortization of unrealized gains and losses on cash flow hedging activities, income tax	$ 1	$ 1

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	May 23, 2020	Feb. 01, 2020
Current assets
Cash and temporary cash investments	$ 2,726	$ 399
Store deposits in-transit	1,142	1,179
Receivables	1,552	1,706
FIFO inventory	7,708	8,464
LIFO reserve	(1,411)	(1,380)
Prepaid and other current assets	458	522
Total current assets	12,175	10,890
Property, plant and equipment, net	21,790	21,871
Operating lease assets	6,831	6,814
Intangibles, net	1,044	1,066
Goodwill	3,076	3,076
Other assets	2,026	1,539
Total Assets	46,942	45,256
Current liabilities
Current portion of long-term debt including obligations under finance leases	1,095	1,965
Current portion of operating lease liabilities	669	597
Trade accounts payable	7,132	6,349
Accrued salaries and wages	1,302	1,168
Other current liabilities	4,473	4,164
Total current liabilities	14,671	14,243
Long-term debt including obligations under finance leases	12,376	12,111
Noncurrent operating lease liabilities	6,503	6,505
Deferred income taxes	1,532	1,466
Pension and postretirement benefit obligations	591	608
Other long-term liabilities	1,941	1,750
Total Liabilities	37,614	36,683
Commitments and contingencies see Note 6
SHAREHOLDERS' EQUITY
Preferred shares, $100 par per share, 5 shares authorized and unissued
Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2020 and 2019	1,918	1,918
Additional paid-in capital	3,397	3,337
Accumulated other comprehensive loss	(658)	(640)
Accumulated earnings	22,062	20,978
Common shares in treasury, at cost, 1,140 shares in 2020 and 1,130 shares in 2019	(17,363)	(16,991)
Total Shareholders' Equity - The Kroger Co.	9,356	8,602
Noncontrolling interests	(28)	(29)
Total Equity	9,328	8,573
Total Liabilities and Equity	$ 46,942	$ 45,256

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Millions	May 23, 2020	Feb. 01, 2020
CONSOLIDATED BALANCE SHEETS
Preferred shares, per share (in dollars per share)	$ 100	$ 100
Preferred shares, shares authorized	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	1,140	1,130

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	4 Months Ended
	May 23, 2020	May 25, 2019
Cash Flows from Operating Activities:
Net earnings including noncontrolling interests	$ 1,212	$ 763
Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities:
Depreciation and amortization	825	779
Operating lease asset amortization	193	197
LIFO charge	31	15
Stock-based employee compensation	63	48
Company-sponsored pension plans costs	(5)	11
Deferred income taxes	76	(73)
Gain on sale of businesses		(176)
Gain on the sale of assets	(12)	(57)
Mark to market gain on Ocado securities	(422)	(106)
Other	108	(29)
Changes in operating assets and liabilities net of effects from mergers and disposals of businesses:
Store deposits in-transit	37	115
Receivables	90	33
Inventories	756	124
Prepaid and other current assets	63	86
Trade accounts payable	783	364
Accrued expenses	167	(18)
Income taxes receivable and payable	276	63
Operating lease liabilities	(141)	(146)
Proceeds from contract associated with sale of business		295
Other	145	(20)
Net cash provided by operating activities	4,245	2,268
Cash Flows from Investing Activities:
Payments for property and equipment, including payments for lease buyouts	(698)	(901)
Proceeds from sale of assets	35	117
Net proceeds from sale of businesses		326
Other	(26)	(6)
Net cash used by investing activities	(689)	(464)
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt	504	9
Payments on long-term debt including obligations under finance leases	(14)	(1,013)
Net payments on commercial paper	(1,150)	(700)
Dividends paid	(128)	(113)
Proceeds from issuance of capital stock	57	12
Treasury stock purchases	(422)	(15)
Other	(76)	(4)
Net cash used by financing activities	(1,229)	(1,824)
Net increase (decrease) in cash and temporary cash investments	2,327	(20)
Cash and temporary cash investments:
Beginning of year	399	429
End of period	2,726	409
Reconciliation of capital investments:
Payments for property and equipment, including payments for lease buyouts	(698)	(901)
Payments for lease buyouts	5
Changes in construction-in-progress payables	(62)	25
Total capital investments, excluding lease buyouts	(755)	(876)
Disclosure of cash flow information:
Cash paid during the year for interest	188	115
Cash paid during the year for income taxes	$ 18	$ 231

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 Income (Loss)	Accumulated Earnings	Noncontrolling Interest	Total
Treasury stock activity:
Cumulative effect of accounting change					$ 146		$ 146
Balances at Feb. 02, 2019	$ 1,918	$ 3,245	$ (16,612)	$ (346)	19,681	$ (51)	7,835
Balances (in shares) at Feb. 02, 2019	1,918		1,120
Issuance of common stock:
Stock options exercised			$ 12				12
Stock options exercised (in shares)			(1)
Restricted stock issued		(14)	$ 10				(4)
Treasury stock activity:
Stock options exchanged			(15)				(15)
Share-based employee compensation		48					48
Other comprehensive income (loss) net of tax				(146)			(146)
Other		8	(8)		(5)	11	6
Cash dividends declared per common share					(113)		(113)
Net earnings (loss) including non-controlling interests					772	(9)	763
Balances at May. 25, 2019	$ 1,918	3,287	$ (16,613)	(492)	20,481	(49)	8,532
Balances (in shares) at May. 25, 2019	1,918		1,119
Issuance of common stock:
Stock options exercised			$ 6				6
Stock options exercised (in shares)			(1)
Restricted stock issued		(109)	$ 79				(30)
Restricted stock issued (in shares)			(2)
Treasury stock activity:
Stock options exchanged			$ (8)				(8)
Share-based employee compensation		41					41
Other comprehensive income (loss) net of tax				(45)			(45)
Other		51	(51)			1	1
Cash dividends declared per common share					(131)		(131)
Net earnings (loss) including non-controlling interests					297	(10)	287
Balances at Aug. 17, 2019	$ 1,918	3,270	$ (16,587)	(537)	20,647	(58)	8,653
Balances (in shares) at Aug. 17, 2019	1,918		1,116
Issuance of common stock:
Stock options exercised			$ 14				14
Restricted stock issued		(3)	$ 1				(2)
Restricted stock issued (in shares)			(1)
Treasury stock activity:
Stock options exchanged			$ (11)				(11)
Stock options exchanged (in shares)			1
Share-based employee compensation		28					28
Other comprehensive income (loss) net of tax				42			42
Other		1	$ (2)			(9)	(10)
Cash dividends declared per common share					(129)		(129)
Net earnings (loss) including non-controlling interests					263	(120)	143
Balances at Nov. 09, 2019	$ 1,918	3,296	$ (16,585)	(495)	20,781	(187)	8,728
Balances (in shares) at Nov. 09, 2019	1,918		1,116
Issuance of common stock:
Stock options exercised			$ 23				23
Stock options exercised (in shares)			(1)
Restricted stock issued		(2)	$ 2
Treasury stock activity:
Treasury stock purchases, at cost			$ (400)				(400)
Treasury stock purchases, at cost (in shares)			14
Stock options exchanged			$ (31)				(31)
Stock options exchanged (in shares)			1
Share-based employee compensation		38					38
Other comprehensive income (loss) net of tax				(145)			(145)
Other		5				(2)	3
Deconsolidation of Lucky's Market						168	168
Cash dividends declared per common share					(130)		(130)
Net earnings (loss) including non-controlling interests					327	(8)	319
Balances at Feb. 01, 2020	$ 1,918	3,337	$ (16,991)	(640)	20,978	(29)	8,573
Balances (in shares) at Feb. 01, 2020	1,918		1,130
Issuance of common stock:
Stock options exercised			$ 57				57
Stock options exercised (in shares)			(4)
Restricted stock issued		(20)	$ 10				(10)
Treasury stock activity:
Treasury stock purchases, at cost			$ (355)				(355)
Treasury stock purchases, at cost (in shares)			12
Stock options exchanged			$ (67)				(67)
Stock options exchanged (in shares)			2
Share-based employee compensation		63					63
Other comprehensive income (loss) net of tax				(18)			(18)
Other		17	$ (17)			1	1
Cash dividends declared per common share					(128)		(128)
Net earnings (loss) including non-controlling interests					1,212		1,212
Balances at May. 23, 2020	$ 1,918	$ 3,397	$ (17,363)	$ (658)	$ 22,062	$ (28)	$ 9,328
Balances (in shares) at May. 23, 2020	1,918		1,140

CONSOLIDATED STATEMENTS OF CH_2

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY (Parenthetical) - USD ($) $ in Millions	3 Months Ended			4 Months Ended
	Feb. 01, 2020	Nov. 09, 2019	Aug. 17, 2019	May 23, 2020	May 25, 2019
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY
Other comprehensive gain (loss), income tax expense (benefit)	$ (42)	$ 14	$ (14)	$ (8)	$ (5)
Cash dividends declared per common share (in dollars per share)	$ 0.16	$ 0.16	$ 0.16	$ 0.16	$ 0.14

ACCOUNTING POLICIES

ACCOUNTING POLICIES	4 Months Ended
	May 23, 2020
ACCOUNTING POLICIES
ACCOUNTING POLICIES	1. ACCOUNTING POLICIES ​ Basis of Presentation and Principles of Consolidation ​ The accompanying financial statements include the consolidated accounts of The Kroger Co., its wholly-owned subsidiaries and other consolidated entities. The February 1, 2020 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 adjustments, all of which are of a normal, recurring nature that are necessary for a fair statement 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 February 1, 2020. ​ The unaudited information in the Consolidated Financial Statements for the first quarter May 23, 2020 and May 25, 2019, includes the results of operations of the Company for the 16-week periods then ended. ​ Fair Value Measurements ​ Fair value measurements are classified and disclosed in one of the following three categories: ​ 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. ​ The Company records 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 at approximated fair value. Certain other investments and derivatives are recorded as Level 1, 2 or 3 instruments. Refer to Note 2 for the disclosure of debt instrument fair values. ​

DEBT OBLIGATIONS

DEBT OBLIGATIONS	4 Months Ended
	May 23, 2020
DEBT OBLIGATIONS
DEBT OBLIGATIONS	2. DEBT OBLIGATIONS ​ Long-term debt consists of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ May 23, ​ February 1, ​ 2020 2020 2.20% to 8.00% Senior Notes due through 2049 ​ $ 12,097 ​ $ 11,598 5.63% to 12.75% Mortgages due through 2027 ​ 7 ​ 12 1.77% Commercial paper borrowings ​ — ​ 1,150 Other ​ 499 ​ 496 ​ ​ ​ ​ ​ ​ ​ Total debt, excluding obligations under finance leases ​ 12,603 ​ 13,256 Less current portion ​ (1,047) ​ (1,926) ​ ​ ​ ​ ​ ​ ​ Total long-term debt, excluding obligations under finance leases ​ $ 11,556 ​ $ 11,330 ​ ​ 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 May 23, 2020 and February 1, 2020. At May 23, 2020, the fair value of total debt was $14,025 compared to a carrying value of $12,603 . At February 1, 2020, the fair value of total debt was $14,649 compared to a carrying value of $13,256 . ​ On March 18, 2020, the Company proactively borrowed $1,000 under the revolving credit facility. This was a precautionary measure in order to preserve financial flexibility, reduce reliance on the commercial paper market and maintain liquidity in response to the COVID-19 pandemic. During the first quarter of 2020, the Company fully repaid the $1,000 borrowed under the revolving credit facility and the entire $1,150 in outstanding commercial paper obligations, using cash generated by operations. ​ In anticipation of future debt refinancing, the Company, in the first quarter of 2020, entered into three forward-starting interest rate swap agreements with a maturity date of January 2021 with an aggregate notional amount totaling $150 . As of the end of the first quarter of 2020, the Company had a total of $500 notional amount of forward-starting interest rate swaps outstanding. The forward-starting interest rate swaps entered into in the first quarter of 2020 were designated as cash-flow hedges. ​ Additionally, in the first quarter of 2020, the Company issued $500 of senior notes due in fiscal year 2030 bearing an interest rate of 2.20 %. The net proceeds of the issuance will be used for general corporate purposes and reduce reliance on the commercial paper market. As the net proceeds were not immediately needed for these purposes, the net proceeds were held in cash and temporary cash investments as of the end of the first quarter of 2020.

BENEFIT PLANS

BENEFIT PLANS	4 Months Ended
	May 23, 2020
BENEFIT PLANS
BENEFIT PLANS	3. BENEFIT PLANS ​ 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 quarters of 2020 and 2019. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Quarter Ended ​ ​ Pension Benefits ​ Other Benefits ​ ​ May 23, ​ May 25, ​ May 23, ​ May 25, ​ 2020 2019 2020 2019 Components of net periodic benefit cost: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service cost $ 4 $ 12 $ 2 $ 2 Interest cost ​ 34 ​ 41 ​ 2 ​ 2 Expected return on plan assets ​ (52) ​ (56) ​ — ​ — Amortization of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prior service cost ​ — ​ — ​ (4) ​ (3) Actuarial loss (gain) ​ 11 ​ 16 ​ (2) ​ (3) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net periodic benefit cost $ (3) $ 13 $ (2) $ (2) The Company is not required to make any contributions to its company-sponsored pension plans in 2020, but may make contributions to the extent such contributions are beneficial to the Company. The Company did not make any contributions to its company-sponsored pension plans in the first quarters of 2020 and 2019. ​ The Company contributed $96 and $88 to employee 401(k) retirement savings accounts in the first quarter of 2020 and 2019, respectively. ​ 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. In addition to the recurring multi-employer pension contributions the Company makes in the normal course of business, in the first quarter of 2020, the Company contributed an incremental ​ During the first quarter of 2019, the Company incurred a charge totaling $59, $44 net of tax, due to obligations related to withdrawal liabilities for certain local unions of the Central States multi-employer pension fund. The charge was recorded in the OG&A caption in the Consolidated Statements of Operations.

EARNINGS PER COMMON SHARE

EARNINGS PER COMMON SHARE	4 Months Ended
	May 23, 2020
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE	4. EARNINGS PER COMMON SHARE ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Quarter Ended ​ First Quarter Ended ​ ​ ​ May 23, 2020 ​ May 25, 2019 ​ ​ ​ ​ ​ Per ​ ​ ​ Per ​ ​ Earnings ​ Shares ​ Share ​ Earnings ​ Shares ​ Share ​ ​ ​ (Numerator) ​ (Denominator) ​ Amount ​ (Numerator) ​ (Denominator) ​ Amount Net earnings attributable to The Kroger Co. per basic common share ​ $ 1,197 780 ​ $ 1.53 ​ $ 764 798 ​ $ 0.96 ​ Dilutive effect of stock options ​ ​ ​ 8 ​ ​ ​ ​ ​ ​ 7 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net earnings attributable to The Kroger Co. per diluted common share ​ $ 1,197 788 ​ $ 1.52 ​ $ 764 805 ​ $ 0.95 ​ ​ The Company had combined undistributed and distributed earnings to participating securities totaling $15 and $8 in the first quarters of 2020 and 2019, respectively. ​ The Company had options outstanding for approximately 11 million and 16 million shares during the first quarters of 2020 and 2019, 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.

RECENTLY ADOPTED ACCOUNTING STA

RECENTLY ADOPTED ACCOUNTING STANDARDS	4 Months Ended
	May 23, 2020
RECENTLY ADOPTED ACCOUNTING STANDARDS
RECENTLY ADOPTED ACCOUNTING STANDARDS	5. RECENTLY ADOPTED ACCOUNTING STANDARDS ​ In August 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” Under the new standard, implementation costs related to a cloud computing arrangement will be deferred or expensed as incurred, in accordance with the existing internal-use software guidance for similar costs. The new standard also prescribes the balance sheet, income statement, and cash flow classification of the capitalized implementation costs and related amortization expense. The Company adopted this guidance on a prospective basis in the first quarter of 2020. The implementation costs the Company capitalized during the first quarter of 2020 are included in “Other assets” in the Company’s Consolidated Balance Sheets. The corresponding cash flows related to these arrangements are included in “Net cash provided by operating activities” in the Company’s Consolidated Statements of Cash Flows. ​

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	4 Months Ended
	May 23, 2020
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	6. COMMITMENTS AND CONTINGENCIES ​ 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. ​

ACCUMULATED OTHER COMPREHENSIVE

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	4 Months Ended
	May 23, 2020
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ​ The following table represents the changes in AOCI by component for the first quarters of 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension and ​ ​ ​ ​ ​ Cash Flow ​ Postretirement ​ ​ ​ ​ ​ Hedging ​ Defined Benefit ​ ​ ​ ​ Activities (1) Plans (1) Total (1) Balance at February 2, 2019 ​ $ 6 ​ $ (352) ​ $ (346) Cumulative effect of accounting change (2) ​ ​ (5) ​ ​ (141) ​ ​ (146) OCI before reclassifications (3) ​ ​ (8) ​ ​ — ​ (8) Amounts reclassified out of AOCI (4) ​ ​ 1 ​ 7 ​ 8 Net current-period OCI ​ ​ (12) ​ (134) ​ (146) Balance at May 25, 2019 ​ $ (6) ​ $ (486) ​ $ (492) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at February 1, 2020 ​ $ (42) ​ $ (598) ​ $ (640) OCI before reclassifications (3) ​ (22) ​ — ​ (22) Amounts reclassified out of AOCI (4) ​ 1 ​ 3 ​ 4 Net current-period OCI ​ (21) ​ 3 ​ (18) Balance at May 23, 2020 ​ $ (63) ​ $ (595) ​ $ (658) (1) All amounts are net of tax. (2) Related to the adoption of ASU 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." (3) Net of tax of ($9 ) for cash flow hedging activities for the first quarter of 2019. Net of tax of ($11) for cash flow hedging activities for the first quarter of 2020. (4) Net of tax of $1 for cash flow hedging activities and $3 for pension and postretirement defined benefit plans for the first quarter of 2019. Net of tax of $1 for cash flow hedging activities and $2 for pension and postretirement defined benefit plans for the first quarter of 2020. ​ The following table represents the items reclassified out of AOCI and the related tax effects for the first quarters of 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Quarter Ended ​ May 23, May 25, ​ ​ 2020 ​ 2019 ​ Cash flow hedging activity items ​ ​ ​ ​ ​ ​ ​ Amortization of gains and losses on cash flow hedging activities (1) ​ $ 2 ​ $ 2 ​ Tax expense ​ (1) ​ (1) ​ Net of tax ​ 1 ​ 1 ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension and postretirement defined benefit plan items ​ ​ ​ ​ ​ ​ ​ Amortization of amounts included in net periodic pension cost (2) 5 10 ​ Tax expense (2) (3) ​ Net of tax 3 7 ​ Total reclassifications, net of tax $ 4 $ 8 ​ (1) Reclassified from AOCI into interest expense. (2) Reclassified from AOCI into non-service component of company-sponsored pension plan costs. These components are included in the computation of net periodic pension cost (see Note 3 for additional details). ​

INCOME TAXES

INCOME TAXES	4 Months Ended
	May 23, 2020
TAXES BASED ON INCOME
INCOME TAXES	8. INCOME TAXES ​ The effective income tax rate was 23.5% and 22.8% for the first quarters of 2020 and 2019, respectively. The effective income tax rate for the first quarter of 2020 and 2019 differed from the federal statutory rate due to the effect of state income taxes partially offset by the utilization of tax credits and deductions. ​ The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020, includes measures to assist companies in response to the COVID-19 pandemic. These measures include deferring the due dates of tax payments and other changes to income and non-income-based tax laws. As permitted under the CARES Act, the Company deferred its first quarter 2020 federal estimated tax payment of $150 to July 15, 2020. The Company will also defer the remittance of the employer portion of the social security tax. The social security tax provision requires that the deferred employment tax be paid over two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022. During the first quarter of 2020, the Company deferred the employer portion of social security tax of $157 which is included in “Other long-term liabilities” in the Company’s Consolidated Balance Sheets. The $157 deferral is included in “Other” within “Changes in operating assets and liabilities net of effects from mergers and disposals of businesses” in the Company’s Consolidated Statements of Cash Flows. ​

ACCOUNTING POLICIES (Policies)

ACCOUNTING POLICIES (Policies)	4 Months Ended
	May 23, 2020
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 other consolidated entities. The February 1, 2020 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 adjustments, all of which are of a normal, recurring nature that are necessary for a fair statement 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 February 1, 2020. ​ The unaudited information in the Consolidated Financial Statements for the first quarter May 23, 2020 and May 25, 2019, includes the results of operations of the Company for the 16-week periods then ended.
Fair Value Measurements	Fair Value Measurements ​ Fair value measurements are classified and disclosed in one of the following three categories: ​ 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. ​ The Company records 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 at approximated fair value. Certain other investments and derivatives are recorded as Level 1, 2 or 3 instruments. Refer to Note 2 for the disclosure of debt instrument fair values.

DEBT OBLIGATIONS (Tables)

DEBT OBLIGATIONS (Tables)	4 Months Ended
	May 23, 2020
DEBT OBLIGATIONS
Schedule of long-term debt	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ May 23, ​ February 1, ​ 2020 2020 2.20% to 8.00% Senior Notes due through 2049 ​ $ 12,097 ​ $ 11,598 5.63% to 12.75% Mortgages due through 2027 ​ 7 ​ 12 1.77% Commercial paper borrowings ​ — ​ 1,150 Other ​ 499 ​ 496 ​ ​ ​ ​ ​ ​ ​ Total debt, excluding obligations under finance leases ​ 12,603 ​ 13,256 Less current portion ​ (1,047) ​ (1,926) ​ ​ ​ ​ ​ ​ ​ Total long-term debt, excluding obligations under finance leases ​ $ 11,556 ​ $ 11,330 ​

BENEFIT PLANS (Tables)

BENEFIT PLANS (Tables)	4 Months Ended
	May 23, 2020
BENEFIT PLANS
Schedule of components of net periodic benefit cost	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Quarter Ended ​ ​ Pension Benefits ​ Other Benefits ​ ​ May 23, ​ May 25, ​ May 23, ​ May 25, ​ 2020 2019 2020 2019 Components of net periodic benefit cost: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service cost $ 4 $ 12 $ 2 $ 2 Interest cost ​ 34 ​ 41 ​ 2 ​ 2 Expected return on plan assets ​ (52) ​ (56) ​ — ​ — Amortization of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prior service cost ​ — ​ — ​ (4) ​ (3) Actuarial loss (gain) ​ 11 ​ 16 ​ (2) ​ (3) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net periodic benefit cost $ (3) $ 13 $ (2) $ (2)

EARNINGS PER COMMON SHARE (Tabl

EARNINGS PER COMMON SHARE (Tables)	4 Months Ended
	May 23, 2020
EARNINGS PER COMMON SHARE
Schedule of earnings per common and diluted shares	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Quarter Ended ​ First Quarter Ended ​ ​ ​ May 23, 2020 ​ May 25, 2019 ​ ​ ​ ​ ​ Per ​ ​ ​ Per ​ ​ Earnings ​ Shares ​ Share ​ Earnings ​ Shares ​ Share ​ ​ ​ (Numerator) ​ (Denominator) ​ Amount ​ (Numerator) ​ (Denominator) ​ Amount Net earnings attributable to The Kroger Co. per basic common share ​ $ 1,197 780 ​ $ 1.53 ​ $ 764 798 ​ $ 0.96 ​ Dilutive effect of stock options ​ ​ ​ 8 ​ ​ ​ ​ ​ ​ 7 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net earnings attributable to The Kroger Co. per diluted common share ​ $ 1,197 788 ​ $ 1.52 ​ $ 764 805 ​ $ 0.95 ​ ​

ACCUMULATED OTHER COMPREHENSI_2

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)	4 Months Ended
	May 23, 2020
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Schedule of changes in AOCI by component	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension and ​ ​ ​ ​ ​ Cash Flow ​ Postretirement ​ ​ ​ ​ ​ Hedging ​ Defined Benefit ​ ​ ​ ​ Activities (1) Plans (1) Total (1) Balance at February 2, 2019 ​ $ 6 ​ $ (352) ​ $ (346) Cumulative effect of accounting change (2) ​ ​ (5) ​ ​ (141) ​ ​ (146) OCI before reclassifications (3) ​ ​ (8) ​ ​ — ​ (8) Amounts reclassified out of AOCI (4) ​ ​ 1 ​ 7 ​ 8 Net current-period OCI ​ ​ (12) ​ (134) ​ (146) Balance at May 25, 2019 ​ $ (6) ​ $ (486) ​ $ (492) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at February 1, 2020 ​ $ (42) ​ $ (598) ​ $ (640) OCI before reclassifications (3) ​ (22) ​ — ​ (22) Amounts reclassified out of AOCI (4) ​ 1 ​ 3 ​ 4 Net current-period OCI ​ (21) ​ 3 ​ (18) Balance at May 23, 2020 ​ $ (63) ​ $ (595) ​ $ (658) (1) All amounts are net of tax. (2) Related to the adoption of ASU 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." (3) Net of tax of ($9 ) for cash flow hedging activities for the first quarter of 2019. Net of tax of ($11) for cash flow hedging activities for the first quarter of 2020. (4) Net of tax of $1 for cash flow hedging activities and $3 for pension and postretirement defined benefit plans for the first quarter of 2019. Net of tax of $1 for cash flow hedging activities and $2 for pension and postretirement defined benefit plans for the first quarter of 2020. ​
Schedule of items reclassified out of AOCI and the related tax effects	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Quarter Ended ​ May 23, May 25, ​ ​ 2020 ​ 2019 ​ Cash flow hedging activity items ​ ​ ​ ​ ​ ​ ​ Amortization of gains and losses on cash flow hedging activities (1) ​ $ 2 ​ $ 2 ​ Tax expense ​ (1) ​ (1) ​ Net of tax ​ 1 ​ 1 ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension and postretirement defined benefit plan items ​ ​ ​ ​ ​ ​ ​ Amortization of amounts included in net periodic pension cost (2) 5 10 ​ Tax expense (2) (3) ​ Net of tax 3 7 ​ Total reclassifications, net of tax $ 4 $ 8 ​ (1) Reclassified from AOCI into interest expense. (2) Reclassified from AOCI into non-service component of company-sponsored pension plan costs. These components are included in the computation of net periodic pension cost (see Note 3 for additional details).

ACCOUNTING POLICIES - DESCRIPTI

ACCOUNTING POLICIES - DESCRIPTION OF BUSINESS (Details)	4 Months Ended
	May 23, 2020	May 25, 2019
Fiscal Year
Length of fiscal period	112 days	112 days

DEBT OBLIGATIONS (Details)

DEBT OBLIGATIONS (Details) $ in Millions	4 Months Ended
	May 23, 2020USD ($)DerivativeInstrument	Mar. 18, 2020USD ($)	Feb. 01, 2020USD ($)
Debt
Total debt, excluding capital leases and financing obligations	$ 12,603		$ 13,256
Less current portion	(1,047)		(1,926)
Total long-term debt, excluding capital leases and financing obligations	11,556		11,330
Fair value of total debt	14,025		14,649
Forward starting Interest Rate Swaps
Debt
Notional amount	$ 500
Forward Starting Interest Rate Swap With Maturity Dates of January 2021 | Cash flow hedges
Debt
Number of interest-rate swaps | DerivativeInstrument	3
Notional amount	$ 150
Senior Notes due through 2049
Debt
Total debt, excluding capital leases and financing obligations	$ 12,097		11,598
Senior Notes due through 2049 | Minimum
Debt
Interest rate (as a percent)	2.20%
Senior Notes due through 2049 | Maximum
Debt
Interest rate (as a percent)	8.00%
Mortgages due through 2027
Debt
Total debt, excluding capital leases and financing obligations	$ 7		12
Mortgages due through 2027 | Minimum
Debt
Interest rate (as a percent)	5.63%
Mortgages due through 2027 | Maximum
Debt
Interest rate (as a percent)	12.75%
Commercial paper borrowings
Debt
Total debt, excluding capital leases and financing obligations			$ 1,150
Interest rate (as a percent)			1.77%
Repayment of debt	$ 1,150
Other
Debt
Total debt, excluding capital leases and financing obligations	499		$ 496
Senior notes due in fiscal year 2030
Debt
Debt issued	$ 500
Interest rate (as a percent)	2.20%
Credit Agreement
Debt
Debt issued		$ 1,000
Repayment of debt	$ 1,000

BENEFIT PLANS - COMPONENTS OF N

BENEFIT PLANS - COMPONENTS OF NET PERIODIC BENEFIT COSTS (Details) - USD ($) $ in Millions	4 Months Ended
	May 23, 2020	May 25, 2019
Pension Benefits
Components of net periodic benefit cost:
Service cost	$ 4	$ 12
Interest cost	34	41
Expected return on plan assets	(52)	(56)
Amortization of:
Actuarial loss (gain)	11	16
Net periodic benefit cost	(3)	13
Contributions into Fund	0	0
Other Benefits
Components of net periodic benefit cost:
Service cost	2	2
Interest cost	2	2
Amortization of:
Prior service cost	(4)	(3)
Actuarial loss (gain)	(2)	(3)
Net periodic benefit cost	$ (2)	$ (2)

BENEFIT PLANS - DEFINED CONTRIB

BENEFIT PLANS - DEFINED CONTRIBUTION PLAN INFORMATION (Details) - USD ($) $ in Millions	4 Months Ended
	May 23, 2020	May 25, 2019
BENEFIT PLANS
Contribution to 401(k) retirement savings accounts	$ 96	$ 88

BENEFIT PLANS - MULTI EMPLOYER

BENEFIT PLANS - MULTI EMPLOYER PLAN (Details) - Multi-employer pension funds - USD ($) $ in Millions	4 Months Ended
	May 23, 2020	May 25, 2019
Multiemployer Plans
Incremental contributions (before-tax)	$ 236
Incremental contributions (after-tax)	$ 180
Charge (before-tax) related to pension plan agreements		$ 59
Charge (after-tax) related to pension plan agreements		$ 44

EARNINGS PER COMMON SHARE (Deta

EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	4 Months Ended
	May 23, 2020	May 25, 2019
EARNINGS PER COMMON SHARE
Net earnings numerator (basic)	$ 1,197	$ 764
Net earnings numerator (diluted)	$ 1,197	$ 764
Average number of common shares used in basic calculation	780	798
Net earnings attributable to The Kroger Co. per basic common share	$ 1.53	$ 0.96
Dilutive effect of stock options (in shares)	8	7
Average number of common shares used in diluted calculation	788	805
Net earnings attributable to The Kroger Co. per diluted common share	$ 1.52	$ 0.95
Undistributed and distributed earnings to participating securities	$ 15	$ 8
Shares excluded from the earnings per share calculation due to anti-dilutive effect on earnings per share	11	16

ACCUMULATED OTHER COMPREHENSI_3

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - CHANGES IN AOCI BY COMPONENT (Details) - USD ($) $ in Millions		3 Months Ended			4 Months Ended
		Feb. 01, 2020	Nov. 09, 2019	Aug. 17, 2019	May 23, 2020	May 25, 2019
Accumulated other comprehensive income (loss)
Balance at the beginning of the period					$ 8,602
Cumulative effect of accounting change	[1]					$ (146)
Amounts reclassified out of AOCI					4	8
Total other comprehensive loss		$ (145)	$ 42	$ (45)	(18)	(146)
Balance at the end of the period		8,602			9,356
Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss)
Balance at the beginning of the period				(492)	(640)	(346)
Cumulative effect of accounting change						(146)
OCI before reclassifications					(22)	(8)
Amounts reclassified out of AOCI					4	8
Total other comprehensive loss		(145)	$ 42	(45)	(18)	(146)
Balance at the end of the period		(640)			(658)	(492)
Cash Flow Hedging Activities
Accumulated other comprehensive income (loss)
Balance at the beginning of the period				(6)	(42)	6
Cumulative effect of accounting change						(5)
OCI before reclassifications					(22)	(8)
Amounts reclassified out of AOCI					1	1
Total other comprehensive loss					(21)	(12)
Balance at the end of the period		(42)			(63)	(6)
OCI before reclassifications, tax					(11)	(9)
Amounts reclassified out of AOCI, tax					1	1
Pension and Postretirement Defined Benefit Plans
Accumulated other comprehensive income (loss)
Balance at the beginning of the period				$ (486)	(598)	(352)
Cumulative effect of accounting change						(141)
Amounts reclassified out of AOCI					3	7
Total other comprehensive loss					3	(134)
Balance at the end of the period		$ (598)			(595)	(486)
Amounts reclassified out of AOCI, tax					$ 2	$ 3
[1]	Related to the adoption of Accounting Standards Update (“ASU”) 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income."

ACCUMULATED OTHER COMPREHENSI_4

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - ITEMS RECLASSIFIED OUT OF AOCI (Details) - USD ($) $ in Millions	4 Months Ended
	May 23, 2020	May 25, 2019
Reclassification out of AOCI and the related tax effects
Amortization of gains and losses on cash flow hedging activities	$ 174	$ 197
Tax expense	373	226
Net of tax	(1,212)	(772)
Total reclassifications, net of tax	4	8
Cash Flow Hedging Activities
Reclassification out of AOCI and the related tax effects
Tax expense	(1)	(1)
Total reclassifications, net of tax	1	1
Pension and Postretirement Defined Benefit Plans
Reclassification out of AOCI and the related tax effects
Amortization of amounts included in net periodic pension expense	5	10
Tax expense	(2)	(3)
Total reclassifications, net of tax	3	7
Reclassification out of AOCI | Cash Flow Hedging Activities
Reclassification out of AOCI and the related tax effects
Amortization of gains and losses on cash flow hedging activities	2	2
Tax expense	(1)	(1)
Net of tax	$ 1	$ 1

INCOME TAXES - EFFECTIVE INCOME

INCOME TAXES - EFFECTIVE INCOME TAX RATE (Details) - USD ($) $ in Millions	4 Months Ended
	May 23, 2020	May 25, 2019
Effective income tax rate (as a percent)	23.50%	22.80%
Deferred first quarter 2020 federal estimated tax payment	$ 150
Deferred social security tax payment period	2 years
Other long-term liabilities
Deferred payment of social security taxes	$ 157