Document and Entity Information
Document and Entity Information - USD ($) $ / shares in Units, $ in Billions | 12 Months Ended | ||
Jan. 29, 2022 | Mar. 23, 2022 | Aug. 14, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Jan. 29, 2022 | ||
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 Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
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 | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 31.8 | ||
Entity Common Stock, Shares Outstanding | 723,308,230 | ||
Auditor Name | PricewaterhouseCoopers LLP | ||
Auditor Firm ID | 238 | ||
Auditor Location | Cincinnati, Ohio | ||
Entity Listing, Par Value Per Share | $ 1 | ||
Current Fiscal Year End Date | --01-29 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0000056873 | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jan. 29, 2022 | Jan. 30, 2021 |
Current assets | ||
Cash and temporary cash investments | $ 1,821 | $ 1,687 |
Store deposits in-transit | 1,082 | 1,096 |
Receivables | 1,828 | 1,781 |
FIFO inventory | 8,353 | 8,436 |
LIFO reserve | (1,570) | (1,373) |
Prepaid and other current assets | 660 | 876 |
Total current assets | 12,174 | 12,503 |
Property, plant and equipment, net | 23,789 | 22,386 |
Operating lease assets | 6,695 | 6,796 |
Intangibles, net | 942 | 997 |
Goodwill | 3,076 | 3,076 |
Other assets | 2,410 | 2,904 |
Total Assets | 49,086 | 48,662 |
Current liabilities | ||
Current portion of long-term debt including obligations under finance leases | 555 | 911 |
Current portion of operating lease liabilities | 650 | 667 |
Trade accounts payable | 7,117 | 6,679 |
Accrued salaries and wages | 1,736 | 1,413 |
Other current liabilities | 6,265 | 5,696 |
Total current liabilities | 16,323 | 15,366 |
Long-term debt including obligations under finance leases | 12,809 | 12,502 |
Noncurrent operating lease liabilities | 6,426 | 6,507 |
Deferred income taxes | 1,562 | 1,542 |
Pension and postretirement benefit obligations | 478 | 535 |
Other long-term liabilities | 2,059 | 2,660 |
Total Liabilities | 39,657 | 39,112 |
Commitments and contingencies see Note 12 | ||
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 2021 and 2020 | 1,918 | 1,918 |
Additional paid-in capital | 3,657 | 3,461 |
Accumulated other comprehensive loss | (467) | (630) |
Accumulated earnings | 24,066 | 23,018 |
Common shares in treasury, at cost, 1,191 shares in 2021 and 1,160 shares in 2020 | (19,722) | (18,191) |
Total Shareholders' Equity - The Kroger Co. | 9,452 | 9,576 |
Noncontrolling interests | (23) | (26) |
Total Equity | 9,429 | 9,550 |
Total Liabilities and Equity | $ 49,086 | $ 48,662 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Millions | Jan. 29, 2022 | Jan. 30, 2021 |
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 | 1,191 | 1,160 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Sales | $ 137,888 | $ 132,498 | $ 122,286 |
Operating expenses | |||
Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below | 107,539 | 101,597 | 95,294 |
Operating, general and administrative | 23,203 | 24,500 | 21,208 |
Rent | 845 | 874 | 884 |
Depreciation and amortization | 2,824 | 2,747 | 2,649 |
Operating profit | 3,477 | 2,780 | 2,251 |
Other income (expense) | |||
Interest expense | (571) | (544) | (603) |
Non-service component of company-sponsored pension plan (costs) benefits | (34) | 29 | |
(Loss) gain on investments | (821) | 1,105 | 157 |
Gain on sale of businesses | 176 | ||
Net earnings before income tax expense | 2,051 | 3,370 | 1,981 |
Income tax expense | 385 | 782 | 469 |
Net earnings including noncontrolling interests | 1,666 | 2,588 | 1,512 |
Net income (loss) attributable to noncontrolling interests | 11 | 3 | (147) |
Net earnings attributable to The Kroger Co. | $ 1,655 | $ 2,585 | $ 1,659 |
Net earnings attributable to The Kroger Co. per basic common share | $ 2.20 | $ 3.31 | $ 2.05 |
Average number of common shares used in basic calculation | 744 | 773 | 799 |
Net earnings attributable to The Kroger Co. per diluted common share | $ 2.17 | $ 3.27 | $ 2.04 |
Average number of common shares used in diluted calculation | 754 | 781 | 805 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | |||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | ||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net earnings including noncontrolling interests | $ 1,666 | $ 2,588 | $ 1,512 | |
Other comprehensive income (loss) | ||||
Change in pension and other postretirement defined benefit plans, net of income tax | [1] | 156 | 22 | (105) |
Unrealized gains and losses on cash flow hedging activities, net of income tax | [2] | (14) | (47) | |
Amortization of unrealized gains and losses on cash flow hedging activities, net of income tax | [3] | 7 | 2 | 4 |
Cumulative effect of accounting change | [4] | (146) | ||
Total other comprehensive income (loss) | 163 | 10 | (294) | |
Comprehensive income | 1,829 | 2,598 | 1,218 | |
Comprehensive income (loss) attributable to noncontrolling interests | 11 | 3 | (147) | |
Comprehensive income attributable to The Kroger Co. | $ 1,818 | $ 2,595 | $ 1,365 | |
[1] | Amount is net of tax expense (benefit) of $48 in 2021, $7 in 2020 and ($33) in 2019. | |||
[2] | Amount is net of tax benefit of ($8) in 2020 and ($17) in 2019. | |||
[3] | Amount is net of tax expense of $3 in 2021, $2 in 2020 and $3 in 2019. | |||
[4] | Related to the adoption of Accounting Standards Update (“ASU”) 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” (See Note 17 for additional details). |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Change in pension and other postretirement defined benefit plans, income tax | $ 48 | $ 7 | $ (33) |
Unrealized gains and losses on cash flow hedging activities, income tax | (8) | (17) | |
Amortization of unrealized gains and losses on cash flow hedging activities, income tax | $ 3 | $ 2 | $ 3 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
Cash Flows from Operating Activities: | |||
Net earnings including noncontrolling interests | $ 1,666 | $ 2,588 | $ 1,512 |
Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities: | |||
Depreciation and amortization | 2,824 | 2,747 | 2,649 |
Asset impairment charges | 64 | 70 | 120 |
Operating lease asset amortization | 605 | 626 | 640 |
LIFO charge (credit) | 197 | (7) | 105 |
Share-based employee compensation | 203 | 185 | 155 |
Company-sponsored pension plans expense (benefits) | 50 | (9) | 39 |
Deferred income taxes | (31) | 73 | (56) |
Gain on sale of businesses | (176) | ||
Gain on the sale of assets | (44) | (59) | (158) |
Loss (gain) on investments | 821 | (1,105) | (157) |
Loss on deconsolidation and impairment of Lucky's Market | 412 | ||
Other | 64 | 165 | (109) |
Changes in operating assets and liabilities net of effects from mergers and disposals of business: | |||
Store deposits in-transit | 13 | 83 | 3 |
Receivables | (61) | (90) | (36) |
Inventories | 80 | 7 | (351) |
Prepaid and other current assets | 232 | (342) | (33) |
Trade accounts payable | 438 | 330 | 342 |
Accrued expenses | 331 | 1,382 | 302 |
Income taxes receivable and payable | 16 | 24 | (142) |
Operating lease liabilities | (618) | (552) | (639) |
Proceeds from contract associated with sale of business | 295 | ||
Other | (660) | 699 | (53) |
Net cash provided by operating activities | 6,190 | 6,815 | 4,664 |
Cash Flows from Investing Activities: | |||
Payments for property and equipment, including payments for lease buyouts | (2,614) | (2,865) | (3,128) |
Proceeds from sale of assets | 153 | 165 | 273 |
Net proceeds from sale of businesses | 327 | ||
Other | (150) | (114) | (83) |
Net cash used by investing activities | (2,611) | (2,814) | (2,611) |
Cash Flows from Financing Activities: | |||
Proceeds from issuance of long-term debt | 56 | 1,049 | 813 |
Payments on long-term debt including obligations under finance leases | (1,442) | (747) | (2,304) |
Net (payments) proceeds on commercial paper | (1,150) | 350 | |
Dividends paid | (589) | (534) | (486) |
Proceeds from issuance of capital stock | 172 | 127 | 55 |
Treasury stock purchases | (1,647) | (1,324) | (465) |
Proceeds from financing arrangement | 166 | ||
Other | (161) | (134) | (46) |
Net cash used by financing activities | (3,445) | (2,713) | (2,083) |
Net increase (decrease) in cash and temporary cash investments | 134 | 1,288 | (30) |
Cash and temporary cash investments: | |||
Beginning of year | 1,687 | 399 | 429 |
End of year | 1,821 | 1,687 | 399 |
Reconciliation of capital investments: | |||
Payments for property and equipment, including payments for lease buyouts | (2,614) | (2,865) | (3,128) |
Payments for lease buyouts | 58 | 82 | |
Changes in construction-in-progress payables | (542) | (359) | 2 |
Total capital investments, excluding lease buyouts | (3,156) | (3,166) | (3,044) |
Disclosure of cash flow information: | |||
Cash paid during the year for interest | 607 | 564 | 523 |
Cash paid during the year for income taxes | $ 513 | $ 659 | $ 706 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY - USD ($) shares in Millions, $ in Millions | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Gain (Loss) | Accumulated EarningsCumulative Effect, Period of Adoption, Adjustment | Accumulated Earnings | Noncontrolling Interest | Cumulative Effect, Period of Adoption, Adjustment | Total |
Balances at Feb. 02, 2019 | $ 1,918 | $ 3,245 | $ (16,612) | $ (346) | $ 146 | $ 19,681 | $ (51) | $ 146 | $ 7,835 |
Balances (in shares) at Feb. 02, 2019 | 1,918 | 1,120 | |||||||
Issuance of common stock: | |||||||||
Stock options exercised | $ 55 | 55 | |||||||
Stock options exercised (in shares) | (3) | ||||||||
Restricted stock issued | (128) | $ 92 | (36) | ||||||
Restricted stock issued (in shares) | (3) | ||||||||
Treasury stock activity: | |||||||||
Treasury stock purchases, at cost | $ (400) | (400) | |||||||
Treasury stock purchases, at cost (in shares) | 14 | ||||||||
Stock options exchanged | $ (65) | (65) | |||||||
Stock options exchanged (in shares) | 2 | ||||||||
Share-based employee compensation | 155 | 155 | |||||||
Other comprehensive income (loss) net of tax | (294) | (294) | |||||||
Deconsolidation of Lucky's Market | 168 | 168 | |||||||
Other | 65 | $ (61) | (5) | 1 | |||||
Cash dividends declared per common share | (503) | (503) | |||||||
Net earnings (loss) including non-controlling interests | 1,659 | (147) | 1,512 | ||||||
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 | $ 127 | 127 | |||||||
Stock options exercised (in shares) | (7) | ||||||||
Restricted stock issued | (134) | $ 71 | (63) | ||||||
Restricted stock issued (in shares) | (3) | ||||||||
Treasury stock activity: | |||||||||
Treasury stock purchases, at cost | $ (1,196) | (1,196) | |||||||
Treasury stock purchases, at cost (in shares) | 36 | ||||||||
Stock options exchanged | $ (128) | (128) | |||||||
Stock options exchanged (in shares) | 4 | ||||||||
Share-based employee compensation | 185 | 185 | |||||||
Other comprehensive income (loss) net of tax | 10 | 10 | |||||||
Other | 73 | $ (74) | (1) | ||||||
Cash dividends declared per common share | (545) | (545) | |||||||
Net earnings (loss) including non-controlling interests | 2,585 | 3 | 2,588 | ||||||
Balances at Jan. 30, 2021 | $ 1,918 | 3,461 | $ (18,191) | (630) | 23,018 | (26) | 9,550 | ||
Balances (in shares) at Jan. 30, 2021 | 1,918 | 1,160 | |||||||
Issuance of common stock: | |||||||||
Stock options exercised | $ 172 | 172 | |||||||
Stock options exercised (in shares) | (7) | ||||||||
Restricted stock issued | (137) | $ 73 | (64) | ||||||
Restricted stock issued (in shares) | (3) | ||||||||
Treasury stock activity: | |||||||||
Treasury stock purchases, at cost | $ (1,422) | (1,422) | |||||||
Treasury stock purchases, at cost (in shares) | 35 | ||||||||
Stock options exchanged | $ (225) | $ (225) | |||||||
Stock options exchanged (in shares) | 6 | 5 | |||||||
Share-based employee compensation | 203 | $ 203 | |||||||
Other comprehensive income (loss) net of tax | 163 | 163 | |||||||
Other | 130 | $ (129) | (8) | (7) | |||||
Cash dividends declared per common share | (607) | (607) | |||||||
Net earnings (loss) including non-controlling interests | 1,655 | 11 | 1,666 | ||||||
Balances at Jan. 29, 2022 | $ 1,918 | $ 3,657 | $ (19,722) | $ (467) | $ 24,066 | $ (23) | $ 9,429 | ||
Balances (in shares) at Jan. 29, 2022 | 1,918 | 1,191 |
CONSOLIDATED STATEMENT OF CHA_2
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
CONSOLIDATED STATEMENT OF CHANGES IN SHAREOWNERS' EQUITY | |||
Other comprehensive income (loss) net of income tax | $ 51 | $ 1 | $ (47) |
Cash dividends declared per common share (in dollars per share) | $ 0.81 | $ 0.70 | $ 0.62 |
ACCOUNTING POLICIES
ACCOUNTING POLICIES | 12 Months Ended |
Jan. 29, 2022 | |
ACCOUNTING POLICIES | |
ACCOUNTING POLICIES | 1. ACCOUNTING POLICIES The following is a summary of the significant accounting policies followed in preparing these financial statements. Description of Business, Basis of Presentation and Principles of Consolidation The Kroger Co. (the “Company”) was founded in 1883 and incorporated in 1902. As of January 29, 2022, the Company was one of the largest retailers in the world based on annual sales. The Company also manufactures and processes food for sale by its supermarkets and online. The accompanying financial statements include the consolidated accounts of the Company, its wholly-owned subsidiaries and other consolidated entities. Intercompany transactions and balances have been eliminated. Refer to Note 17 for a description of changes to the Consolidated Financial Statements for recently adopted accounting standards regarding the implementation costs of cloud computing arrangements. Fiscal Year The Company’s fiscal year ends on the Saturday nearest January 31. The last three fiscal years consist of the 52 -week periods ended January 29, 2022, January 30, 2021 and February 1, 2020. Pervasiveness of Estimates The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of consolidated revenues and expenses during the reporting period is also required. Actual results could differ from those estimates. Cash, Temporary Cash Investments and Book Overdrafts Cash and temporary cash investments represent store cash and short-term investments with original maturities of less than three months. Book overdrafts are included in “Trade accounts payable” and “Accrued salaries and wages” in the Consolidated Balance Sheets. Deposits In-Transit Deposits in-transit generally represent funds deposited to the Company’s bank accounts at the end of the year related to sales, a majority of which were paid for with debit cards, credit cards and checks, to which the Company does not have immediate access but settle within a few days of the sales transaction. Inventories Inventories are stated at the lower of cost (principally on a last-in, first-out “LIFO” basis) or market. In total, approximately 91% of inventories in 2021 and 92% of inventories in 2020 were valued using the LIFO method. The remaining inventories, including substantially all fuel inventories, are stated at the lower of cost (on a FIFO basis) or net realizable value. Replacement cost was higher than the carrying amount by $1,570 at January 29, 2022 and $1,373 at January 30, 2021. The Company follows the Link-Chain, Dollar-Value LIFO method for purposes of calculating its LIFO charge or credit. During 2020, the Company had a LIFO liquidation primarily related to pharmacy inventory. The liquidated inventory was carried at lower costs prevailing in prior years as compared with current costs. The effect of this reduction in inventory decreased “Merchandise costs” by approximately $76, $58 net of tax. The item-cost method of accounting to determine inventory cost before the LIFO adjustment is followed for substantially all store inventories at the Company’s supermarket divisions. This method involves counting each item in inventory, assigning costs to each of these items based on the actual purchase costs (net of vendor allowances and cash discounts) of each item and recording the cost of items sold. The item-cost method of accounting allows for more accurate reporting of periodic inventory balances and enables management to more precisely manage inventory. In addition, substantially all of the Company’s inventory consists of finished goods and is recorded at actual purchase costs (net of vendor allowances and cash discounts). The Company evaluates inventory shortages throughout the year based on actual physical counts in its facilities. Allowances for inventory shortages are recorded based on the results of these counts to provide for estimated shortages as of the financial statement date. Property, Plant and Equipment Property, plant and equipment are recorded at cost or, in the case of assets acquired in a business combination, at fair value. Depreciation and amortization expense, which includes the depreciation of assets recorded under finance leases, is computed principally using the straight-line method over the estimated useful lives of individual assets. Buildings and land improvements are depreciated based on lives varying from 10 to 40 years . All new purchases of store equipment are assigned lives varying from three to nine years . Leasehold improvements are amortized over the shorter of the lease term to which they relate, which generally varies from four to 25 years , or the useful life of the asset. Food production plant, fulfillment center and distribution center equipment is depreciated over lives varying from three to 15 years . Information technology assets are generally depreciated over three to five years . Depreciation and amortization expense was $2,824 in 2021, $2,747 in 2020 and $2,649 in 2019. Interest costs on significant projects constructed for the Company’s own use are capitalized as part of the costs of the newly constructed facilities. Upon retirement or disposal of assets, the cost and related accumulated depreciation and amortization are removed from the balance sheet and any gain or loss is reflected in net earnings. Refer to Note 3 for further information regarding the Company’s property, plant and equipment. Leases The Company leases certain store real estate, warehouses, distribution centers, fulfillment centers, office space and equipment. The Company determines if an arrangement is a lease at inception. Finance and operating lease assets and liabilities are recognized at the lease commencement date. Finance and operating lease liabilities represent the present value of minimum lease payments not yet paid. Operating lease assets represent the right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments, lease incentives and impairment, if any. To determine the present value of lease payments, the Company estimates an incremental borrowing rate which represents the rate used for a secured borrowing of a similar term as the lease. Lease terms generally range from 10 to 20 years with options to renew for varying terms at the Company’s sole discretion. The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Certain leases include escalation clauses or payment of executory costs such as property taxes, utilities or insurance and maintenance. Operating lease payments are charged on a straight-line basis to rent expense over the lease term and finance lease payments are charged to interest expense and depreciation and amortization expense over the lease term. Assets under finance leases are amortized in accordance with the Company’s normal depreciation policy for owned assets or over the lease term, if shorter. The Company’s lease agreements do not contain any residual value guarantees or material restrictive covenants. For additional information on leases, see Note 9 to the Consolidated Financial Statements. Goodwill The Company reviews goodwill for impairment during the fourth quarter of each year, or earlier upon the occurrence of a triggering event. The Company performs reviews of each of its operating divisions and other consolidated entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is determined using a market multiple model, or discounted projected future cash flows, and is compared to the carrying value of a reporting unit for purposes of identifying potential impairment. Projected future cash flows are based on management’s knowledge of the current operating environment and expectations for the future. Goodwill impairment is recognized for any excess of the reporting unit’s carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. Results of the goodwill impairment reviews performed during 2021, 2020 and 2019 are summarized in Note 2. Impairment of Long-Lived Assets The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on whether certain triggering events have occurred. These events include current period losses combined with a history of losses or a projection of continuing losses or a significant decrease in the market value of an asset. When a triggering event occurs, an impairment calculation is performed, comparing projected undiscounted future cash flows, utilizing current cash flow information and expected growth rates related to specific stores, to the carrying value for those stores. If the Company identifies impairment for long-lived assets to be held and used, the Company compares the assets’ current carrying value to the assets’ fair value. Fair value is based on current market values or discounted future cash flows. The Company records impairment when the carrying value exceeds fair market value. With respect to owned property and equipment held for disposal, the value of the property and equipment is adjusted to reflect recoverable values based on previous efforts to dispose of similar assets and current economic conditions. Impairment is recognized for the excess of the carrying value over the estimated fair market value, reduced by estimated direct costs of disposal. The Company recorded asset impairments totaling $64, $70 and $120 in 2021, 2020 and 2019, respectively. The decrease in the 2021 and 2020 impairment charges, compared to 2019, was the result of 35 planned store closures in 2020 recognized in 2019. Costs to reduce the carrying value of long-lived assets for each of the years presented have been included in the Consolidated Statements of Operations as Operating, general and administrative (“OG&A”) expense. Accounts Payable Financing Arrangement The Company has an agreement with a third party to provide an accounts payable tracking system which facilitates participating suppliers’ ability to finance payment obligations from the Company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not affected by suppliers’ decisions to finance amounts under this arrangement. These obligations are included in “Other current liabilities” in the Consolidated Balance Sheets. Contingent Consideration The Company’s Home Chef business combination involves potential payment of future consideration that is contingent upon the achievement of certain performance milestones. The Company recorded contingent consideration at fair value at the date of acquisition based on the consideration expected to be transferred, estimated as the probability-weighted future cash flows, discounted back to present value using a discount rate determined in accordance with accepted valuation methods. The liability for contingent consideration is remeasured to fair value at each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized in earnings until the contingency is resolved. In 2021 and 2020, adjustments to increase the contingent consideration liability as of year-end were recorded for $66 and $189, respectively, in OG&A expense. In 2019, an adjustment to decrease the contingent consideration liability as of year-end 2019 was recorded for ($69) in OG&A expense. Store Closing Costs The Company regularly evaluates the performance of its stores and periodically closes those stores that are underperforming. Related liabilities arise, such as severance, contractual obligations and other accruals associated with store closings. The Company records a liability for costs associated with an exit or disposal activity when the liability is incurred, usually in the period the store closes. Adjustments to closed store liabilities primarily relate to actual exit costs differing from original estimates. Adjustments are made for changes in estimates in the period in which the change becomes known. Owned stores held for disposal are reduced to their estimated net realizable value. Costs to reduce the carrying values of property, plant, equipment and operating lease assets are accounted for in accordance with the Company’s policy on impairment of long-lived assets. Inventory write-downs, if any, in connection with store closings, are classified in the Consolidated Statements of Operations as “Merchandise costs”. Costs to transfer inventory and equipment from closed stores are expensed as incurred. Interest Rate Risk Management The Company uses derivative instruments primarily to manage its exposure to changes in interest rates. The Company’s current program relative to interest rate protection and the methods by which the Company accounts for its derivative instruments are described in Note 6. Benefit Plans and Multi-Employer Pension Plans The Company recognizes the funded status of its retirement plans on the Consolidated Balance Sheets. Actuarial gains or losses, prior service costs or credits and transition obligations that have not yet been recognized as part of net periodic benefit cost are required to be recorded as a component of Accumulated Other Comprehensive Income (“AOCI”). The Company has elected to measure defined benefit plan assets and obligations as of January 31, which is the month-end The determination of the obligation and expense for company-sponsored pension plans and other post-retirement benefits is dependent on the selection of assumptions used by actuaries and the Company in calculating those amounts. Those assumptions are described in Note 14 and include, among others, the discount rate, the expected long-term rate of return on plan assets, mortality and the rates of increase in compensation and health care costs. Actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally affect the recognized expense and recorded obligation in future periods. While the Company believes that the assumptions are appropriate, significant differences in actual experience or significant changes in assumptions may materially affect the pension and other post-retirement obligations and future expense. The Company also participates in various multi-employer plans for substantially all union employees. Pension expense for these plans is recognized as contributions are funded or when commitments are probable and reasonably estimable, in accordance with GAAP. Refer to Note 15 for additional information regarding the Company’s participation in these various multi-employer pension plans. The Company administers and makes contributions to the employee 401(k) retirement savings accounts. Contributions to the employee 401(k) retirement savings accounts are expensed when contributed or over the service period in the case of automatic contributions. Refer to Note 14 for additional information regarding the Company’s benefit plans. Share Based Compensation The Company recognizes compensation expense for all share-based payments granted under fair value recognition provisions. The Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award based on the fair value at the date of the grant. 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 the stock option at the date of grant. Stock options typically expire 10 years from the date of grant. Stock options vest between one one Deferred Income Taxes Deferred income taxes are recorded to reflect the tax consequences of differences between the tax basis of assets and liabilities and their financial reporting basis. Refer to Note 4 for the types of differences that give rise to significant portions of deferred income tax assets and liabilities. Uncertain Tax Positions The Company reviews the tax positions taken or expected to be taken on tax returns to determine whether and to what extent a benefit can be recognized in its consolidated financial statements. Refer to Note 4 for the amount of unrecognized tax benefits and other related disclosures related to uncertain tax positions. Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. As of January 29, 2022, the Internal Revenue Service had concluded its examination of all federal tax returns up to and including the return for the year ended February 3, 2018. The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions. Self-Insurance Costs The Company is primarily self-insured for costs related to workers’ compensation and general liability claims. Liabilities are actuarially determined and are recognized based on claims filed and an estimate of claims incurred but not reported. The liabilities for workers’ compensation claims are accounted for on a present value basis. The Company has purchased stop-loss coverage to limit its exposure to any significant exposure on a per claim basis. The Company is insured for covered costs in excess of these per claim limits. The following table summarizes the changes in the Company’s self-insurance liability through January 29, 2022: 2021 2020 2019 Beginning balance $ 731 $ 689 $ 696 Expense 226 262 209 Claim payments (236) (220) (216) Ending balance 721 731 689 Less: Current portion (236) (220) (216) Long-term portion $ 485 $ 511 $ 473 The current portion of the self-insured liability is included in “Other current liabilities,” and the long-term portion is included in “Other long-term liabilities” in the Consolidated Balance Sheets. The Company maintains surety bonds related to self-insured workers’ compensation claims. These bonds are required by most states in which the Company is self-insured for workers’ compensation and are placed with third-party insurance providers to insure payment of the Company’s obligations in the event the Company is unable to meet its claim payment obligations up to its self-insured retention levels. These bonds do not represent liabilities of the Company, as the Company has recorded reserves for the claim costs. The Company also maintains insurance coverages for some risks, including cyber exposure and property-related losses. The Company’s insurance coverage begins for these exposures ranging from Revenue Recognition Sales The Company recognizes revenues from the sale products, net of sales taxes, at the point of sale. Pharmacy sales recorded when the to customer. Digital channel originated sales are recognized either upon pickup in store or upon delivery to the customer. When shipping is discounted, it is recorded as an adjustment to sales. Discounts provided to customers the Company at the time sale, including those provided in connection with loyalty cards, are recognized as reduction in sales the products sold. Discounts provided vendors, usually in the form coupons, are not recognized reduction in sales provided coupons redeemable any retailer that accepts coupons. The Company records receivable difference sales price cash received. For merchandise sold in one of the Company’s stores or online, tender is accepted at the point of sale. The Company acts as principal in certain vendor arrangements where the purchase and sale of inventory are virtually simultaneous. The Company records revenue and related costs on a gross basis for these arrangements. For pharmacy sales, collection of third-party receivables is typically expected within three months or less from the time of purchase. The third-party receivables from pharmacy sales are recorded in Receivables in the Company’s Consolidated Balance Sheets and were $774 as of January 29, 2022 and $672 as of January 30, 2021. Gift Cards and Gift Certificates The Company does recognize when it sells its own gift certificates (collectively “gift cards”). Rather, it records deferred revenue the amount received. sale then recognized when gift cards are redeemed to purchase the Company’s products. The Company’s gift cards do not expire. While gift cards are generally redeemed within 12 months , some are never fully redeemed. The Company recognizes gift card breakage under the proportional method, where recognition of breakage income the historical unredeemed gift cards. The Company’s gift card deferred revenue liability was $185 as of January 29, 2022 and $160 as of January 30, 2021. Disaggregated Revenues The following table presents sales revenue by type of product for the year-ended January 29, 2022, January 30, 2021, and February 1, 2020: 2021 2020 2019 Amount % of total Amount % of total Amount % of total Non Perishable (1) $ 69,648 50.6 % $ 71,434 53.9 % $ 61,464 50.3 % Fresh (2) 33,972 24.6 % 33,449 25.2 % 29,452 24.1 % Supermarket Fuel 14,678 10.6 % 9,486 7.2 % 14,052 11.5 % Pharmacy 12,401 9.0 % 11,388 8.6 % 11,015 9.0 % Other (3) 7,189 5.2 % 6,741 5.1 % 6,303 5.1 % Total Sales $ 137,888 100 % $ 132,498 100 % $ 122,286 100 % (1) Consists primarily of grocery, general merchandise, health and beauty care and natural foods. (2) Consists primarily of produce, floral, meat, seafood, deli, bakery and fresh prepared. (3) Consists primarily of sales related to food production plants to outside parties, data analytic services, third-party media revenue, other consolidated entities, specialty pharmacy, in-store health clinics, digital coupon services and other online sales not included in the categories above. Merchandise Costs The “Merchandise costs” line item of the Consolidated Statements of Operations includes product costs, net of discounts and allowances; advertising costs (see separate discussion below); inbound freight charges; warehousing costs, including receiving and inspection costs; transportation costs; and food production and operational costs. Warehousing, transportation and manufacturing management salaries are also included in the “Merchandise costs” line item; however, purchasing management salaries and administration costs are included in the OG&A line item along with most of the Company’s other managerial and administrative costs. Shipping and delivery costs associated with the Company’s digital offerings originating from non-retail store locations are included in the “Merchandise costs” line item. Rent expense and depreciation and amortization expense are shown separately in the Consolidated Statements of Operations. Warehousing and transportation costs include distribution center direct wages, transportation direct wages, repairs and maintenance, utilities, inbound freight and, where applicable, third-party warehouse management fees. These costs are recognized in the periods the related expenses are incurred. The Company believes the classification of costs included in merchandise costs could vary widely throughout the industry. The Company’s approach is to include in the “Merchandise costs” line item the direct, net costs of acquiring products and making them available to customers. The Company believes this approach most accurately presents the actual costs of products sold. The Company recognizes all vendor allowances as a reduction in merchandise costs when the related product is sold. When possible, vendor allowances are applied to the related product cost by item and, therefore, reduce the carrying value of inventory by item. When the items are sold, the vendor allowance is recognized. When it is not possible, due to systems constraints, to allocate vendor allowances to the product by item, vendor allowances are recognized as a reduction in merchandise costs based on inventory turns and, therefore, recognized as the product is sold. Advertising Costs The Company’s advertising costs are recognized in the periods the related expenses are incurred and are included in the “Merchandise costs” line item of the Consolidated Statements of Operations. The Company’s advertising costs totaled $984 in 2021, $888 in 2020 and $854 in 2019. The Company does not record vendor allowances for co-operative advertising as a reduction of advertising expense. Operating, General and Administrative Expenses OG&A expenses consist primarily of employee-related costs such as wages, healthcare benefit costs, retirement plan costs, utilities, and credit card fees. Shipping and delivery costs associated with the Company's digital offerings originating from retail store locations, including third-party delivery fees, are included in the “OG&A” line item of the Consolidated Statements of Operations. Rent expense, depreciation and amortization expense and interest expense are shown separately in the Consolidated Statement of Operations. Consolidated Statements of Cash Flows For purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be temporary cash investments. Segments The Company operates supermarkets, multi-department stores and fulfillment centers throughout the United States. The Company’s retail operations, which represent 97 % of the Company’s consolidated sales, are its only reportable segment. The Company aggregates its operating divisions into one reportable segment due to the operating divisions having similar economic characteristics with similar long-term financial performance. In addition, the Company’s operating divisions offer customers similar products, have similar distribution methods, operate in similar regulatory environments, purchase the majority of the merchandise for retail sale from similar (and in many cases identical) vendors on a coordinated basis from a centralized location, serve similar types of customers, and are allocated capital from a centralized location. Operating divisions are organized primarily on a geographical basis so that the operating division management team can be responsive to local needs of the operating division and can execute company strategic plans and initiatives throughout the locations in their operating division. This geographical separation is the primary differentiation between these retail operating divisions. The geographical basis of organization reflects how the business is managed and how the Company’s Chief Executive Officer, who acts as the Company’s chief operating decision maker, assesses performance internally. All of the Company’s operations are domestic. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Jan. 29, 2022 | |
GOODWILL AND INTANGIBLE ASSETS | |
GOODWILL AND INTANGIBLE ASSETS | 2. GOODWILL AND INTANGIBLE ASSETS The Company’s goodwill balance as of January 29, 2022 and January 30, 2021 was $3,076 . Gross goodwill and accumulated impaired losses were $5,737 and $2,661, respectively, as of January 29, 2022 and January 30, 2021. Testing for impairment is performed annually, or on an interim basis upon the occurrence of a triggering event or a change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The annual evaluation of goodwill and indefinite-lived intangible assets was performed during the fourth quarter of 2021, 2020 and 2019 and did not result in impairment. The following table summarizes the Company’s intangible assets balance through January 29, 2022: 2021 2020 Gross carrying Accumulated Gross carrying Accumulated amount amortization (1) amount amortization (1) Definite-lived pharmacy prescription files $ 317 $ (199) $ 315 $ (167) Definite-lived customer relationships 186 (160) 186 (143) Definite-lived other 111 (88) 110 (78) Indefinite-lived trade name 685 — 685 — Indefinite-lived liquor licenses 90 — 89 — Total $ 1,389 $ (447) $ 1,385 $ (388) (1) Pharmacy prescription files are amortized to merchandise costs, customer relationships are amortized to depreciation and amortization expense and other intangibles are amortized to OG&A expense and depreciation and amortization expense. Amortization expense associated with intangible assets totaled approximately $59, $67 and $85, during fiscal years 2021, 2020 and 2019, respectively. Future amortization expense associated with the net carrying amount of definite-lived intangible assets for the years subsequent to 2021 is estimated to be approximately: 2022 $ 51 2023 39 2024 34 2025 31 2026 10 Thereafter 2 Total future estimated amortization associated with definite-lived intangible assets $ 167 |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 12 Months Ended |
Jan. 29, 2022 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
PROPERTY, PLANT AND EQUIPMENT, NET | 3. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consists of: 2021 2020 Land $ 3,395 $ 3,373 Buildings and land improvements 13,996 13,149 Equipment 15,951 14,928 Leasehold improvements 10,775 10,516 Construction-in-progress 3,831 2,892 Leased property under finance leases 1,939 1,165 Total property, plant and equipment 49,887 46,023 Accumulated depreciation and amortization (26,098) (23,637) Property, plant and equipment, net $ 23,789 $ 22,386 Accumulated depreciation and amortization for leased property under finance leases was $414 at January 29, 2022 and $321 at January 30, 2021. Approximately $136 and $152, net book value, of property, plant and equipment collateralized certain mortgages at January 29, 2022 and January 30, 2021, respectively. |
TAXES BASED ON INCOME
TAXES BASED ON INCOME | 12 Months Ended |
Jan. 29, 2022 | |
TAXES BASED ON INCOME | |
TAXES BASED ON INCOME | 4. TAXES BASED ON INCOME The provision for taxes based on income consists of: 2021 2020 2019 Federal Current $ 349 $ 577 $ 454 Deferred (46) 75 (50) Subtotal federal 303 652 404 State and local Current 67 133 70 Deferred 15 (3) (5) Subtotal state and local 82 130 65 Total $ 385 $ 782 $ 469 A reconciliation of the statutory federal rate and the effective rate follows: 2021 2020 2019 Statutory rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal tax benefit 3.2 3.0 2.6 Credits (1.3) (0.7) (1.5) Resolution of tax audit examinations (3.1) — (0.1) Excess tax benefits from share-based payments (1.3) (0.8) (0.2) Impairment losses attributable to noncontrolling interest — — 1.2 Non-deductible executive compensation 0.6 0.3 0.3 Other changes, net (0.3) 0.4 0.4 18.8 % 23.2 % 23.7 % The Company’s effective income tax rates were 18.8% in 2021 and 23.2% in 2020. The 2021 tax rate differed from the federal statutory rate primarily due to a discrete benefit of $47 which was primarily from the favorable outcome of income tax audit examinations covering multiple years, the benefit from share-based payments and the utilization of tax credits, partially offset by the effect of state income taxes. The 2020 tax rate differed from the federal statutory rate primarily due to the effect of state income taxes, partially offset by the utilization of tax credits and deductions. The 2019 tax rate differed from the federal statutory rate primarily due to the effect of state income taxes and Lucky’s Market losses attributable to the noncontrolling interest, which reduced pre-tax income but did not impact tax expense. The tax effects of significant temporary differences that comprise tax balances were as follows: 2021 2020 Deferred tax assets: Compensation related costs $ 560 $ 766 Lease liabilities 1,926 1,932 Closed store reserves 46 38 Net operating loss and credit carryforwards 98 86 Deferred income 126 149 Allowance for uncollectible receivables 36 23 Other 25 46 Subtotal 2,817 3,040 Valuation allowance (72) (53) Total deferred tax assets 2,745 2,987 Deferred tax liabilities: Depreciation and amortization (2,006) (2,115) Operating lease assets (1,790) (1,794) Insurance related costs (54) — Inventory related costs (310) (264) Equity investments in excess of tax basis (147) (356) Total deferred tax liabilities (4,307) (4,529) Deferred taxes $ (1,562) $ (1,542) At January 29, 2022, the Company had net operating loss carryforwards for state income tax purposes of $1,259 . These net operating loss carryforwards expire from 2022 through 2041. The utilization of certain of the Company’s state net operating loss carryforwards may be limited in a given year. Further, the Company has recorded a valuation allowance against certain deferred tax assets resulting from its state net operating losses. At January 29, 2022, the Company had state credit carryforwards of $37 . These state credit carryforwards expire from 2022 through 2035. The utilization of certain of the Company’s credits may be limited in a given year. Further, the Company has recorded a valuation allowance against certain deferred tax assets resulting from its state credits. The Company regularly reviews all deferred tax assets on a tax filer and jurisdictional basis to estimate whether these assets are more likely than not to be realized based on all available evidence. This evidence includes historical taxable income, projected future taxable income, the expected timing of the reversal of existing temporary differences and the implementation of tax planning strategies. Projected future taxable income is based on expected results and assumptions as to the jurisdiction in which the income will be earned. The expected timing of the reversals of existing temporary differences is based on current tax law and the Company’s tax methods of accounting. Unless deferred tax assets are more likely than not to be realized, a valuation allowance is established to reduce the carrying value of the deferred tax asset until such time that realization becomes more likely than not. Increases and decreases in these valuation allowances are included in "Income tax expense" in the Consolidated Statements of Operations. As of January 29, 2022, January 30, 2021 and February 1, 2020 the total valuation allowance was $72, $53 and $55, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits, including positions impacting only the timing of tax benefits, is as follows: 2021 2020 2019 Beginning balance $ 193 $ 174 $ 174 Additions based on tax positions related to the current year 10 7 13 Additions for tax positions of prior years 9 16 8 Reductions for tax positions of prior years (108) — (1) Settlements — — (19) Lapse of statute (4) (4) (1) Ending balance $ 100 $ 193 $ 174 As of January 29, 2022, January 30, 2021 and February 1, 2020, the amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $73, $85 and $74 respectively. To the extent interest and penalties would be assessed by taxing authorities on any underpayment of income tax, such amounts have been accrued and classified as a component of income tax expense. During the years ended January 29, 2022, January 30, 2021 and February 1, 2020, the Company recognized approximately $(15), $7 and $7 , respectively, in interest and penalties (recoveries). The Company had accrued approximately $22, $38 and $30 for the payment of interest and penalties as of January 29, 2022, January 30, 2021 and February 1, 2020. As of January 29, 2022, the Internal Revenue Service had concluded its examination of all federal tax returns up to and including the return for the year ended February 3, 2018. 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 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 to be paid by December 31, 2022. During 2020, the Company deferred the employer portion of social security tax of $622. Of the total, $311 was paid during 2021 and $311 is included in “Other current liabilities” in the Company’s Consolidated Balance Sheets. |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 12 Months Ended |
Jan. 29, 2022 | |
DEBT OBLIGATIONS | |
DEBT OBLIGATIONS | 5. DEBT OBLIGATIONS Long-term debt consists of: January 29, January 30, 2022 2021 1.70% to 8.00% Senior Notes due through 2049 $ 10,607 $ 11,899 Other 1,138 511 Total debt, excluding obligations under finance leases 11,745 12,410 Less current portion (451) (844) Total long-term debt, excluding obligations under finance leases $ 11,294 $ 11,566 In 2021, the Company repaid $300 of senior notes bearing an interest rate of 2.60% , $500 of senior notes bearing an interest rate of 2.95% , and $500 of senior notes bearing an interest rate of 3.40% , all using cash on hand. Additionally in 2021, the Company acquired 28 , previously leased, properties for a purchase price of $455 . Separately, the Company also entered into a transaction to sell those properties to a third party for total proceeds of $621 . Total cash proceeds received as a result of the transactions was $166 . The sale transaction did not qualify for sale-leaseback accounting treatment. As a result, the Company recorded property, plant and equipment for the $455 price paid and recorded a $621 financing obligation. The leases have a base term of 25 years and twelve option periods of five years each. The Company has the option to purchase the individual properties for fair market value at the end of the base term or at the end of any option period. The Company is obligated to repurchase the properties at the end of the base term for $300 if the lessor exercises its put option. In 2020, the Company issued $500 of senior notes due in fiscal year 2030 bearing an interest rate of 2.20% and $500 of senior notes due in fiscal year 2030 bearing interest rate of 1.70% . In connection with the senior note issuances, the Company also terminated forward-starting interest rate swap agreements with an aggregate notional amount of due in fiscal year 2030. These forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued during the fourth quarter of 2020. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized loss of net of tax, has been deferred in Accumulated Other Comprehensive Loss and will continue to amortize to earnings as the interest payments are made. The Company repaid with proceeds from the senior notes issuances. 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 2020, the Company fully repaid the $1,000 borrowed under the revolving credit facility and the entire $1,150 in outstanding commercial paper obligations, as of February 1, 2020, using cash generated by operations. On July 6, 2021, the Company entered into an amended, extended and restated $2,750 unsecured revolving credit facility (the “Credit Agreement”), with a termination date of July 6, 2026, unless extended as permitted under the Credit Agreement. The Company has the ability to increase the size of the Credit Agreement by up to an additional $1,250 , subject to certain conditions. Borrowings under the Credit Agreement bear interest, at the Company’s option, at either (i) LIBOR plus a market spread, based on the Company’s Public Debt Rating or (ii) the base rate, defined as the highest of (a) the Federal Funds Rate plus 0.5%, (b) Bank of America prime rate, and (c) one-month LIBOR plus 1.0%, plus a market rate spread based on the Company’s Public Debt Rating . The Company will also pay a Commitment Fee based on its Public Debt Rating and Letter of Credit fees equal to a market rate spread based on the Company’s Public Debt Rating. “Public Debt Rating” means, as of any date, the rating that has been most recently announced by either S&P or Moody’s, as the case may be, for any class of non-credit enhanced long-term senior unsecured debt issued by the Company. The Credit Agreement includes fallback language related to the transition from LIBOR to alternative reference rates. The Company does not expect a significant change to its cost of debt as a result of the transition from LIBOR to an alternative reference rate. The Credit Agreement contains a covenant, which, among other things, requires the maintenance of a Leverage Ratio of not greater than 3.50 :1.00. The Company may repay the Credit Agreement in whole or in part at any time without premium or penalty. The Credit Agreement is not guaranteed by the Company’s subsidiaries. As of January 29, 2022, and January 30, 2021, the Company had no commercial paper borrowings and no borrowings under the Credit Agreement. As of January 29, 2022, the Company had outstanding letters of credit in the amount of $363, of which $2 reduces funds available under the Credit Agreement. As of January 30, 2021, the Company had outstanding letters of credit in the amount of $381, of which $2 reduces funds available under the Credit Agreement. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company. Most of the Company’s outstanding public debt is subject to early redemption at varying times and premiums, at the option of the Company. In addition, subject to certain conditions, some of the Company’s publicly issued debt will be subject to redemption, in whole or in part, at the option of the holder upon the occurrence of a redemption event, upon not less than five days’ notice prior to the date of redemption, at a redemption price equal to the default amount, plus a specified premium. “Redemption Event” is defined in the indentures as the occurrence of (i) any person or group, together with any affiliate thereof, beneficially owning 50% or more of the voting power of the Company, (ii) any one person or group, or affiliate thereof, succeeding in having a majority of its nominees elected to the Company’s Board of Directors, in each case, without the consent of a majority of the continuing directors of the Company or (iii) both a change of control and a below investment grade rating. The aggregate annual maturities and scheduled payments of long-term debt, as of year-end 2021, and for the years subsequent to 2021 are: 2022 $ 451 2023 1,130 2024 5 2025 84 2026 1,387 Thereafter 8,688 Total debt $ 11,745 |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Jan. 29, 2022 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 6. DERIVATIVE FINANCIAL INSTRUMENTS GAAP requires that derivatives be carried at fair value on the balance sheet and provides for hedge accounting when certain conditions are met. The Company’s derivative financial instruments are recognized on the balance sheet at fair value. Changes in the fair value of derivative instruments designated as “cash flow” hedges, to the extent the hedges are highly effective, are recorded in other comprehensive income, net of tax effects. Ineffective portions of cash flow hedges, if any, are recognized in current period earnings. Other comprehensive income or loss is reclassified into current period earnings when the hedged transaction affects earnings. Changes in the fair value of derivative instruments designated as “fair value” hedges, along with corresponding changes in the fair values of the hedged assets or liabilities, are recorded in current period earnings. Ineffective portions of fair value hedges, if any, are recognized in current period earnings. The Company assesses, both at the inception of the hedge and on an ongoing basis, whether derivatives used as hedging instruments are highly effective in offsetting the changes in the fair value or cash flow of the hedged items. If it is determined that a derivative is not highly effective as a hedge or ceases to be highly effective, the Company discontinues hedge accounting prospectively. Interest Rate Risk Management The Company is exposed to market risk from fluctuations in interest rates. The Company manages its exposure to interest rate fluctuations through the use of a commercial paper program, interest rate swaps (fair value hedges) and forward-starting interest rate swaps (cash flow hedges). The Company’s current program relative to interest rate protection contemplates hedging the exposure to changes in the fair value of fixed-rate debt attributable to changes in interest rates. To do this, the Company uses the following guidelines: (i) use average daily outstanding borrowings to determine annual debt amounts subject to interest rate exposure, (ii) limit the average annual amount subject to interest rate reset and the amount of floating rate debt to a combined total amount that represents 25% of the carrying value of the Company’s debt portfolio or less, (iii) include no leveraged products, and (iv) hedge without regard to profit motive or sensitivity to current mark-to-market status. The Company reviews compliance with these guidelines annually with the Financial Policy Committee of the Board of Directors. These guidelines may change as the Company’s needs dictate. Fair Value Interest Rate Swaps The Company did not have any outstanding interest rate derivatives classified as fair value hedges as of January 29, 2022 and January 30, 2021. Cash Flow Forward-Starting Interest Rate Swaps The Company did not have any outstanding forward-starting interest rate swap agreements as of January 29, 2022 and January 30, 2021. During 2020, the Company terminated nine forward-starting interest rate swaps with maturity dates of January 2021 with an aggregate notional amount totaling $450 . These forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued during the fourth quarter of 2020. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized loss of $41, $31 net of tax, has been deferred in AOCI and will be amortized to earnings as the interest payments are made. In addition, the Company terminated and discontinued hedge accounting for one forward-starting interest rate swap with a maturity date of January 2021 with an aggregate notional amount totaling $50 . The gain of $7 from the termination of this forward starting interest rate swap was record in interest income in the fourth quarter of 2020. The following table summarizes the effect of the Company’s derivative instruments designated as cash flow hedges for 2021, 2020 and 2019: Year-To-Date Amount of Gain/(Loss) in Amount of Gain/(Loss) AOCI on Derivative Reclassified from AOCI into Location of Gain/(Loss) Derivatives in Cash Flow Hedging (Effective Portion) Income (Effective Portion) Reclassified into Income Relationships 2021 2020 2019 2021 2020 2019 (Effective Portion) Forward-Starting Interest Rate Swaps, net of tax* $ (47) $ (54) $ (42) $ (7) $ (2) $ (4) Interest expense * The amounts of Gain/(Loss) in AOCI on derivatives include unamortized proceeds and payments from forward-starting interest rate swaps once classified as cash flow hedges that were terminated prior to the end of 2020. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Jan. 29, 2022 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 7. FAIR VALUE MEASUREMENTS 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 January 29, 2022 and January 30, 2021: January 29, 2022 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) Marketable Securities $ 1,054 January 30, 2021 Fair Value Measurements Using Quoted Prices in Active Markets Significant for Identical Unobservable Assets Inputs (Level 1) (Level 3) Total Marketable Securities $ 1,882 $ — $ 1,882 Other Investment — 160 160 Total $ 1,882 $ 160 $ 2,042 Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analysis of goodwill, other intangible assets, long-lived assets and in the valuation of store lease exit costs. The Company reviews goodwill and indefinite-lived intangible assets for impairment annually, during the fourth quarter of each fiscal year, and as circumstances indicate the possibility of impairment. See Note 2 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 for further discussion of the Company’s policies for impairments of long-lived assets and valuation of store lease exit costs. In 2021, long-lived assets with a carrying amount of . In 2020, long-lived assets with a carrying amount of 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 respective year-ends. At January 29, 2022, the fair value of total debt excluding obligation under finance leases was . At January 30, 2021, the fair value of total debt excluding obligation under finance leases was Contingent Consideration As a result of the Home Chef merger, the Company recognized a contingent liability of $91 on the acquisition date. The contingent consideration was measured using unobservable (Level 3) inputs and was included in . The Company estimated the fair value of the earnout liability by applying a using the Company’s projection of future operating results for both the online and offline businesses related to the Home Chef merger and the estimated probability of achievement of the earnout target metrics. The liability is remeasured to fair value using the Monte-Carlo simulation method at each reporting period, and the change in fair value, including accretion for the passage of time, is recognized in net earnings until the contingency is resolved. In 2020, the Company amended the contingent consideration agreement including the performance milestones to align with the Company’s current business strategies. In 2021 and 2020, the Company recorded adjustments to increase the contingent consideration liability for 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 due to their short term nature. Other Assets The equity investment in Ocado Group plc is measured at fair value through net earnings. The fair value of all shares owned, which is measured using Level 1 inputs, was $987 and $1,808 as of January 29, 2022 and January 30, 2021, respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. The unrealized gain (loss) for this Level 1 investment was approximately ($821) and $1,032 for 2021 and 2020, respectively, and is included in “(Loss) Gain on investments” in the Company’s Consolidated Statements of Operations. The Company held other equity investments without a readily determinable fair value. These investments are measured initially at cost and remeasured for observable price changes to fair value through net earnings. The value of these investments was $309 and $189 as of January 29, 2022 and January 30, 2021, respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. During 2020, certain of these investments with a carrying value of $87 were remeasured to their fair value of $160, resulting in an unrealized gain of $73. The gain was measured using Level 3 inputs and is included in “(Loss) Gain on investments” in the Company’s Consolidated Statements of Operations. There were no observable price changes or impairments for these investments during 2021, and as such, they are excluded from the fair value measurements table above for January 29, 2022. The following table presents the Company’s remaining other assets as of January 29, 2022 and January 30 2021: January 29, 2022 January 30, 2021 Other Assets Equity method and other long-term investments $ 282 $ 250 Notes receivable 191 240 Prepaid deposits under certain contractual arrangements 214 186 Implementation costs related to cloud computing arrangements 151 81 Funded asset status of pension plans 156 21 Other 120 129 Total $ 1,114 $ 907 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 12 Months Ended |
Jan. 29, 2022 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS). | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table represents the changes in AOCI by component for the years ended January 29, 2022 and January 30, 2021: Pension and Cash Flow Postretirement Hedging Defined Benefit Activities (1) Plans (1) Total (1) Balance at February 1, 2020 $ (42) $ (598) $ (640) OCI before reclassifications (2) (14) 8 (6) Amounts reclassified out of AOCI (3) 2 14 16 Net current-period OCI (12) 22 10 Balance at January 30, 2021 $ (54) $ (576) $ (630) Balance at January 30, 2021 $ (54) $ (576) $ (630) OCI before reclassifications (2) — 82 82 Amounts reclassified out of AOCI (3) 7 74 81 Net current-period OCI 7 156 163 Balance at January 29, 2022 $ (47) $ (420) $ (467) (1) All amounts are net of tax. (2) Net of tax of ($8) and $2 for cash flow hedging activities and pension and postretirement defined benefit plans, respectively, as of January 30, 2021. Net of tax of $25 for pension and postretirement defined benefit plans as of January 29, 2022. (3) Net of tax of $5 and $2 for pension and postretirement defined benefit plans and cash flow hedging activities, respectively, as of January 30, 2021. Net of tax of $23 and $3 for pension and postretirement defined benefit plans and cash flow hedging activities, respectively, as of January 29, 2022. The following table represents the items reclassified out of AOCI and the related tax effects for the years ended January 29, 2022, January 30, 2021 and February 1, 2020: For the year ended For the year ended For the year ended January 29, 2022 January 30, 2021 February 1, 2020 Cash flow hedging activity items Amortization of gains and losses on cash flow hedging activities (1) $ 10 $ 4 $ 7 Tax expense (3) (2) (3) Net of tax 7 2 4 Pension and postretirement defined benefit plan items Amortization of amounts included in net periodic pension cost (2) 97 19 38 Tax expense (23) (5) (9) Net of tax 74 14 29 Total reclassifications, net of tax $ 81 $ 16 $ 33 (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 expense. |
LEASES AND LEASE-FINANCED TRANS
LEASES AND LEASE-FINANCED TRANSACTIONS | 12 Months Ended |
Jan. 29, 2022 | |
LEASES AND LEASE-FINANCED TRANSACTIONS | |
LEASES AND LEASE-FINANCED TRANSACTIONS | 9. LEASES AND LEASE-FINANCED TRANSACTIONS The Company leases certain store real estate, warehouses, distribution centers, fulfillment centers, office space and equipment. The Company operates in leased facilities in approximately half of its store locations. Lease terms generally range from 10 to 20 years with options to renew for varying terms at the Company’s sole discretion. Certain leases also include options to purchase the leased property. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Certain leases include escalation clauses or payment of executory costs such as property taxes, utilities or insurance and maintenance. Rent expense for leases with escalation clauses or other lease concessions are accounted for on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Certain properties or portions thereof are subleased to others for periods generally ranging from one to 20 years . The following table provides supplemental balance sheet classification information related to leases: January 29, January 30, Classification 2022 2021 Assets Operating Operating lease assets $ 6,695 $ 6,796 Finance Property, plant and equipment, net (1) 1,525 844 Total leased assets $ 8,220 $ 7,640 Liabilities Current Operating Current portion of operating lease liabilities $ 650 $ 667 Finance Current portion of long-term debt including obligations under finance leases 104 67 Noncurrent Operating Noncurrent operating lease liabilities 6,426 6,507 Finance Long-term debt including obligations under finance leases 1,515 936 Total lease liabilities $ 8,695 $ 8,177 (1) Finance lease assets are recorded net of accumulated amortization of $414 and $321 as of January 29, 2022 and January 30, 2021. The following table provides the components of lease cost: Year-To-Date Year-To-Date Lease Cost Classification January 29, 2022 January 30, 2021 Operating lease cost (1) Rent Expense $ 954 $ 981 Sublease and other rental income Rent Expense (109) (107) Finance lease cost Amortization of leased assets Depreciation and Amortization 95 55 Interest on lease liabilities Interest Expense 52 45 Net lease cost $ 992 $ 974 (1) Includes short-term leases and variable lease costs, which are immaterial. Maturities of operating and finance lease liabilities are listed below. Amounts in the table include options to extend lease terms that are reasonably certain of being exercised. Operating Finance Leases Leases Total 2022 $ 920 $ 159 $ 1,079 2023 862 158 1,020 2024 791 156 947 2025 717 152 869 2026 664 152 816 Thereafter 5,961 1,323 7,284 Total lease payments 9,915 2,100 $ 12,015 Less amount representing interest 2,839 481 Present value of lease liabilities (1) $ 7,076 $ 1,619 (1) Includes the current portion of $650 for operating leases and $104 for finance leases. Total future minimum rentals under non-cancellable subleases at January 29, 2022 were $256. The following table provides the weighted-average lease term and discount rate for operating and finance leases: January 29, 2022 January 30, 2021 Weighted-average remaining lease term (years) Operating leases 14.9 15.3 Finance leases 14.7 16.2 Weighted-average discount rate Operating leases 4.1 % 4.2 % Finance leases 3.7 % 4.4 % The following table provides supplemental cash flow information related to leases: Year-To-Date Year-To-Date January 29, 2022 January 30, 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 897 $ 849 Operating cash flows from finance leases 52 45 Financing cash flows from finance leases 127 37 Leased assets obtained in exchange for new operating lease liabilities 669 679 Leased assets obtained in exchange for new finance lease liabilities 753 190 Net gain recognized from sale and leaseback transactions (1) 35 39 Impairment of operating lease assets 8 4 Impairment of finance lease assets 4 2 (1) In 2021, the Company entered into sale leaseback transactions related to seven properties, which resulted in total proceeds of $79 . In 2020, the Company entered into sale leaseback transactions related to seven properties, which resulted in total proceeds of $78. On May 17, 2018, the Company entered into a Partnership Framework Agreement with Ocado International Holdings Limited and Ocado Group plc (“Ocado”), which has since been amended. Under this agreement, Ocado will partner exclusively with the Company in the U.S., enhancing the Company’s digital and robotics capabilities in its distribution networks. The Company opened its first three Kroger Delivery customer fulfillment centers in Monroe, Ohio, Groveland, Florida and Forest Park, Georgia. The Company determined the arrangement with Ocado contains a lease of the robotic equipment used to fulfill customer orders. As a result, the Company established a finance lease when each facility began fulfilling orders to customers and used its 10-year incremental borrowing rate to calculate the lease liability. The base term of each lease is 10 years with options to renew at the Company’s sole discretion. The Company elected to combine the lease and non-lease elements in the contract. As a result, it will account for all payments to Ocado as lease payments. In 2021, the Company recorded finance lease assets of $401 and finance lease liabilities of $372 related to these location openings. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 12 Months Ended |
Jan. 29, 2022 | |
EARNINGS PER COMMON SHARE | |
EARNINGS PER COMMON SHARE | 10. EARNINGS PER COMMON SHARE Net earnings attributable to The Kroger Co. per basic common share equals 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 equals 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: For the year ended For the year ended For the year ended January 29, 2022 January 30, 2021 February 1, 2020 Per Per Per Earnings Shares Share Earnings Shares Share Earnings Shares Share (in millions, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net earnings attributable to The Kroger Co. per basic common share $ 1,639 744 $ 2.20 $ 2,556 773 $ 3.31 $ 1,640 799 $ 2.05 Dilutive effect of stock options 10 8 6 Net earnings attributable to The Kroger Co. per diluted common share $ 1,639 754 $ 2.17 $ 2,556 781 $ 3.27 $ 1,640 805 $ 2.04 The Company had combined undistributed and distributed earnings to participating securities totaling $16, $29 and $19 in 2021, 2020 and 2019, respectively. The Company had stock options outstanding for approximately 2.4 million, 9.1 million and 18.4 million shares, respectively, for the years ended January 29, 2022, January 30, 2021, and February 1, 2020, which 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 diluted share. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Jan. 29, 2022 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 11. STOCK-BASED COMPENSATION The Company recognizes compensation expense for all share-based payments granted. The Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award based on the fair value at the date of the grant. 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 the stock option at the date of grant. The Company accounts for stock options under the fair value recognition provisions. Stock options typically expire 10 years from the date of grant. Stock options vest between one In addition to the stock options described above, the Company awards restricted stock to employees and nonemployee directors under various plans. The restrictions on these awards generally lapse between one from the date of the awards. The Company determines the fair value for restricted stock awards in an amount equal to the fair market value of the underlying shares on the grant date of the award. At January 29, 2022, approximately 19 million common shares were available for future options or restricted stock grants under the 2011, 2014, and 2019 Long-Term Incentive Plans (the “Plans”). Options granted reduce the shares available under the Plans at a ratio of one to one. Restricted stock grants reduce the shares available under the Plans at a ratio of 2.83 to one. Equity awards granted are based on the aggregate value of the award on the grant date. This can affect the number of shares granted in a given year as equity awards. Excess tax benefits related to equity awards are recognized in the provision for income taxes. Equity awards may be approved at one of four meetings of its Board of Directors occurring shortly after the Company’s release of quarterly earnings. The 2021 primary grants were made in conjunction with the March and June meetings of the Company’s Board of Directors. All awards become immediately exercisable upon certain changes of control of the Company. Stock Options Changes in options outstanding under the stock option plans are summarized below: Shares Weighted- subject average to option exercise (in millions) price Outstanding, year-end 2018 34.1 $ 23.42 Granted 3.1 $ 24.63 Exercised (4.0) $ 14.17 Canceled or Expired (1.0) $ 28.87 Outstanding, year-end 2019 32.2 $ 24.52 Granted 2.9 $ 29.31 Exercised (7.3) $ 17.72 Canceled or Expired (1.0) $ 30.53 Outstanding, year-end 2020 26.8 $ 26.65 Granted 2.1 $ 35.45 Exercised (7.1) $ 24.70 Canceled or Expired (0.7) $ 28.88 Outstanding, year-end 2021 21.1 $ 28.15 A summary of options outstanding, exercisable and expected to vest at January 29, 2022 follows: Weighted-average Aggregate remaining Weighted-average intrinsic Number of shares contractual life exercise price value (in millions) (in years) (in millions) Options Outstanding 21.1 5.31 $ 28.15 $ 324 Options Exercisable 14.6 4.19 $ 27.58 $ 232 Options Expected to Vest 6.4 7.79 $ 29.35 $ 90 Restricted stock Changes in restricted stock outstanding under the restricted stock plans are summarized below: Restricted shares Weighted-average outstanding grant-date (in millions) fair value Outstanding, year-end 2018 8.8 $ 27.86 Granted 5.4 $ 22.72 Lapsed (4.1) $ 28.07 Canceled or Expired (0.8) $ 25.68 Outstanding, year-end 2019 9.3 $ 24.85 Granted 4.0 $ 31.99 Lapsed (4.9) $ 24.69 Canceled or Expired (0.6) $ 26.71 Outstanding, year-end 2020 7.8 $ 28.46 Granted 3.9 $ 37.29 Lapsed (4.0) $ 29.58 Canceled or Expired (0.5) $ 31.31 Outstanding, year-end 2021 7.2 $ 32.52 The weighted-average grant date fair value of stock options granted during 2021, 2020 and 2019 was $8.54, $6.43 and $6.00 , 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 2021, compared to 2020, resulted primarily from increases in the Company’s share price and the weighted-average expected volatility. The increase in the fair value of the stock options granted during 2020, compared to 2019, resulted primarily from increases in the Company’s share price and the weighted-average expected volatility, partially offset by a decrease in the interest rate. The following table reflects the weighted-average assumptions used for grants awarded to option holders: 2021 2020 2019 Weighted average expected volatility 28.52 % 26.96 % 25.37 % Weighted average risk-free interest rate 1.21 % 0.82 % 2.54 % Expected dividend yield 2.00 % 2.00 % 2.00 % Expected term (based on historical results) 7.2 years 7.2 years 7.2 years The weighted-average risk-free interest rate was based on the yield of a treasury note as of the grant date, continuously compounded, which matures at a date that approximates the expected term of the options. The dividend yield was based on our history and expectation of dividend payouts. Expected volatility was determined based upon historical stock volatilities; however, implied volatility was also considered. Expected term was determined based upon historical exercise and cancellation experience. Total stock compensation recognized in 2021, 2020 and 2019 was $203, $185 and $155 , respectively. Stock option compensation recognized in 2021, 2020 and 2019 was $20, $22 and $24 , respectively. Restricted shares compensation recognized in 2021, 2020 and 2019 was $183, $163 and $131, respectively. The total intrinsic value of stock options exercised was $121, $115 and $51 in 2021, 2020 and 2019, respectively. The total amount of cash received in 2021 by the Company from the exercise of stock options granted under share-based payment arrangements was $172 . As of January 29, 2022, there was $194 of total unrecognized compensation expense remaining related to non-vested share-based compensation arrangements granted under the Plans. This cost is expected to be recognized over a weighted-average period of approximately two years . The total fair value of options that vested was $20, $23 and $26 in 2021, 2020 and 2019, respectively. Shares issued as a result of stock option exercises may be newly issued shares or reissued treasury shares. Proceeds received from the exercise of options, and the related tax benefit, may be utilized to repurchase the Company’s common shares under a stock repurchase program adopted by the Company’s Board of Directors. During 2021, the Company repurchased approximately five million common shares in such a manner. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jan. 29, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 12. 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. The principal contingencies are described below: Insurance Litigation — Various claims and lawsuits arising in the normal course of business, including personal injury, contract disputes, employment discrimination, wage and hour and other regulatory claims are pending against the Company. Some of these suits purport or have been determined to be class actions and/or seek substantial damages. 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 when an adverse outcome is probable. Nonetheless, assessing and predicting the outcomes of these matters involves 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. On February 9, 2022, a putative shareholder filed a derivative action in the Court of Common Pleas, Hamilton County, Ohio against certain current and former directors of The Kroger Co. and The Kroger Co., as a nominal defendant, alleging among other things, that the defendants breached their fiduciary duties in connection with the data incident involving the Company’s former third party secure file transfer vendor, Accellion. The Company is one of dozens of companies that have been named in various lawsuits alleging that defendants contributed to create a public nuisance through the distribution and dispensing of opioids. At present, the Company is named in a significant number of lawsuits pending in various state courts as well as in the United States District Court for the Northern District of Ohio, where over 2,000 cases have been consolidated as Multi-District Litigation ("MDL") pursuant to 28 U.S.C. §1407 in a case entitled In re National Prescription Opiate Litigation Once discovery is completed, those cases will be remanded to the originating federal court for trial. The Company is vigorously defending these matters and believes that these cases are without merit. At this stage in the proceedings, the Company is unable to determine the probability of the outcome of these matters or the range of reasonably possible loss, if any. Assignments — |
STOCK
STOCK | 12 Months Ended |
Jan. 29, 2022 | |
STOCK | |
STOCK | 13. STOCK Preferred Shares The Company has authorized five million shares of voting cumulative preferred shares; two million shares were available for issuance at January 29, 2022. The shares have a par value of $100 per share and are issuable in series. Common Shares The Company has authorized two billion common shares, $1 par value per share. Common Stock Repurchase Program The Company maintains stock repurchase programs that comply with Rule 10b5-1 of the Securities Exchange Act of 1934 to allow for the orderly repurchase of The Kroger Co. common shares, from time to time. The Company made open market purchases totaling $1,422, $1,196 and $400 under these repurchase programs in 2021, 2020 and 2019, respectively. In addition to these repurchase programs, in December 1999, the Company began a program to repurchase common shares to reduce dilution resulting from its employee stock option plans. This program is solely funded by proceeds from stock option exercises and the related tax benefit. The Company repurchased approximately $225, $128 and $65 under the stock option program during 2021, 2020 and 2019, respectively. |
COMPANY-SPONSORED BENEFIT PLANS
COMPANY-SPONSORED BENEFIT PLANS | 12 Months Ended |
Jan. 29, 2022 | |
COMPANY- SPONSORED BENEFIT PLANS | |
COMPANY- SPONSORED BENEFIT PLANS | 14. COMPANY- SPONSORED BENEFIT PLANS The Company administers non-contributory defined benefit retirement plans for some non-union employees and union-represented employees as determined by the terms and conditions of collective bargaining agreements. These include several qualified pension plans (the “Qualified Plans”) and non-qualified pension plans (the “Non-Qualified Plans”). The Non-Qualified Plans pay benefits to any employee that earns in excess of the maximum allowed for the Qualified Plans by Section 415 of the Internal Revenue Code. The Company only funds obligations under the Qualified Plans. Funding for the company-sponsored pension plans is based on a review of the specific requirements and on evaluation of the assets and liabilities of each plan. In addition to providing pension benefits, the Company provides certain health care benefits for retired employees. Based on employee’s age, years of service and position with the Company, the employee may be eligible for retiree health care benefits. Funding of retiree health care benefits occurs as claims or premiums are paid. The Company recognizes the funded status of its retirement plans on the Consolidated Balance Sheets. Actuarial gains or losses and prior service credits that have not yet been recognized as part of net periodic benefit cost are required to be recorded as a component of AOCI. The Company has elected to measure defined benefit plan assets and obligations as of January 31, which is the month-end Amounts recognized in AOCI as of January 29, 2022 and January 30, 2021 consist of the following (pre-tax): Pension Benefits Other Benefits Total 2021 2020 2021 2020 2021 2020 Net actuarial loss (gain) $ 715 $ 951 $ (127) $ (147) $ 588 $ 804 Prior service credit — — (43) (55) (43) (55) Total $ 715 $ 951 $ (170) $ (202) $ 545 $ 749 Other changes recognized in other comprehensive income (loss) in 2021, 2020 and 2019 were as follows (pre-tax): Pension Benefits Other Benefits Total 2021 2020 2019 2021 2020 2019 2021 2020 2019 Incurred net actuarial loss (gain) $ (109) $ 36 $ 179 $ 2 $ (46) $ 9 $ (107) $ (10) $ 188 Amortization of prior service credit — — — 12 13 11 12 13 11 Amortization of net actuarial gain (loss) (126) (40) (61) 17 8 12 (109) (32) (49) Other — — (1) — — (12) — — (13) Total recognized in other comprehensive income (loss) $ (235) $ (4) $ 117 $ 31 $ (25) $ 20 $ (204) $ (29) $ 137 Total recognized in net periodic benefit cost and other comprehensive income (loss) $ (164) $ (4) $ 165 $ 10 $ (34) $ 11 $ (154) $ (38) $ 176 Information with respect to change in benefit obligation, change in plan assets, the funded status of the plans recorded in the Consolidated Balance Sheets, net amounts recognized at the end of fiscal years, weighted-average assumptions and components of net periodic benefit cost follow: Pension Benefits Qualified Plans Non-Qualified Plans Other Benefits 2021 2020 2021 2020 2021 2020 Change in benefit obligation: Benefit obligation at beginning of fiscal year $ 3,615 $ 3,518 $ 351 $ 328 $ 152 $ 198 Service cost 12 13 — — 4 7 Interest cost 92 104 9 10 4 6 Plan participants’ contributions — — — — 13 12 Actuarial (gain) loss (125) 175 (12) 35 2 (47) Plan settlements (442) (16) — — — — Benefits paid (172) (171) (24) (21) (25) (24) Other (3) (8) 1 (1) — — Benefit obligation at end of fiscal year $ 2,977 $ 3,615 $ 325 $ 351 $ 150 $ 152 Change in plan assets: Fair value of plan assets at beginning of fiscal year $ 3,569 $ 3,422 $ — $ — $ — $ — Actual return on plan assets 141 342 — — — — Employer contributions — — 24 21 12 12 Plan participants’ contributions — — — — 13 12 Plan settlements (442) (16) — — — — Benefits paid (172) (171) (24) (21) (25) (24) Other — (8) — — — — Fair value of plan assets at end of fiscal year $ 3,096 $ 3,569 $ — $ — $ — $ — Funded status and net asset and liability recognized at end of fiscal year $ 119 $ (46) $ (325) $ (351) $ (150) $ (152) As of January 29, 2022, other assets and other current liabilities include $156 and $34 , respectively, of the net asset and liability recognized for the above benefit plans. As of January 30, 2021, other assets and other current liabilities include $21 and $35 , respectively, of the net asset and liability recognized for the above benefit plans. Pension plan assets do not include common shares of The Kroger Co. In 2021, the Company settled certain company-sponsored pension plan obligations using existing assets of the plans. The Company recognized a non-cash settlement charge of $87, $68 net of tax, associated with the settlement of its obligations for the eligible participants’ pension balances that were distributed out of the plans via a lump sum distribution or the purchase of an annuity contract, based on each participant’s election. The settlement charge is included in “Non-service component of company-sponsored pension plan costs” in the Consolidated Statements of Operations. Pension Benefits Other Benefits Weighted average assumptions 2021 2020 2019 2021 2020 2019 Discount rate — Benefit obligation 3.17 % 2.72 % 3.01 % 3.01 % 2.43 % 2.97 % Discount rate — Net periodic benefit cost 2.72 % 3.01 % 4.23 % 2.43 % 2.97 % 4.19 % Expected long-term rate of return on plan assets 5.50 % 5.50 % 6.00 % Rate of compensation increase — Net periodic benefit cost 3.03 % 3.03 % 3.04 % Rate of compensation increase — Benefit obligation 3.05 % 3.03 % 3.03 % Cash Balance plan interest crediting rate 3.30 % 3.30 % 3.60 % The Company’s discount rate assumptions were intended to reflect the rates at which the pension benefits could be effectively settled. They take into account the timing and amount of benefits that would be available under the plans. The Company’s policy is to match the plan’s cash flows to that of a hypothetical bond portfolio whose cash flow from coupons and maturities match the plan’s projected benefit cash flows. The discount rates are the single rates that produce the same present value of cash flows. The selection of the 3.17% and 3.01 % discount rates as of year-end 2021 for pension and other benefits, respectively, represents the hypothetical bond portfolio using bonds with an AA or better rating constructed with the assistance of an outside consultant. A 100 basis point increase in the discount rate would decrease the projected pension benefit obligation as of January 29, 2022, by approximately $316. The Company’s 2021 assumed pension plan investment return rate was 5.50% compared to 5.50% in 2020 and 6.00 % in 2019. The value of all investments in the company-sponsored defined benefit pension plans during the calendar year ended December 31, 2021, net of investment management fees and expenses, increased 5.9% and for fiscal year 2021 investments increased 4.2 %. Historically, the Company’s pension plans’ average rate of return was 8.2% for the 10 calendar years ended December 31, 2021, net of all investment management fees and expenses. For the past 20 years , the Company’s pension plans’ average annual rate of return has been 7.8 %. To determine the expected rate of return on pension plan assets held by the Company, the Company considers current and forecasted plan asset allocations as well as historical and forecasted rates of return on various asset categories. The Company calculates its expected return on plan assets by using the market-related value of plan assets. The market-related value of plan assets is determined by adjusting the actual fair value of plan assets for gains or losses on plan assets. Gains or losses represent the difference between actual and expected returns on plan investments for each plan year. Gains or losses on plan assets are recognized evenly over a five-year period. Using a different method to calculate the market-related value of plan assets would provide a different expected return on plan assets. The pension benefit unfunded status decreased in 2021, compared to 2020, due primarily to an increase in discount rates, reducing the benefit obligation. The following table provides the components of the Company’s net periodic benefit costs for 2021, 2020 and 2019: Pension Benefits Qualified Plans Non-Qualified Plans Other Benefits 2021 2020 2019 2021 2020 2019 2021 2020 2019 Components of net periodic benefit cost: Service cost $ 12 $ 13 $ 32 $ — $ — $ 1 $ 4 $ 7 $ 6 Interest cost 92 104 124 9 10 12 4 6 8 Expected return on plan assets (168) (168) (182) — — — — — — Amortization of: Prior service credit — — — — — — (12) (13) (11) Actuarial (gain) loss 33 35 55 6 5 6 (17) (8) (12) Settlement loss recognized 87 — — — — — — — — Other (1) 1 — 1 — — — (1) — Net periodic benefit cost $ 55 $ (15) $ 29 $ 16 $ 15 $ 19 $ (21) $ (9) $ (9) The following table provides the projected benefit obligation (“PBO”) and the fair value of plan assets for those company-sponsored pension plans with projected benefit obligations in excess of plan assets: Qualified Plans Non-Qualified Plans 2021 2020 2021 2020 PBO at end of fiscal year $ 244 $ 3,415 $ 325 $ 351 Fair value of plan assets at end of year $ 207 $ 3,349 $ — $ — The following table provides the accumulated benefit obligation (“ABO”) and the fair value of plan assets for those company-sponsored pension plans with accumulated benefit obligations in excess of plan assets: Qualified Plans Non-Qualified Plans 2021 2020 2021 2020 ABO at end of fiscal year $ 244 $ 3,415 $ 325 $ 351 Fair value of plan assets at end of year $ 207 $ 3,349 $ — $ — The following table provides information about the Company’s estimated future benefit payments: Pension Other Benefits Benefits 2022 $ 207 $ 12 2023 $ 204 $ 12 2024 $ 207 $ 13 2025 $ 209 $ 13 2026 $ 209 $ 13 2027 —2031 $ 1,009 $ 58 The following table provides information about the target and actual pension plan asset allocations as of January 29, 2022: Actual Target allocations Allocations 2021 2021 2020 Pension plan asset allocation Global equity securities 2.0 % 7.0 % 6.0 % Emerging market equity securities 1.0 1.7 1.6 Investment grade debt securities 80.0 73.6 77.9 High yield debt securities 4.0 2.5 2.7 Private equity 10.0 10.6 8.1 Hedge funds — 2.9 2.2 Real estate 3.0 1.7 1.5 Total 100.0 % 100.0 % 100.0 % Investment objectives, policies and strategies are set by the Retirement Benefit Plan Management Committee (the “Committee”). The primary objectives include holding and investing the assets and distributing benefits to participants and beneficiaries of the pension plans. Investment objectives have been established based on a comprehensive review of the capital markets and each underlying plan’s current and projected financial requirements. The time horizon of the investment objectives is long-term in nature and plan assets are managed on a going-concern basis. Investment objectives and guidelines specifically applicable to each manager of assets are established and reviewed annually. Derivative instruments may be used for specified purposes, including rebalancing exposures to certain asset classes. Any use of derivative instruments for a purpose or in a manner not specifically authorized is prohibited, unless approved in advance by the Committee. The target allocations shown for 2021 were established in 2020 based on the Company’s LDI strategy. An LDI strategy focuses on maintaining a close to fully-funded status over the long-term with minimal funded status risk. This is achieved by investing more of the plan assets in fixed income instruments to more closely match the duration of the plan liability. The Company did not make any contributions to its company-sponsored pension plans in 2021, and the Company is not required to make any contributions to these plans in 2022. If the Company does make any contributions in 2022, the Company expects these contributions will decrease its required contributions in future years. Among other things, investment performance of plan assets, the interest rates required to be used to calculate the pension obligations, and future changes in legislation, will determine the amounts of any contributions. The Company expects 2022 net periodic benefit costs for company-sponsored pension plans to be approximately ($38). Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. The Company used a 5.30% initial health care cost trend rate, which is assumed to decrease on a linear basis to a 4.50% ultimate health care cost trend rate in 2037, to determine its expense. The following tables, set forth by level within the fair value hierarchy, present the Qualified Plans’ assets at fair value as of January 29, 2022 and January 30, 2021: Assets at Fair Value as of January 29, 2022 Quoted Prices in Significant Active Markets for Significant Other Unobservable Assets Identical Assets Observable Inputs Inputs Measured (Level 1) (Level 2) (Level 3) at NAV Total Cash and cash equivalents $ 80 $ — $ — $ — $ 80 Corporate Stocks 98 — — — 98 Corporate Bonds — 1,070 — — 1,070 U.S. Government Securities — 144 — — 144 Mutual Funds 265 — — — 265 Collective Trusts — — — 871 871 Hedge Funds — — 39 49 88 Private Equity — — — 326 326 Real Estate — — 37 16 53 Other — 101 — — 101 Total $ 443 $ 1,315 $ 76 $ 1,262 $ 3,096 Assets at Fair Value as of January 30, 2021 Quoted Prices in Significant Active Markets for Significant Other Unobservable Assets Identical Assets Observable Inputs Inputs Measured (Level 1) (Level 2) (Level 3) at NAV Total Cash and cash equivalents $ 120 $ — $ — $ — $ 120 Corporate Stocks 89 — — — 89 Corporate Bonds — 1,240 — — 1,240 U.S. Government Securities — 225 — — 225 Mutual Funds 329 — — — 329 Collective Trusts — — — 1,014 1,014 Hedge Funds — — 35 46 81 Private Equity — — — 289 289 Real Estate — — 39 16 55 Other — 127 — — 127 Total $ 538 $ 1,592 $ 74 $ 1,365 $ 3,569 Certain investments that are measured at fair value using the NAV per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented for these investments in the preceding tables are intended to permit reconciliation of the fair value hierarchies to the total fair value of plan assets. For measurements using significant unobservable inputs (Level 3) during 2021 and 2020, a reconciliation of the beginning and ending balances is as follows: Hedge Funds Real Estate Ending balance, February 1, 2020 $ 43 $ 43 Contributions into Fund 2 1 Realized gains — 4 Unrealized gains — (6) Distributions (10) (3) Ending balance, January 30, 2021 35 39 Contributions into Fund — 1 Realized gains 2 2 Unrealized gains 7 6 Distributions (5) (11) Ending balance, January 29, 2022 $ 39 $ 37 See Note 7 for a discussion of the levels of the fair value hierarchy. The assets’ fair value measurement level above is based on the lowest level of any input that is significant to the fair value measurement. The following is a description of the valuation methods used for the Qualified Plans’ assets measured at fair value in the above tables: ● Cash and cash equivalents: The carrying value approximates fair value. ● Corporate Stocks: The fair values of these securities are based on observable market quotations for identical assets and are valued at the closing price reported on the active market on which the individual securities are traded. ● Corporate Bonds: The fair values of these securities are primarily based on observable market quotations for similar bonds, valued at the closing price reported on the active market on which the individual securities are traded. When such quoted prices are not available, the bonds are valued using a discounted cash flow approach using current yields on similar instruments of issuers with similar credit ratings, including adjustments for certain risks that may not be observable, such as credit and liquidity risks. ● U.S. Government Securities: Certain U.S. Government securities are valued at the closing price reported in the active market in which the security is traded. Other U.S. government securities are valued based on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for similar securities, the security is valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks. ● Mutual Funds: The fair values of these securities are based on observable market quotations for identical assets and are valued at the closing price reported on the active market on which the individual securities are traded. ● Collective Trusts: The collective trust funds are public investment vehicles valued using a Net Asset Value (NAV) provided by the manager of each fund. These assets have been valued using NAV as a practical expedient. ● Hedge Funds: The Hedge funds classified as Level 3 include investments that are not readily tradeable and have valuations that are not based on readily observable data inputs. The fair value of these assets is estimated based on information provided by the fund managers or the general partners. Therefore, these assets are classified as Level 3. Certain other hedge funds are private investment vehicles valued using a NAV provided by the manager of each fund. These assets have been valued using NAV as a practical expedient. ● Private Equity: Private Equity investments are valued based on the fair value of the underlying securities within the fund, which include investments both traded on an active market and not traded on an active market. For those investments that are traded on an active market, the values are based on the closing price reported on the active market on which those individual securities are traded. For investments not traded on an active market, or for which a quoted price is not publicly available, a variety of unobservable valuation methodologies, including discounted cash flow, market multiple and cost valuation approaches, are employed by the fund manager to value investments. Fair values of all investments are adjusted annually, if necessary, based on audits of the private equity fund financial statements; such adjustments are reflected in the fair value of the plan’s assets. ● Real Estate: Real estate investments include investments in real estate funds managed by a fund manager. These investments are valued using a variety of unobservable valuation methodologies, including discounted cash flow, market multiple and cost valuation approaches. The valuations for these investments are not based on readily observable inputs and are classified as Level 3 investments. Certain other real estate investments are valued using a NAV provided by the manager of each fund. These assets have been valued using NAV as a practical expedient. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement. The Company contributed and expensed $289, $294 and $264 to employee 401(k) retirement savings accounts in 2021, 2020 and 2019, respectively. The 401(k) retirement savings account plans provide to eligible employees both matching contributions and automatic contributions from the Company based on participant contributions, compensation as defined by the plan and length of service. In 2019, the Company approved and implemented a plan to reorganize certain portions of its division management structure. This reorganization increased operational effectiveness and reduced overhead costs while maintaining a high quality customer experience. The Company recorded a charge for severance and related benefits of $80 , $61 net of tax, in 2019, which is included in the OG&A caption within the Consolidated Statements of Operations. |
MULTI-EMPLOYER PENSION PLANS
MULTI-EMPLOYER PENSION PLANS | 12 Months Ended |
Jan. 29, 2022 | |
MULTI-EMPLOYER PENSION PLANS | |
MULTI-EMPLOYER PENSION PLANS | 15. MULTI-EMPLOYER PENSION PLANS The Company contributes to various multi-employer pension plans based on obligations arising from collective bargaining agreements. These multi-employer pension plans provide retirement benefits to participants based on their service to contributing employers. The benefits are paid from assets held in trust for that purpose. Trustees are appointed in equal number by employers and unions. The trustees typically are responsible for determining the level of benefits to be provided to participants as well as for such matters as the investment of the assets and the administration of the plans. The Company recognizes expense in connection with these plans as contributions are funded or when commitments are probable and reasonably estimable, in accordance with GAAP. The Company continues to evaluate and address potential exposure to under-funded multi-employer pension plans as it relates to the Company’s associates who are beneficiaries of these plans. These under-fundings are not a liability of the Company. When an opportunity arises that is economically feasible and beneficial to the Company and its associates, the Company may negotiate the restructuring of under-funded multi-employer pension plan obligations to help stabilize associates’ future benefits and become the fiduciary of the restructured multi-employer pension plan. The commitments from these restructurings do not change the Company’s debt profile as it relates to its credit rating since these off balance sheet commitments are typically considered in the Company’s investment grade debt rating. The Company is currently designated as the named fiduciary of the United Food and Commercial Workers (“UFCW”) Consolidated Pension Plan and the International Brotherhood of Teamsters (“IBT”) Consolidated Pension Fund and has sole investment authority over these assets. Due to opportunities arising, the Company has restructured certain multi-employer pension plans. The significant effects of these restructuring agreements recorded in our Consolidated Financial Statements are: ● In 2021, associates within the Fred Meyer and QFC divisions ratified an agreement for the transfer of liabilities from the Sound Retirement Trust to the UFCW Consolidated Pension Plan. The Company transferred $449 , $344 net of tax, in net accrued pension liabilities and prepaid escrow funds to fulfill obligations for past service for associates and retirees. The agreement will be satisfied by cash installment payments to the UFCW Consolidated Pension Plan and will be paid evenly over seven years . ● In 2020, certain of the Company’s associates ratified an agreement with certain UFCW local unions to withdraw from the UFCW International Union-Industry Pension Fund (“National Fund”). Due to the ratification of the agreement, the Company incurred a withdrawal liability charge of $962 , on a pre-tax basis, to fulfill obligations for past service for associates and retirees in the National Fund. The Company also incurred an additional $27 commitment to a transition reserve in the new variable annuity pension plan. On an after-tax basis, the withdrawal liability and commitment to the transition reserve totaled $754 . As of January 30, 2021, the current portion of the commitment of $523 was included in “Other current liabilities” and the long-term portion of the commitment of $466 was included in “Other long-term liabilities” in the Company’s Consolidated Balance Sheets. In 2021, the Company paid $523 of these commitments. As of January 29, 2022, the current portion of the commitment of $233 is included in “Other current liabilities” and the long-term portion of the commitment of $233 is included in “Other long-term liabilities” in the Company’s Consolidated Balance Sheets. The original commitment of $962 on a pre-tax basis, will be satisfied by payment to the National Fund over three years . The long-term portion, from January 30, 2021, 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. ● In 2019, the Company incurred a $135 charge, $104 net of tax, for obligations related to withdrawal liabilities for certain multi-employer pension plan funds. The risks of participating in multi-employer pension plans are different from the risks of participating in single-employer pension plans in the following respects: a. Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers. b. If a participating employer stops contributing to the plan, the unfunded obligations of the plan allocable to such withdrawing employer may be borne by the remaining participating employers. c. If the Company stops participating in some of its multi-employer pension plans, the Company may be required to pay those plans an amount based on its allocable share of the unfunded vested benefits of the plan, referred to as a withdrawal liability. The Company’s participation in multi-employer plans is outlined in the following tables. The EIN / Pension Plan Number column provides the Employer Identification Number (“EIN”) and the three-digit pension plan number. The most recent Pension Protection Act Zone Status available in 2021 and 2020 is for the plan’s year-end at December 31, 2020 and December 31, 2019, respectively. Among other factors, generally, plans in the red zone are less than percent funded. The FIP/RP Status Pending / Implemented Column indicates plans for which a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented. Unless otherwise noted, the information for these tables was obtained from the Forms 5500 filed for each plan’s year-end at December 31, 2020 and December 31, 2019. The multi-employer contributions listed in the table below are the Company’s multi-employer contributions made in fiscal years 2021, 2020 and 2019. The following table contains information about the Company’s multi-employer pension plans: FIP/RP Pension Protection Status EIN / Pension Act Zone Status Pending/ Multi-Employer Contributions Surcharge Pension Fund Plan Number 2021 2020 Implemented 2021 2020 2019 Imposed (5) SO CA UFCW Unions & Food Employers Joint Pension Trust Fund (1)(2) 95-1939092 - 001 Yellow Yellow Implemented $ 83 $ 86 $ 75 No Desert States Employers & UFCW Unions Pension Plan (1) 84-6277982 - 001 Green Green No 22 19 19 No Sound Retirement Trust (formerly Retail Clerks Pension Plan) (1)(3) 91-6069306 – 001 Yellow Yellow Implemented 24 29 25 No Rocky Mountain UFCW Unions and Employers Pension Plan (1) 84-6045986 - 001 Green Green No 29 28 23 No Oregon Retail Employees Pension Plan (1) 93-6074377 - 001 Green Green No 10 9 9 No Bakery and Confectionary Union & Industry International Pension Fund (1) 52-6118572 - 001 Red Red Implemented 8 8 10 No Retail Food Employers & UFCW Local 711 Pension (1) 51-6031512 - 001 Yellow Yellow Implemented 11 11 10 No United Food & Commercial Workers Intl Union — Industry Pension Fund (1)(4) 51-6055922 - 001 Green Green No 550 29 32 No Western Conference of Teamsters Pension Plan 91-6145047 - 001 Green Green No 37 35 34 No Central States, Southeast & Southwest Areas Pension Plan 36-6044243 - 001 Red Red Implemented 37 12 — No UFCW Consolidated Pension Plan (1) 58-6101602 – 001 Green Green No 243 321 174 No IBT Consolidated Pension Plan (1)(6) 82-2153627 - 001 N/A N/A No 29 18 33 No Other 26 14 17 Total Contributions $ 1,109 $ 619 $ 461 (1) The Company's multi-employer contributions to these respective funds represent more than 5% of the total contributions received by the pension funds . (2) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at March 31, 2021 and March 31, 2020. (3) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at September 30, 2020 and September 30, 2019. (4) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at June 30, 2020 and June 30, 2019. (5) Under the Pension Protection Act, a surcharge may be imposed when employers make contributions under a collective bargaining agreement that is not in compliance with a rehabilitation plan. As of January 29, 2022, the collective bargaining agreements under which the Company was making contributions were in compliance with rehabilitation plans adopted by the applicable pension fund. (6) The plan was formed after 2006, and therefore is not subject to zone status certifications. The following table describes (a) the expiration date of the Company’s collective bargaining agreements and (b) the expiration date of the Company’s most significant collective bargaining agreements for each of the material multi-employer funds in which the Company participates: Expiration Date of Collective Most Significant Collective Bargaining Bargaining Agreements (1) Pension Fund Agreements Count Expiration SO CA UFCW Unions & Food Employers Joint Pension Trust Fund March 2022 to June 2024 2 March 2022 to June 2024 UFCW Consolidated Pension Plan April 2020 (2) 4 April 2020 (2) Desert States Employers & UFCW Unions Pension Plan October 2023 to June 2025 1 October 2023 Sound Retirement Trust (formerly Retail Clerks Pension Plan) April 2022 to September 2024 4 May 2022 to August 2022 Rocky Mountain UFCW Unions and Employers Pension Plan January 2025 to February 2025 1 January 2025 Oregon Retail Employees Pension Plan August 2024 to March 2026 3 August 2024 to July 2025 Bakery and Confectionary Union & Industry International Pension Fund May 2021 (2) 3 October 2021 (2) Retail Food Employers & UFCW Local 711 Pension March 2022 to January 2024 1 March 2022 United Food & Commercial Workers Intl Union — Industry Pension Fund April 2020 (2) 2 July 2023 to August 2023 Western Conference of Teamsters Pension Plan April 2022 to September 2025 4 April 2022 to September 2025 International Brotherhood of Teamsters Consolidated Pension Fund September 2022 to September 2024 3 September 2022 to September 2024 (1) This column represents the number of significant collective bargaining agreements and their expiration date for each of the Company’s pension funds listed above. For the purposes of this table, the “significant collective bargaining agreements” are the largest based on covered employees that, when aggregated, cover the majority of the employees for which we make multi-employer contributions for the referenced pension fund. (2) Certain collective bargaining agreements for each of these pension funds are operating under an extension. In 2020, the Company held escrow deposits amounting to $271 due to certain restructuring agreements. These payments were included in “Prepaid and other current assets” in the Company’s Consolidated Balance Sheets. These escrow deposits were paid in 2021. Based on the most recent information available to it, the Company believes the present value of actuarial accrued liabilities in most of these multi-employer plans exceeds the value of the assets held in trust to pay benefits. Moreover, if the Company were to exit certain markets or otherwise cease making contributions to these funds, the Company could trigger a withdrawal liability. Any adjustment for withdrawal liability will be recorded when it is probable that a liability exists and it can be reasonably estimated. The Company also contributes to various other multi-employer benefit plans that provide health and welfare benefits to active and retired participants. Total contributions made by the Company to these other multi-employer health and welfare plans were approximately $1,197 in 2021, $1,262 in 2020, and $1,252 in 2019. |
DISPOSAL OF BUSINESS
DISPOSAL OF BUSINESS | 12 Months Ended |
Jan. 29, 2022 | |
DISPOSAL OF BUSINESS | |
DISPOSAL OF BUSINESS | 16. DISPOSAL OF BUSINESS On March 13, 2019, the Company completed the sale of its You Technology business to Inmar for total consideration of $565, including $396 of cash and $64 of preferred equity received upon closing. The Company is also entitled to receive other cash payments of $105 over five years . The transaction includes a long-term service agreement for Inmar to provide the Company digital coupon services. The sale resulted in a gain of $70, $52 net of tax, which is included in “Gain on sale of businesses” in the Consolidated Statement of Operations. The Company recorded the fair value of the long-term service agreement of $358 in “Other current liabilities” and “Other long-term liabilities” in the Consolidated Balance Sheets and such amount is being recorded as sales over the 10-year agreement. On April 26, 2019, the Company completed the sale of its Turkey Hill Dairy business to an affiliate of Peak Rock Capital for total proceeds of $225. The sale resulted in a gain of $106, $80 net of tax, which is included in “Gain on sale of businesses” in the Consolidated Statements of Operations. In the third quarter of 2019, as a result of a portfolio review, the Company decided to divest its interest in Lucky’s Market. The Company recognized an impairment charge of $238 in the third quarter of 2019, which is included in OG&A in the Consolidated Statements of Operations. The impairment charge consists of property, plant and equipment of $200, which includes $40 of finance lease assets; goodwill of $19; operating lease assets of $11; and other charges of $8. The amount of the impairment charge attributable to The Kroger Co. is $131, $100 net of tax, with the remaining amount attributable to the minority interest. Subsequently, the decision was made by Lucky’s Market to file for bankruptcy in January 2020, which led the Company to fully write off the value of its investment and deconsolidate Lucky’s Market from the consolidated financial statements. This resulted in an additional non-cash charge of $174, $125 net of tax, in the fourth quarter of 2019, which is included in OG&A in the Consolidated Statements of Operations. The amount of the total 2019 charge attributable to The Kroger Co. is $305, $225 net of tax. The Company maintains liabilities associated with certain property related guarantees that will result in the Company making payments to settle these over time. |
RECENTLY ADOPTED ACCOUNTING STA
RECENTLY ADOPTED ACCOUNTING STANDARDS | 12 Months Ended |
Jan. 29, 2022 | |
RECENTLY ADOPTED ACCOUNTING STANDARDS | |
RECENTLY ADOPTED ACCOUNTING STANDARDS | 17. RECENTLY ADOPTED ACCOUNTING STANDARDS In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." This amendment allows companies to reclassify stranded tax effects resulting from the Tax Act from accumulated other comprehensive income (AOCI) to retained earnings. The Company adopted ASU 2018-02 on February 3, 2019 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. Capitalized implementation costs of , are included in “Other assets” in the Company’s Consolidated Balance Sheets as of January 29, 2022 and January 30, 2021, respectively. 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. |
RECENTLY ISSUED ACCOUNTING STAN
RECENTLY ISSUED ACCOUNTING STANDARDS | 12 Months Ended |
Jan. 29, 2022 | |
RECENTLY ISSUED ACCOUNTING STANDARDS | |
RECENTLY ISSUED ACCOUNTING STANDARDS | 18. RECENTLY ISSUED ACCOUNTING STANDARDS In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This standard provides optional expedients and exceptions for applying GAAP to certain contract modifications and hedging relationships that reference LIBOR or other reference rates expected to be discontinued. This guidance is effective upon issuance and can be applied through December 31, 2022. The Company may elect to apply the amendments for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020. The adoption of the standard is not expected to have a material effect on the Company’s Consolidated Statements of Operations, Consolidated Balance Sheets or Consolidated Statements of Cash Flows. |
ACCOUNTING POLICIES (Policies)
ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jan. 29, 2022 | |
ACCOUNTING POLICIES | |
Description of Business, Basis of Presentation and Principles of Consolidation | Description of Business, Basis of Presentation and Principles of Consolidation The Kroger Co. (the “Company”) was founded in 1883 and incorporated in 1902. As of January 29, 2022, the Company was one of the largest retailers in the world based on annual sales. The Company also manufactures and processes food for sale by its supermarkets and online. The accompanying financial statements include the consolidated accounts of the Company, its wholly-owned subsidiaries and other consolidated entities. Intercompany transactions and balances have been eliminated. Refer to Note 17 for a description of changes to the Consolidated Financial Statements for recently adopted accounting standards regarding the implementation costs of cloud computing arrangements. |
Fiscal Year | Fiscal Year The Company’s fiscal year ends on the Saturday nearest January 31. The last three fiscal years consist of the 52 -week periods ended January 29, 2022, January 30, 2021 and February 1, 2020. |
Pervasiveness of Estimates | Pervasiveness of Estimates The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of consolidated revenues and expenses during the reporting period is also required. Actual results could differ from those estimates. |
Cash, Temporary Cash Investments and Book Overdrafts | Cash, Temporary Cash Investments and Book Overdrafts Cash and temporary cash investments represent store cash and short-term investments with original maturities of less than three months. Book overdrafts are included in “Trade accounts payable” and “Accrued salaries and wages” in the Consolidated Balance Sheets. |
Deposits In-Transit | Deposits In-Transit Deposits in-transit generally represent funds deposited to the Company’s bank accounts at the end of the year related to sales, a majority of which were paid for with debit cards, credit cards and checks, to which the Company does not have immediate access but settle within a few days of the sales transaction. |
Inventories | Inventories Inventories are stated at the lower of cost (principally on a last-in, first-out “LIFO” basis) or market. In total, approximately 91% of inventories in 2021 and 92% of inventories in 2020 were valued using the LIFO method. The remaining inventories, including substantially all fuel inventories, are stated at the lower of cost (on a FIFO basis) or net realizable value. Replacement cost was higher than the carrying amount by $1,570 at January 29, 2022 and $1,373 at January 30, 2021. The Company follows the Link-Chain, Dollar-Value LIFO method for purposes of calculating its LIFO charge or credit. During 2020, the Company had a LIFO liquidation primarily related to pharmacy inventory. The liquidated inventory was carried at lower costs prevailing in prior years as compared with current costs. The effect of this reduction in inventory decreased “Merchandise costs” by approximately $76, $58 net of tax. The item-cost method of accounting to determine inventory cost before the LIFO adjustment is followed for substantially all store inventories at the Company’s supermarket divisions. This method involves counting each item in inventory, assigning costs to each of these items based on the actual purchase costs (net of vendor allowances and cash discounts) of each item and recording the cost of items sold. The item-cost method of accounting allows for more accurate reporting of periodic inventory balances and enables management to more precisely manage inventory. In addition, substantially all of the Company’s inventory consists of finished goods and is recorded at actual purchase costs (net of vendor allowances and cash discounts). The Company evaluates inventory shortages throughout the year based on actual physical counts in its facilities. Allowances for inventory shortages are recorded based on the results of these counts to provide for estimated shortages as of the financial statement date. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are recorded at cost or, in the case of assets acquired in a business combination, at fair value. Depreciation and amortization expense, which includes the depreciation of assets recorded under finance leases, is computed principally using the straight-line method over the estimated useful lives of individual assets. Buildings and land improvements are depreciated based on lives varying from 10 to 40 years . All new purchases of store equipment are assigned lives varying from three to nine years . Leasehold improvements are amortized over the shorter of the lease term to which they relate, which generally varies from four to 25 years , or the useful life of the asset. Food production plant, fulfillment center and distribution center equipment is depreciated over lives varying from three to 15 years . Information technology assets are generally depreciated over three to five years . Depreciation and amortization expense was $2,824 in 2021, $2,747 in 2020 and $2,649 in 2019. Interest costs on significant projects constructed for the Company’s own use are capitalized as part of the costs of the newly constructed facilities. Upon retirement or disposal of assets, the cost and related accumulated depreciation and amortization are removed from the balance sheet and any gain or loss is reflected in net earnings. Refer to Note 3 for further information regarding the Company’s property, plant and equipment. |
Leases | Leases The Company leases certain store real estate, warehouses, distribution centers, fulfillment centers, office space and equipment. The Company determines if an arrangement is a lease at inception. Finance and operating lease assets and liabilities are recognized at the lease commencement date. Finance and operating lease liabilities represent the present value of minimum lease payments not yet paid. Operating lease assets represent the right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments, lease incentives and impairment, if any. To determine the present value of lease payments, the Company estimates an incremental borrowing rate which represents the rate used for a secured borrowing of a similar term as the lease. Lease terms generally range from 10 to 20 years with options to renew for varying terms at the Company’s sole discretion. The lease term includes the initial contractual term as well as any options to extend the lease when it is reasonably certain that the Company will exercise that option. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Certain leases include escalation clauses or payment of executory costs such as property taxes, utilities or insurance and maintenance. Operating lease payments are charged on a straight-line basis to rent expense over the lease term and finance lease payments are charged to interest expense and depreciation and amortization expense over the lease term. Assets under finance leases are amortized in accordance with the Company’s normal depreciation policy for owned assets or over the lease term, if shorter. The Company’s lease agreements do not contain any residual value guarantees or material restrictive covenants. For additional information on leases, see Note 9 to the Consolidated Financial Statements. |
Goodwill | Goodwill The Company reviews goodwill for impairment during the fourth quarter of each year, or earlier upon the occurrence of a triggering event. The Company performs reviews of each of its operating divisions and other consolidated entities (collectively, “reporting units”) that have goodwill balances. Generally, fair value is determined using a market multiple model, or discounted projected future cash flows, and is compared to the carrying value of a reporting unit for purposes of identifying potential impairment. Projected future cash flows are based on management’s knowledge of the current operating environment and expectations for the future. Goodwill impairment is recognized for any excess of the reporting unit’s carrying value over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. Results of the goodwill impairment reviews performed during 2021, 2020 and 2019 are summarized in Note 2. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on whether certain triggering events have occurred. These events include current period losses combined with a history of losses or a projection of continuing losses or a significant decrease in the market value of an asset. When a triggering event occurs, an impairment calculation is performed, comparing projected undiscounted future cash flows, utilizing current cash flow information and expected growth rates related to specific stores, to the carrying value for those stores. If the Company identifies impairment for long-lived assets to be held and used, the Company compares the assets’ current carrying value to the assets’ fair value. Fair value is based on current market values or discounted future cash flows. The Company records impairment when the carrying value exceeds fair market value. With respect to owned property and equipment held for disposal, the value of the property and equipment is adjusted to reflect recoverable values based on previous efforts to dispose of similar assets and current economic conditions. Impairment is recognized for the excess of the carrying value over the estimated fair market value, reduced by estimated direct costs of disposal. The Company recorded asset impairments totaling $64, $70 and $120 in 2021, 2020 and 2019, respectively. The decrease in the 2021 and 2020 impairment charges, compared to 2019, was the result of 35 planned store closures in 2020 recognized in 2019. Costs to reduce the carrying value of long-lived assets for each of the years presented have been included in the Consolidated Statements of Operations as Operating, general and administrative (“OG&A”) expense. |
Accounts Payable Financing Arrangement | Accounts Payable Financing Arrangement The Company has an agreement with a third party to provide an accounts payable tracking system which facilitates participating suppliers’ ability to finance payment obligations from the Company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not affected by suppliers’ decisions to finance amounts under this arrangement. These obligations are included in “Other current liabilities” in the Consolidated Balance Sheets. |
Contingent Consideration | Contingent Consideration The Company’s Home Chef business combination involves potential payment of future consideration that is contingent upon the achievement of certain performance milestones. The Company recorded contingent consideration at fair value at the date of acquisition based on the consideration expected to be transferred, estimated as the probability-weighted future cash flows, discounted back to present value using a discount rate determined in accordance with accepted valuation methods. The liability for contingent consideration is remeasured to fair value at each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized in earnings until the contingency is resolved. In 2021 and 2020, adjustments to increase the contingent consideration liability as of year-end were recorded for $66 and $189, respectively, in OG&A expense. In 2019, an adjustment to decrease the contingent consideration liability as of year-end 2019 was recorded for ($69) in OG&A expense. |
Store Closing Costs | Store Closing Costs The Company regularly evaluates the performance of its stores and periodically closes those stores that are underperforming. Related liabilities arise, such as severance, contractual obligations and other accruals associated with store closings. The Company records a liability for costs associated with an exit or disposal activity when the liability is incurred, usually in the period the store closes. Adjustments to closed store liabilities primarily relate to actual exit costs differing from original estimates. Adjustments are made for changes in estimates in the period in which the change becomes known. Owned stores held for disposal are reduced to their estimated net realizable value. Costs to reduce the carrying values of property, plant, equipment and operating lease assets are accounted for in accordance with the Company’s policy on impairment of long-lived assets. Inventory write-downs, if any, in connection with store closings, are classified in the Consolidated Statements of Operations as “Merchandise costs”. Costs to transfer inventory and equipment from closed stores are expensed as incurred. |
Interest Rate Risk Management | Interest Rate Risk Management The Company uses derivative instruments primarily to manage its exposure to changes in interest rates. The Company’s current program relative to interest rate protection and the methods by which the Company accounts for its derivative instruments are described in Note 6. |
Benefit Plans and Multi-Employer Pension Plans | Benefit Plans and Multi-Employer Pension Plans The Company recognizes the funded status of its retirement plans on the Consolidated Balance Sheets. Actuarial gains or losses, prior service costs or credits and transition obligations that have not yet been recognized as part of net periodic benefit cost are required to be recorded as a component of Accumulated Other Comprehensive Income (“AOCI”). The Company has elected to measure defined benefit plan assets and obligations as of January 31, which is the month-end The determination of the obligation and expense for company-sponsored pension plans and other post-retirement benefits is dependent on the selection of assumptions used by actuaries and the Company in calculating those amounts. Those assumptions are described in Note 14 and include, among others, the discount rate, the expected long-term rate of return on plan assets, mortality and the rates of increase in compensation and health care costs. Actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally affect the recognized expense and recorded obligation in future periods. While the Company believes that the assumptions are appropriate, significant differences in actual experience or significant changes in assumptions may materially affect the pension and other post-retirement obligations and future expense. The Company also participates in various multi-employer plans for substantially all union employees. Pension expense for these plans is recognized as contributions are funded or when commitments are probable and reasonably estimable, in accordance with GAAP. Refer to Note 15 for additional information regarding the Company’s participation in these various multi-employer pension plans. The Company administers and makes contributions to the employee 401(k) retirement savings accounts. Contributions to the employee 401(k) retirement savings accounts are expensed when contributed or over the service period in the case of automatic contributions. Refer to Note 14 for additional information regarding the Company’s benefit plans. |
Share Based Compensation | Share Based Compensation The Company recognizes compensation expense for all share-based payments granted under fair value recognition provisions. The Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award based on the fair value at the date of the grant. 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 the stock option at the date of grant. Stock options typically expire 10 years from the date of grant. Stock options vest between one one |
Deferred Income Taxes | Deferred Income Taxes Deferred income taxes are recorded to reflect the tax consequences of differences between the tax basis of assets and liabilities and their financial reporting basis. Refer to Note 4 for the types of differences that give rise to significant portions of deferred income tax assets and liabilities. |
Uncertain Tax Positions | Uncertain Tax Positions The Company reviews the tax positions taken or expected to be taken on tax returns to determine whether and to what extent a benefit can be recognized in its consolidated financial statements. Refer to Note 4 for the amount of unrecognized tax benefits and other related disclosures related to uncertain tax positions. Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. As of January 29, 2022, the Internal Revenue Service had concluded its examination of all federal tax returns up to and including the return for the year ended February 3, 2018. The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions. |
Self-Insurance Costs | Self-Insurance Costs The Company is primarily self-insured for costs related to workers’ compensation and general liability claims. Liabilities are actuarially determined and are recognized based on claims filed and an estimate of claims incurred but not reported. The liabilities for workers’ compensation claims are accounted for on a present value basis. The Company has purchased stop-loss coverage to limit its exposure to any significant exposure on a per claim basis. The Company is insured for covered costs in excess of these per claim limits. The following table summarizes the changes in the Company’s self-insurance liability through January 29, 2022: 2021 2020 2019 Beginning balance $ 731 $ 689 $ 696 Expense 226 262 209 Claim payments (236) (220) (216) Ending balance 721 731 689 Less: Current portion (236) (220) (216) Long-term portion $ 485 $ 511 $ 473 The current portion of the self-insured liability is included in “Other current liabilities,” and the long-term portion is included in “Other long-term liabilities” in the Consolidated Balance Sheets. The Company maintains surety bonds related to self-insured workers’ compensation claims. These bonds are required by most states in which the Company is self-insured for workers’ compensation and are placed with third-party insurance providers to insure payment of the Company’s obligations in the event the Company is unable to meet its claim payment obligations up to its self-insured retention levels. These bonds do not represent liabilities of the Company, as the Company has recorded reserves for the claim costs. The Company also maintains insurance coverages for some risks, including cyber exposure and property-related losses. The Company’s insurance coverage begins for these exposures ranging from |
Revenue Recognition | Revenue Recognition Sales The Company recognizes revenues from the sale products, net of sales taxes, at the point of sale. Pharmacy sales recorded when the to customer. Digital channel originated sales are recognized either upon pickup in store or upon delivery to the customer. When shipping is discounted, it is recorded as an adjustment to sales. Discounts provided to customers the Company at the time sale, including those provided in connection with loyalty cards, are recognized as reduction in sales the products sold. Discounts provided vendors, usually in the form coupons, are not recognized reduction in sales provided coupons redeemable any retailer that accepts coupons. The Company records receivable difference sales price cash received. For merchandise sold in one of the Company’s stores or online, tender is accepted at the point of sale. The Company acts as principal in certain vendor arrangements where the purchase and sale of inventory are virtually simultaneous. The Company records revenue and related costs on a gross basis for these arrangements. For pharmacy sales, collection of third-party receivables is typically expected within three months or less from the time of purchase. The third-party receivables from pharmacy sales are recorded in Receivables in the Company’s Consolidated Balance Sheets and were $774 as of January 29, 2022 and $672 as of January 30, 2021. Gift Cards and Gift Certificates The Company does recognize when it sells its own gift certificates (collectively “gift cards”). Rather, it records deferred revenue the amount received. sale then recognized when gift cards are redeemed to purchase the Company’s products. The Company’s gift cards do not expire. While gift cards are generally redeemed within 12 months , some are never fully redeemed. The Company recognizes gift card breakage under the proportional method, where recognition of breakage income the historical unredeemed gift cards. The Company’s gift card deferred revenue liability was $185 as of January 29, 2022 and $160 as of January 30, 2021. Disaggregated Revenues The following table presents sales revenue by type of product for the year-ended January 29, 2022, January 30, 2021, and February 1, 2020: 2021 2020 2019 Amount % of total Amount % of total Amount % of total Non Perishable (1) $ 69,648 50.6 % $ 71,434 53.9 % $ 61,464 50.3 % Fresh (2) 33,972 24.6 % 33,449 25.2 % 29,452 24.1 % Supermarket Fuel 14,678 10.6 % 9,486 7.2 % 14,052 11.5 % Pharmacy 12,401 9.0 % 11,388 8.6 % 11,015 9.0 % Other (3) 7,189 5.2 % 6,741 5.1 % 6,303 5.1 % Total Sales $ 137,888 100 % $ 132,498 100 % $ 122,286 100 % (1) Consists primarily of grocery, general merchandise, health and beauty care and natural foods. (2) Consists primarily of produce, floral, meat, seafood, deli, bakery and fresh prepared. (3) Consists primarily of sales related to food production plants to outside parties, data analytic services, third-party media revenue, other consolidated entities, specialty pharmacy, in-store health clinics, digital coupon services and other online sales not included in the categories above. |
Merchandise Costs | Merchandise Costs The “Merchandise costs” line item of the Consolidated Statements of Operations includes product costs, net of discounts and allowances; advertising costs (see separate discussion below); inbound freight charges; warehousing costs, including receiving and inspection costs; transportation costs; and food production and operational costs. Warehousing, transportation and manufacturing management salaries are also included in the “Merchandise costs” line item; however, purchasing management salaries and administration costs are included in the OG&A line item along with most of the Company’s other managerial and administrative costs. Shipping and delivery costs associated with the Company’s digital offerings originating from non-retail store locations are included in the “Merchandise costs” line item. Rent expense and depreciation and amortization expense are shown separately in the Consolidated Statements of Operations. Warehousing and transportation costs include distribution center direct wages, transportation direct wages, repairs and maintenance, utilities, inbound freight and, where applicable, third-party warehouse management fees. These costs are recognized in the periods the related expenses are incurred. The Company believes the classification of costs included in merchandise costs could vary widely throughout the industry. The Company’s approach is to include in the “Merchandise costs” line item the direct, net costs of acquiring products and making them available to customers. The Company believes this approach most accurately presents the actual costs of products sold. The Company recognizes all vendor allowances as a reduction in merchandise costs when the related product is sold. When possible, vendor allowances are applied to the related product cost by item and, therefore, reduce the carrying value of inventory by item. When the items are sold, the vendor allowance is recognized. When it is not possible, due to systems constraints, to allocate vendor allowances to the product by item, vendor allowances are recognized as a reduction in merchandise costs based on inventory turns and, therefore, recognized as the product is sold. |
Advertising Costs | Advertising Costs The Company’s advertising costs are recognized in the periods the related expenses are incurred and are included in the “Merchandise costs” line item of the Consolidated Statements of Operations. The Company’s advertising costs totaled $984 in 2021, $888 in 2020 and $854 in 2019. The Company does not record vendor allowances for co-operative advertising as a reduction of advertising expense. |
Operating, General and Administrative Expenses | Operating, General and Administrative Expenses OG&A expenses consist primarily of employee-related costs such as wages, healthcare benefit costs, retirement plan costs, utilities, and credit card fees. Shipping and delivery costs associated with the Company's digital offerings originating from retail store locations, including third-party delivery fees, are included in the “OG&A” line item of the Consolidated Statements of Operations. Rent expense, depreciation and amortization expense and interest expense are shown separately in the Consolidated Statement of Operations. |
Consolidated Statements of Cash Flows | Consolidated Statements of Cash Flows For purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be temporary cash investments. |
Segments | Segments The Company operates supermarkets, multi-department stores and fulfillment centers throughout the United States. The Company’s retail operations, which represent 97 % of the Company’s consolidated sales, are its only reportable segment. The Company aggregates its operating divisions into one reportable segment due to the operating divisions having similar economic characteristics with similar long-term financial performance. In addition, the Company’s operating divisions offer customers similar products, have similar distribution methods, operate in similar regulatory environments, purchase the majority of the merchandise for retail sale from similar (and in many cases identical) vendors on a coordinated basis from a centralized location, serve similar types of customers, and are allocated capital from a centralized location. Operating divisions are organized primarily on a geographical basis so that the operating division management team can be responsive to local needs of the operating division and can execute company strategic plans and initiatives throughout the locations in their operating division. This geographical separation is the primary differentiation between these retail operating divisions. The geographical basis of organization reflects how the business is managed and how the Company’s Chief Executive Officer, who acts as the Company’s chief operating decision maker, assesses performance internally. All of the Company’s operations are domestic. |
ACCOUNTING POLICIES (Tables)
ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jan. 29, 2022 | |
ACCOUNTING POLICIES | |
Summary of changes in self-insurance liability | 2021 2020 2019 Beginning balance $ 731 $ 689 $ 696 Expense 226 262 209 Claim payments (236) (220) (216) Ending balance 721 731 689 Less: Current portion (236) (220) (216) Long-term portion $ 485 $ 511 $ 473 |
Schedule of sales revenue by type of product | 2021 2020 2019 Amount % of total Amount % of total Amount % of total Non Perishable (1) $ 69,648 50.6 % $ 71,434 53.9 % $ 61,464 50.3 % Fresh (2) 33,972 24.6 % 33,449 25.2 % 29,452 24.1 % Supermarket Fuel 14,678 10.6 % 9,486 7.2 % 14,052 11.5 % Pharmacy 12,401 9.0 % 11,388 8.6 % 11,015 9.0 % Other (3) 7,189 5.2 % 6,741 5.1 % 6,303 5.1 % Total Sales $ 137,888 100 % $ 132,498 100 % $ 122,286 100 % (1) Consists primarily of grocery, general merchandise, health and beauty care and natural foods. (2) Consists primarily of produce, floral, meat, seafood, deli, bakery and fresh prepared. (3) Consists primarily of sales related to food production plants to outside parties, data analytic services, third-party media revenue, other consolidated entities, specialty pharmacy, in-store health clinics, digital coupon services and other online sales not included in the categories above. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Jan. 29, 2022 | |
GOODWILL AND INTANGIBLE ASSETS | |
Summary of intangible assets | 2021 2020 Gross carrying Accumulated Gross carrying Accumulated amount amortization (1) amount amortization (1) Definite-lived pharmacy prescription files $ 317 $ (199) $ 315 $ (167) Definite-lived customer relationships 186 (160) 186 (143) Definite-lived other 111 (88) 110 (78) Indefinite-lived trade name 685 — 685 — Indefinite-lived liquor licenses 90 — 89 — Total $ 1,389 $ (447) $ 1,385 $ (388) (1) Pharmacy prescription files are amortized to merchandise costs, customer relationships are amortized to depreciation and amortization expense and other intangibles are amortized to OG&A expense and depreciation and amortization expense. |
Schedule of future amortization expense associated with the net carrying amount of definite-lived intangible assets | 2022 $ 51 2023 39 2024 34 2025 31 2026 10 Thereafter 2 Total future estimated amortization associated with definite-lived intangible assets $ 167 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Jan. 29, 2022 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
Schedule of property, plant and equipment, net | 2021 2020 Land $ 3,395 $ 3,373 Buildings and land improvements 13,996 13,149 Equipment 15,951 14,928 Leasehold improvements 10,775 10,516 Construction-in-progress 3,831 2,892 Leased property under finance leases 1,939 1,165 Total property, plant and equipment 49,887 46,023 Accumulated depreciation and amortization (26,098) (23,637) Property, plant and equipment, net $ 23,789 $ 22,386 |
TAXES BASED ON INCOME (Tables)
TAXES BASED ON INCOME (Tables) | 12 Months Ended |
Jan. 29, 2022 | |
TAXES BASED ON INCOME | |
Schedule of provision for taxes based on income | 2021 2020 2019 Federal Current $ 349 $ 577 $ 454 Deferred (46) 75 (50) Subtotal federal 303 652 404 State and local Current 67 133 70 Deferred 15 (3) (5) Subtotal state and local 82 130 65 Total $ 385 $ 782 $ 469 |
Schedule of reconciliation of the statutory federal rate and the effective rate | 2021 2020 2019 Statutory rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal tax benefit 3.2 3.0 2.6 Credits (1.3) (0.7) (1.5) Resolution of tax audit examinations (3.1) — (0.1) Excess tax benefits from share-based payments (1.3) (0.8) (0.2) Impairment losses attributable to noncontrolling interest — — 1.2 Non-deductible executive compensation 0.6 0.3 0.3 Other changes, net (0.3) 0.4 0.4 18.8 % 23.2 % 23.7 % |
Schedule of the tax effects of significant temporary differences that comprise tax balances | 2021 2020 Deferred tax assets: Compensation related costs $ 560 $ 766 Lease liabilities 1,926 1,932 Closed store reserves 46 38 Net operating loss and credit carryforwards 98 86 Deferred income 126 149 Allowance for uncollectible receivables 36 23 Other 25 46 Subtotal 2,817 3,040 Valuation allowance (72) (53) Total deferred tax assets 2,745 2,987 Deferred tax liabilities: Depreciation and amortization (2,006) (2,115) Operating lease assets (1,790) (1,794) Insurance related costs (54) — Inventory related costs (310) (264) Equity investments in excess of tax basis (147) (356) Total deferred tax liabilities (4,307) (4,529) Deferred taxes $ (1,562) $ (1,542) |
Schedule of reconciliation of beginning and ending amounts of unrecognized tax benefits | 2021 2020 2019 Beginning balance $ 193 $ 174 $ 174 Additions based on tax positions related to the current year 10 7 13 Additions for tax positions of prior years 9 16 8 Reductions for tax positions of prior years (108) — (1) Settlements — — (19) Lapse of statute (4) (4) (1) Ending balance $ 100 $ 193 $ 174 |
DEBT OBLIGATIONS (Tables)
DEBT OBLIGATIONS (Tables) | 12 Months Ended |
Jan. 29, 2022 | |
DEBT OBLIGATIONS | |
Schedule of long-term debt | January 29, January 30, 2022 2021 1.70% to 8.00% Senior Notes due through 2049 $ 10,607 $ 11,899 Other 1,138 511 Total debt, excluding obligations under finance leases 11,745 12,410 Less current portion (451) (844) Total long-term debt, excluding obligations under finance leases $ 11,294 $ 11,566 |
Schedule of aggregate annual maturities and scheduled payments of long-term debt | The aggregate annual maturities and scheduled payments of long-term debt, as of year-end 2021, and for the years subsequent to 2021 are: 2022 $ 451 2023 1,130 2024 5 2025 84 2026 1,387 Thereafter 8,688 Total debt $ 11,745 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Jan. 29, 2022 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of effect of derivative instruments designated as cash flow hedges | Year-To-Date Amount of Gain/(Loss) in Amount of Gain/(Loss) AOCI on Derivative Reclassified from AOCI into Location of Gain/(Loss) Derivatives in Cash Flow Hedging (Effective Portion) Income (Effective Portion) Reclassified into Income Relationships 2021 2020 2019 2021 2020 2019 (Effective Portion) Forward-Starting Interest Rate Swaps, net of tax* $ (47) $ (54) $ (42) $ (7) $ (2) $ (4) Interest expense * The amounts of Gain/(Loss) in AOCI on derivatives include unamortized proceeds and payments from forward-starting interest rate swaps once classified as cash flow hedges that were terminated prior to the end of 2020. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Jan. 29, 2022 | |
FAIR VALUE MEASUREMENTS | |
Summary of fair value measurements | January 29, 2022 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) Marketable Securities $ 1,054 January 30, 2021 Fair Value Measurements Using Quoted Prices in Active Markets Significant for Identical Unobservable Assets Inputs (Level 1) (Level 3) Total Marketable Securities $ 1,882 $ — $ 1,882 Other Investment — 160 160 Total $ 1,882 $ 160 $ 2,042 |
Schedule of other assets | January 29, 2022 January 30, 2021 Other Assets Equity method and other long-term investments $ 282 $ 250 Notes receivable 191 240 Prepaid deposits under certain contractual arrangements 214 186 Implementation costs related to cloud computing arrangements 151 81 Funded asset status of pension plans 156 21 Other 120 129 Total $ 1,114 $ 907 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 12 Months Ended |
Jan. 29, 2022 | |
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 1, 2020 $ (42) $ (598) $ (640) OCI before reclassifications (2) (14) 8 (6) Amounts reclassified out of AOCI (3) 2 14 16 Net current-period OCI (12) 22 10 Balance at January 30, 2021 $ (54) $ (576) $ (630) Balance at January 30, 2021 $ (54) $ (576) $ (630) OCI before reclassifications (2) — 82 82 Amounts reclassified out of AOCI (3) 7 74 81 Net current-period OCI 7 156 163 Balance at January 29, 2022 $ (47) $ (420) $ (467) (1) All amounts are net of tax. (2) Net of tax of ($8) and $2 for cash flow hedging activities and pension and postretirement defined benefit plans, respectively, as of January 30, 2021. Net of tax of $25 for pension and postretirement defined benefit plans as of January 29, 2022. (3) Net of tax of $5 and $2 for pension and postretirement defined benefit plans and cash flow hedging activities, respectively, as of January 30, 2021. Net of tax of $23 and $3 for pension and postretirement defined benefit plans and cash flow hedging activities, respectively, as of January 29, 2022. |
Schedule of items reclassified out of AOCI and the related tax effects | For the year ended For the year ended For the year ended January 29, 2022 January 30, 2021 February 1, 2020 Cash flow hedging activity items Amortization of gains and losses on cash flow hedging activities (1) $ 10 $ 4 $ 7 Tax expense (3) (2) (3) Net of tax 7 2 4 Pension and postretirement defined benefit plan items Amortization of amounts included in net periodic pension cost (2) 97 19 38 Tax expense (23) (5) (9) Net of tax 74 14 29 Total reclassifications, net of tax $ 81 $ 16 $ 33 (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 expense. |
LEASES AND LEASE-FINANCED TRA_2
LEASES AND LEASE-FINANCED TRANSACTIONS (Tables) | 12 Months Ended |
Jan. 29, 2022 | |
LEASES AND LEASE-FINANCED TRANSACTIONS | |
Schedule of supplemental balance sheet classification | January 29, January 30, Classification 2022 2021 Assets Operating Operating lease assets $ 6,695 $ 6,796 Finance Property, plant and equipment, net (1) 1,525 844 Total leased assets $ 8,220 $ 7,640 Liabilities Current Operating Current portion of operating lease liabilities $ 650 $ 667 Finance Current portion of long-term debt including obligations under finance leases 104 67 Noncurrent Operating Noncurrent operating lease liabilities 6,426 6,507 Finance Long-term debt including obligations under finance leases 1,515 936 Total lease liabilities $ 8,695 $ 8,177 (1) Finance lease assets are recorded net of accumulated amortization of $414 and $321 as of January 29, 2022 and January 30, 2021. |
Schedule of components of lease cost | Year-To-Date Year-To-Date Lease Cost Classification January 29, 2022 January 30, 2021 Operating lease cost (1) Rent Expense $ 954 $ 981 Sublease and other rental income Rent Expense (109) (107) Finance lease cost Amortization of leased assets Depreciation and Amortization 95 55 Interest on lease liabilities Interest Expense 52 45 Net lease cost $ 992 $ 974 (1) Includes short-term leases and variable lease costs, which are immaterial. |
Schedule of maturities of operating and finance lease liabilities | Operating Finance Leases Leases Total 2022 $ 920 $ 159 $ 1,079 2023 862 158 1,020 2024 791 156 947 2025 717 152 869 2026 664 152 816 Thereafter 5,961 1,323 7,284 Total lease payments 9,915 2,100 $ 12,015 Less amount representing interest 2,839 481 Present value of lease liabilities (1) $ 7,076 $ 1,619 (1) Includes the current portion of $650 for operating leases and $104 for finance leases. |
Schedule of weighted-average lease term and discount rate | January 29, 2022 January 30, 2021 Weighted-average remaining lease term (years) Operating leases 14.9 15.3 Finance leases 14.7 16.2 Weighted-average discount rate Operating leases 4.1 % 4.2 % Finance leases 3.7 % 4.4 % |
Schedule of supplemental cash flow information | Year-To-Date Year-To-Date January 29, 2022 January 30, 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 897 $ 849 Operating cash flows from finance leases 52 45 Financing cash flows from finance leases 127 37 Leased assets obtained in exchange for new operating lease liabilities 669 679 Leased assets obtained in exchange for new finance lease liabilities 753 190 Net gain recognized from sale and leaseback transactions (1) 35 39 Impairment of operating lease assets 8 4 Impairment of finance lease assets 4 2 (1) In 2021, the Company entered into sale leaseback transactions related to seven properties, which resulted in total proceeds of $79 . In 2020, the Company entered into sale leaseback transactions related to seven properties, which resulted in total proceeds of $78. |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 12 Months Ended |
Jan. 29, 2022 | |
EARNINGS PER COMMON SHARE | |
Schedule of earnings per common and diluted shares | For the year ended For the year ended For the year ended January 29, 2022 January 30, 2021 February 1, 2020 Per Per Per Earnings Shares Share Earnings Shares Share Earnings Shares Share (in millions, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net earnings attributable to The Kroger Co. per basic common share $ 1,639 744 $ 2.20 $ 2,556 773 $ 3.31 $ 1,640 799 $ 2.05 Dilutive effect of stock options 10 8 6 Net earnings attributable to The Kroger Co. per diluted common share $ 1,639 754 $ 2.17 $ 2,556 781 $ 3.27 $ 1,640 805 $ 2.04 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Jan. 29, 2022 | |
STOCK-BASED COMPENSATION | |
Summary of changes in stock options outstanding | Shares Weighted- subject average to option exercise (in millions) price Outstanding, year-end 2018 34.1 $ 23.42 Granted 3.1 $ 24.63 Exercised (4.0) $ 14.17 Canceled or Expired (1.0) $ 28.87 Outstanding, year-end 2019 32.2 $ 24.52 Granted 2.9 $ 29.31 Exercised (7.3) $ 17.72 Canceled or Expired (1.0) $ 30.53 Outstanding, year-end 2020 26.8 $ 26.65 Granted 2.1 $ 35.45 Exercised (7.1) $ 24.70 Canceled or Expired (0.7) $ 28.88 Outstanding, year-end 2021 21.1 $ 28.15 |
Summary of options outstanding, exercisable and expected to vest | Weighted-average Aggregate remaining Weighted-average intrinsic Number of shares contractual life exercise price value (in millions) (in years) (in millions) Options Outstanding 21.1 5.31 $ 28.15 $ 324 Options Exercisable 14.6 4.19 $ 27.58 $ 232 Options Expected to Vest 6.4 7.79 $ 29.35 $ 90 |
Summary of changes in restricted stock outstanding | Restricted shares Weighted-average outstanding grant-date (in millions) fair value Outstanding, year-end 2018 8.8 $ 27.86 Granted 5.4 $ 22.72 Lapsed (4.1) $ 28.07 Canceled or Expired (0.8) $ 25.68 Outstanding, year-end 2019 9.3 $ 24.85 Granted 4.0 $ 31.99 Lapsed (4.9) $ 24.69 Canceled or Expired (0.6) $ 26.71 Outstanding, year-end 2020 7.8 $ 28.46 Granted 3.9 $ 37.29 Lapsed (4.0) $ 29.58 Canceled or Expired (0.5) $ 31.31 Outstanding, year-end 2021 7.2 $ 32.52 |
Summary of weighted-average assumptions used for grants awarded to option holders | 2021 2020 2019 Weighted average expected volatility 28.52 % 26.96 % 25.37 % Weighted average risk-free interest rate 1.21 % 0.82 % 2.54 % Expected dividend yield 2.00 % 2.00 % 2.00 % Expected term (based on historical results) 7.2 years 7.2 years 7.2 years |
COMPANY-SPONSORED BENEFIT PLAN
COMPANY-SPONSORED BENEFIT PLAN (Tables) | 12 Months Ended |
Jan. 29, 2022 | |
COMPANY- SPONSORED BENEFIT PLANS | |
Schedule of amounts recognized in AOCI (pre-tax) | Pension Benefits Other Benefits Total 2021 2020 2021 2020 2021 2020 Net actuarial loss (gain) $ 715 $ 951 $ (127) $ (147) $ 588 $ 804 Prior service credit — — (43) (55) (43) (55) Total $ 715 $ 951 $ (170) $ (202) $ 545 $ 749 |
Schedule of other changes recognized in other comprehensive income (loss) (pre-tax) | Pension Benefits Other Benefits Total 2021 2020 2019 2021 2020 2019 2021 2020 2019 Incurred net actuarial loss (gain) $ (109) $ 36 $ 179 $ 2 $ (46) $ 9 $ (107) $ (10) $ 188 Amortization of prior service credit — — — 12 13 11 12 13 11 Amortization of net actuarial gain (loss) (126) (40) (61) 17 8 12 (109) (32) (49) Other — — (1) — — (12) — — (13) Total recognized in other comprehensive income (loss) $ (235) $ (4) $ 117 $ 31 $ (25) $ 20 $ (204) $ (29) $ 137 Total recognized in net periodic benefit cost and other comprehensive income (loss) $ (164) $ (4) $ 165 $ 10 $ (34) $ 11 $ (154) $ (38) $ 176 |
Schedule of change in benefit obligation, change in plan assets and the funded status of the plans recorded in the Consolidated Balance Sheets and net amounts recognized at the end of fiscal years | Pension Benefits Qualified Plans Non-Qualified Plans Other Benefits 2021 2020 2021 2020 2021 2020 Change in benefit obligation: Benefit obligation at beginning of fiscal year $ 3,615 $ 3,518 $ 351 $ 328 $ 152 $ 198 Service cost 12 13 — — 4 7 Interest cost 92 104 9 10 4 6 Plan participants’ contributions — — — — 13 12 Actuarial (gain) loss (125) 175 (12) 35 2 (47) Plan settlements (442) (16) — — — — Benefits paid (172) (171) (24) (21) (25) (24) Other (3) (8) 1 (1) — — Benefit obligation at end of fiscal year $ 2,977 $ 3,615 $ 325 $ 351 $ 150 $ 152 Change in plan assets: Fair value of plan assets at beginning of fiscal year $ 3,569 $ 3,422 $ — $ — $ — $ — Actual return on plan assets 141 342 — — — — Employer contributions — — 24 21 12 12 Plan participants’ contributions — — — — 13 12 Plan settlements (442) (16) — — — — Benefits paid (172) (171) (24) (21) (25) (24) Other — (8) — — — — Fair value of plan assets at end of fiscal year $ 3,096 $ 3,569 $ — $ — $ — $ — Funded status and net asset and liability recognized at end of fiscal year $ 119 $ (46) $ (325) $ (351) $ (150) $ (152) |
Schedule of weighted-average assumptions used in determining the benefit obligation and net periodic benefit cost | Pension Benefits Other Benefits Weighted average assumptions 2021 2020 2019 2021 2020 2019 Discount rate — Benefit obligation 3.17 % 2.72 % 3.01 % 3.01 % 2.43 % 2.97 % Discount rate — Net periodic benefit cost 2.72 % 3.01 % 4.23 % 2.43 % 2.97 % 4.19 % Expected long-term rate of return on plan assets 5.50 % 5.50 % 6.00 % Rate of compensation increase — Net periodic benefit cost 3.03 % 3.03 % 3.04 % Rate of compensation increase — Benefit obligation 3.05 % 3.03 % 3.03 % Cash Balance plan interest crediting rate 3.30 % 3.30 % 3.60 % |
Schedule of components of net periodic benefit cost | Pension Benefits Qualified Plans Non-Qualified Plans Other Benefits 2021 2020 2019 2021 2020 2019 2021 2020 2019 Components of net periodic benefit cost: Service cost $ 12 $ 13 $ 32 $ — $ — $ 1 $ 4 $ 7 $ 6 Interest cost 92 104 124 9 10 12 4 6 8 Expected return on plan assets (168) (168) (182) — — — — — — Amortization of: Prior service credit — — — — — — (12) (13) (11) Actuarial (gain) loss 33 35 55 6 5 6 (17) (8) (12) Settlement loss recognized 87 — — — — — — — — Other (1) 1 — 1 — — — (1) — Net periodic benefit cost $ 55 $ (15) $ 29 $ 16 $ 15 $ 19 $ (21) $ (9) $ (9) |
Schedule of projected benefit obligation ("PBO"), accumulated benefit obligation ("ABO") and the fair value of plan assets for all Company-sponsored pension plans | Qualified Plans Non-Qualified Plans 2021 2020 2021 2020 PBO at end of fiscal year $ 244 $ 3,415 $ 325 $ 351 Fair value of plan assets at end of year $ 207 $ 3,349 $ — $ — Qualified Plans Non-Qualified Plans 2021 2020 2021 2020 ABO at end of fiscal year $ 244 $ 3,415 $ 325 $ 351 Fair value of plan assets at end of year $ 207 $ 3,349 $ — $ — |
Schedule of estimated future benefit payments for defined benefit pension plans and other benefits | Pension Other Benefits Benefits 2022 $ 207 $ 12 2023 $ 204 $ 12 2024 $ 207 $ 13 2025 $ 209 $ 13 2026 $ 209 $ 13 2027 —2031 $ 1,009 $ 58 |
Schedule of weighted average target and actual pension plan asset allocations | Actual Target allocations Allocations 2021 2021 2020 Pension plan asset allocation Global equity securities 2.0 % 7.0 % 6.0 % Emerging market equity securities 1.0 1.7 1.6 Investment grade debt securities 80.0 73.6 77.9 High yield debt securities 4.0 2.5 2.7 Private equity 10.0 10.6 8.1 Hedge funds — 2.9 2.2 Real estate 3.0 1.7 1.5 Total 100.0 % 100.0 % 100.0 % |
Schedule of fair values of defined benefit pension plan assets | Assets at Fair Value as of January 29, 2022 Quoted Prices in Significant Active Markets for Significant Other Unobservable Assets Identical Assets Observable Inputs Inputs Measured (Level 1) (Level 2) (Level 3) at NAV Total Cash and cash equivalents $ 80 $ — $ — $ — $ 80 Corporate Stocks 98 — — — 98 Corporate Bonds — 1,070 — — 1,070 U.S. Government Securities — 144 — — 144 Mutual Funds 265 — — — 265 Collective Trusts — — — 871 871 Hedge Funds — — 39 49 88 Private Equity — — — 326 326 Real Estate — — 37 16 53 Other — 101 — — 101 Total $ 443 $ 1,315 $ 76 $ 1,262 $ 3,096 Assets at Fair Value as of January 30, 2021 Quoted Prices in Significant Active Markets for Significant Other Unobservable Assets Identical Assets Observable Inputs Inputs Measured (Level 1) (Level 2) (Level 3) at NAV Total Cash and cash equivalents $ 120 $ — $ — $ — $ 120 Corporate Stocks 89 — — — 89 Corporate Bonds — 1,240 — — 1,240 U.S. Government Securities — 225 — — 225 Mutual Funds 329 — — — 329 Collective Trusts — — — 1,014 1,014 Hedge Funds — — 35 46 81 Private Equity — — — 289 289 Real Estate — — 39 16 55 Other — 127 — — 127 Total $ 538 $ 1,592 $ 74 $ 1,365 $ 3,569 |
Schedule of reconciliation of beginning and ending balances for measurements using significant unobservable inputs (Level 3) | Hedge Funds Real Estate Ending balance, February 1, 2020 $ 43 $ 43 Contributions into Fund 2 1 Realized gains — 4 Unrealized gains — (6) Distributions (10) (3) Ending balance, January 30, 2021 35 39 Contributions into Fund — 1 Realized gains 2 2 Unrealized gains 7 6 Distributions (5) (11) Ending balance, January 29, 2022 $ 39 $ 37 |
MULTI-EMPLOYER PENSION PLANS (T
MULTI-EMPLOYER PENSION PLANS (Tables) | 12 Months Ended |
Jan. 29, 2022 | |
MULTI-EMPLOYER PENSION PLANS | |
Schedule of multi-employer pension plans | FIP/RP Pension Protection Status EIN / Pension Act Zone Status Pending/ Multi-Employer Contributions Surcharge Pension Fund Plan Number 2021 2020 Implemented 2021 2020 2019 Imposed (5) SO CA UFCW Unions & Food Employers Joint Pension Trust Fund (1)(2) 95-1939092 - 001 Yellow Yellow Implemented $ 83 $ 86 $ 75 No Desert States Employers & UFCW Unions Pension Plan (1) 84-6277982 - 001 Green Green No 22 19 19 No Sound Retirement Trust (formerly Retail Clerks Pension Plan) (1)(3) 91-6069306 – 001 Yellow Yellow Implemented 24 29 25 No Rocky Mountain UFCW Unions and Employers Pension Plan (1) 84-6045986 - 001 Green Green No 29 28 23 No Oregon Retail Employees Pension Plan (1) 93-6074377 - 001 Green Green No 10 9 9 No Bakery and Confectionary Union & Industry International Pension Fund (1) 52-6118572 - 001 Red Red Implemented 8 8 10 No Retail Food Employers & UFCW Local 711 Pension (1) 51-6031512 - 001 Yellow Yellow Implemented 11 11 10 No United Food & Commercial Workers Intl Union — Industry Pension Fund (1)(4) 51-6055922 - 001 Green Green No 550 29 32 No Western Conference of Teamsters Pension Plan 91-6145047 - 001 Green Green No 37 35 34 No Central States, Southeast & Southwest Areas Pension Plan 36-6044243 - 001 Red Red Implemented 37 12 — No UFCW Consolidated Pension Plan (1) 58-6101602 – 001 Green Green No 243 321 174 No IBT Consolidated Pension Plan (1)(6) 82-2153627 - 001 N/A N/A No 29 18 33 No Other 26 14 17 Total Contributions $ 1,109 $ 619 $ 461 (1) The Company's multi-employer contributions to these respective funds represent more than 5% of the total contributions received by the pension funds . (2) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at March 31, 2021 and March 31, 2020. (3) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at September 30, 2020 and September 30, 2019. (4) The information for this fund was obtained from the Form 5500 filed for the plan's year-end at June 30, 2020 and June 30, 2019. (5) Under the Pension Protection Act, a surcharge may be imposed when employers make contributions under a collective bargaining agreement that is not in compliance with a rehabilitation plan. As of January 29, 2022, the collective bargaining agreements under which the Company was making contributions were in compliance with rehabilitation plans adopted by the applicable pension fund. (6) The plan was formed after 2006, and therefore is not subject to zone status certifications. |
Collective Bargaining Agreements | |
MULTI-EMPLOYER PENSION PLANS | |
Schedule of multi-employer pension plans | Expiration Date of Collective Most Significant Collective Bargaining Bargaining Agreements (1) Pension Fund Agreements Count Expiration SO CA UFCW Unions & Food Employers Joint Pension Trust Fund March 2022 to June 2024 2 March 2022 to June 2024 UFCW Consolidated Pension Plan April 2020 (2) 4 April 2020 (2) Desert States Employers & UFCW Unions Pension Plan October 2023 to June 2025 1 October 2023 Sound Retirement Trust (formerly Retail Clerks Pension Plan) April 2022 to September 2024 4 May 2022 to August 2022 Rocky Mountain UFCW Unions and Employers Pension Plan January 2025 to February 2025 1 January 2025 Oregon Retail Employees Pension Plan August 2024 to March 2026 3 August 2024 to July 2025 Bakery and Confectionary Union & Industry International Pension Fund May 2021 (2) 3 October 2021 (2) Retail Food Employers & UFCW Local 711 Pension March 2022 to January 2024 1 March 2022 United Food & Commercial Workers Intl Union — Industry Pension Fund April 2020 (2) 2 July 2023 to August 2023 Western Conference of Teamsters Pension Plan April 2022 to September 2025 4 April 2022 to September 2025 International Brotherhood of Teamsters Consolidated Pension Fund September 2022 to September 2024 3 September 2022 to September 2024 (1) This column represents the number of significant collective bargaining agreements and their expiration date for each of the Company’s pension funds listed above. For the purposes of this table, the “significant collective bargaining agreements” are the largest based on covered employees that, when aggregated, cover the majority of the employees for which we make multi-employer contributions for the referenced pension fund. (2) Certain collective bargaining agreements for each of these pension funds are operating under an extension. |
ACCOUNTING POLICIES - DESCRIPTI
ACCOUNTING POLICIES - DESCRIPTION OF BUSINESS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
Fiscal Year | |||
Length of fiscal period | 364 days | 364 days | 364 days |
Inventories | |||
Percentage of inventory valued at LIFO method | 91.00% | 92.00% | |
Replacement cost over carrying value | $ 1,570 | $ 1,373 | |
Reduction of inventory before tax | 76 | ||
Reduction of inventory | $ 58 |
ACCOUNTING POLICIES - PROPERTY
ACCOUNTING POLICIES - PROPERTY AND EQUIPMENT AND LONG-LIVED ASSETS (Details) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022USD ($)store | Jan. 30, 2021USD ($) | Feb. 01, 2020USD ($) | |
Property, Plant and Equipment | |||
Depreciation and amortization | $ 2,824 | $ 2,747 | $ 2,649 |
Leases | |||
Term - Finance | 25 years | ||
Option to renew - Operating | true | ||
Option to renew - Finance | true | ||
Impairment of Long-Lived Assets | |||
Asset impairment charges | $ 64 | 70 | 120 |
Number of planned store closures | store | 35 | ||
Contingent Consideration | |||
Revaluation of contingent consideration | $ 66 | $ 189 | $ (69) |
Minimum | |||
Leases | |||
Term - Operating | 10 years | ||
Term - Finance | 10 years | ||
Maximum | |||
Leases | |||
Term - Operating | 20 years | ||
Term - Finance | 20 years | ||
Buildings and land improvements | Minimum | |||
Property, Plant and Equipment | |||
Useful life of the assets | 10 years | ||
Buildings and land improvements | Maximum | |||
Property, Plant and Equipment | |||
Useful life of the assets | 40 years | ||
Store equipment | Minimum | |||
Property, Plant and Equipment | |||
Useful life of the assets | 3 years | ||
Store equipment | Maximum | |||
Property, Plant and Equipment | |||
Useful life of the assets | 9 years | ||
Leasehold improvements | Minimum | |||
Property, Plant and Equipment | |||
Useful life of the assets | 4 years | ||
Leasehold improvements | Maximum | |||
Property, Plant and Equipment | |||
Useful life of the assets | 25 years | ||
Food production plant and distribution center equipment | Minimum | |||
Property, Plant and Equipment | |||
Useful life of the assets | 3 years | ||
Food production plant and distribution center equipment | Maximum | |||
Property, Plant and Equipment | |||
Useful life of the assets | 15 years | ||
Information Technology | Minimum | |||
Property, Plant and Equipment | |||
Useful life of the assets | 3 years | ||
Information Technology | Maximum | |||
Property, Plant and Equipment | |||
Useful life of the assets | 5 years |
ACCOUNTING POLICIES - STOCK-BAS
ACCOUNTING POLICIES - STOCK-BASED COMPENSATION (Details) | 12 Months Ended |
Jan. 29, 2022 | |
Stock options | |
Share Based Compensation | |
Expiration period from date of grant | 10 years |
Stock options | Minimum | |
Share Based Compensation | |
Vesting period from date of grant | 1 year |
Stock options | Maximum | |
Share Based Compensation | |
Vesting period from date of grant | 5 years |
Restricted stock | Minimum | |
Share Based Compensation | |
Vesting period from date of grant | 1 year |
Restricted stock | Maximum | |
Share Based Compensation | |
Vesting period from date of grant | 5 years |
ACCOUNTING POLICIES - SELF-INSU
ACCOUNTING POLICIES - SELF-INSURANCE (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
Changes in self-insurance liability | |||
Balance at the beginning of the period | $ 731 | $ 689 | $ 696 |
Expense | 226 | 262 | 209 |
Claim payments | (236) | (220) | (216) |
Balance at the end of the period | 721 | 731 | 689 |
Less: Current portion | (236) | (220) | (216) |
Long-term portion | 485 | $ 511 | $ 473 |
Minimum | |||
Changes in self-insurance liability | |||
Insurance coverage for some risks, including cyber exposure and property-related losses | 25 | ||
Maximum | |||
Changes in self-insurance liability | |||
Insurance coverage for some risks, including cyber exposure and property-related losses | $ 50 |
ACCOUNTING POLICIES - REVENUE R
ACCOUNTING POLICIES - REVENUE RECOGNITION (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
Disaggregation of revenue | |||
Total Sales and other revenue | $ 137,888 | $ 132,498 | $ 122,286 |
Receivables | $ 1,828 | 1,781 | |
Typical period for redemption of gift certificates | 12 months | ||
Gift card and gift certificate deferred revenue liability | $ 185 | $ 160 | |
Percentage of total sales | 100.00% | 100.00% | 100.00% |
Non Perishable | |||
Disaggregation of revenue | |||
Total Sales and other revenue | $ 69,648 | $ 71,434 | $ 61,464 |
Percentage of total sales | 50.60% | 53.90% | 50.30% |
Fresh | |||
Disaggregation of revenue | |||
Total Sales and other revenue | $ 33,972 | $ 33,449 | $ 29,452 |
Percentage of total sales | 24.60% | 25.20% | 24.10% |
Supermarket Fuel | |||
Disaggregation of revenue | |||
Total Sales and other revenue | $ 14,678 | $ 9,486 | $ 14,052 |
Percentage of total sales | 10.60% | 7.20% | 11.50% |
Pharmacy | |||
Disaggregation of revenue | |||
Total Sales and other revenue | $ 12,401 | $ 11,388 | $ 11,015 |
Typical period for collection of third party receivables | 3 months | ||
Receivables | $ 774 | $ 672 | |
Percentage of total sales | 9.00% | 8.60% | 9.00% |
Other Product | |||
Disaggregation of revenue | |||
Total Sales and other revenue | $ 7,189 | $ 6,741 | $ 6,303 |
Percentage of total sales | 5.20% | 5.10% | 5.10% |
ACCOUNTING POLICIES - ADVERTISI
ACCOUNTING POLICIES - ADVERTISING (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
Advertising Costs | |||
Advertising costs | $ 984 | $ 888 | $ 854 |
ACCOUNTING POLICIES - SEGMENTS
ACCOUNTING POLICIES - SEGMENTS (Details) | 12 Months Ended |
Jan. 29, 2022segment | |
ACCOUNTING POLICIES | |
Company's retail operations (as a percent) | 97.00% |
Number of segments | 1 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - OTHER INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
GOODWILL AND INTANGIBLE ASSETS | |||
Goodwill | $ 3,076 | $ 3,076 | |
Accumulated impaired losses | 5,737 | 2,661 | |
Goodwill and intangible impairment | $ 0 | $ 0 | $ 0 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - INTANGIBLE ASSETS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
Intangible assets | |||
Intangible Assets, Gross (Excluding Goodwill) | $ 1,389 | $ 1,385 | |
Accumulated amortization | (447) | (388) | |
Amortization expense associated with intangible assets | 59 | 67 | $ 85 |
Future amortization expense associated with the net carrying amount of definite-lived intangible assets | |||
2022 | 51 | ||
2023 | 39 | ||
2024 | 34 | ||
2025 | 31 | ||
2026 | 10 | ||
Thereafter | 2 | ||
Total future estimated amortization associated with definite-lived intangible assets | 167 | ||
Trade name | |||
Intangible assets | |||
Indefinite-lived, Gross carrying amount | 685 | 685 | |
Liquor licenses | |||
Intangible assets | |||
Indefinite-lived, Gross carrying amount | 90 | 89 | |
Pharmacy prescription files | |||
Intangible assets | |||
Gross carrying amount | 317 | 315 | |
Accumulated amortization | (199) | (167) | |
Customer relationships. | |||
Intangible assets | |||
Gross carrying amount | 186 | 186 | |
Accumulated amortization | (160) | (143) | |
Definite-lived other | |||
Intangible assets | |||
Gross carrying amount | 111 | 110 | |
Accumulated amortization | $ (88) | $ (78) |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) $ in Millions | Jan. 29, 2022 | Jan. 30, 2021 |
Property, Plant and Equipment | ||
Total property, plant and equipment | $ 49,887 | $ 46,023 |
Accumulated depreciation and amortization | (26,098) | (23,637) |
Property, plant and equipment, net | 23,789 | 22,386 |
Finance leases - accumulated amortization | 414 | 321 |
Property, plant and equipment collateralized, net book value | 136 | 152 |
Land | ||
Property, Plant and Equipment | ||
Total property, plant and equipment | 3,395 | 3,373 |
Buildings and land improvements | ||
Property, Plant and Equipment | ||
Total property, plant and equipment | 13,996 | 13,149 |
Equipment | ||
Property, Plant and Equipment | ||
Total property, plant and equipment | 15,951 | 14,928 |
Leasehold improvements | ||
Property, Plant and Equipment | ||
Total property, plant and equipment | 10,775 | 10,516 |
Construction-in-progress | ||
Property, Plant and Equipment | ||
Total property, plant and equipment | 3,831 | 2,892 |
Leased property under finance Leases | ||
Property, Plant and Equipment | ||
Total property, plant and equipment | $ 1,939 | $ 1,165 |
TAXES BASED ON INCOME - PROVISI
TAXES BASED ON INCOME - PROVISION (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
Federal | |||
Current | $ 349 | $ 577 | $ 454 |
Deferred | (46) | 75 | (50) |
Subtotal federal | 303 | 652 | 404 |
State and local | |||
Current | 67 | 133 | 70 |
Deferred | 15 | (3) | (5) |
Subtotal state and local | 82 | 130 | 65 |
Total | $ 385 | $ 782 | $ 469 |
TAXES BASED ON INCOME - RECONCI
TAXES BASED ON INCOME - RECONCILIATION (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
A reconciliation of the statutory federal rate and the effective rate follows: | |||
Statutory rate | 21.00% | 21.00% | 21.00% |
State income taxes, net of federal tax benefit | 3.20% | 3.00% | 2.60% |
Credits | (1.30%) | (0.70%) | (1.50%) |
Resolution of tax audit examinations | (3.10%) | (0.10%) | |
Excess tax benefits from share-based payments | (1.30%) | (0.80%) | (0.20%) |
Impairment losses attributable to noncontrolling interest | 1.20% | ||
Non-deductible executive compensation | 0.60% | 0.30% | 0.30% |
Other changes, net | (0.30%) | 0.40% | 0.40% |
Effective income tax rate (as a percent) | 18.80% | 23.20% | 23.70% |
Non-recurring income tax benefit | $ 47 |
TAXES BASED ON INCOME - DEFERRE
TAXES BASED ON INCOME - DEFERRED TAX BALANCES (Details) - USD ($) $ in Millions | Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 |
Deferred tax assets | |||
Compensation related costs | $ 560 | $ 766 | |
Lease liabilities | 1,926 | 1,932 | |
Closed store reserves | 46 | 38 | |
Net operating loss and credit carryforwards | 98 | 86 | |
Deferred Income | 126 | 149 | |
Allowance for uncollectible receivables | 36 | 23 | |
Other | 25 | 46 | |
Subtotal | 2,817 | 3,040 | |
Valuation allowance | (72) | (53) | $ (55) |
Total deferred tax assets | 2,745 | 2,987 | |
Deferred tax liabilities: | |||
Depreciation and amortization | (2,006) | (2,115) | |
Operating lease assets | (1,790) | (1,794) | |
Insurance related costs | (54) | ||
Inventory related costs | (310) | (264) | |
Equity investments in excess of tax basis | (147) | (356) | |
Total deferred tax liabilities | (4,307) | (4,529) | |
Deferred taxes | $ (1,562) | $ (1,542) |
TAXES BASED ON INCOME - NOLS AN
TAXES BASED ON INCOME - NOLS AND CREDITS (Details) - USD ($) $ in Millions | Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 |
Operating loss carryforwards and tax credit carryforwards | |||
Total valuation allowance | $ 72 | $ 53 | $ 55 |
State and Local Jurisdiction | |||
Operating loss carryforwards and tax credit carryforwards | |||
Net operating loss carryforwards | 1,259 | ||
Credit carryforwards | $ 37 |
TAXES BASED ON INCOME - UNRECOG
TAXES BASED ON INCOME - UNRECOGNIZED TAX BENEFITS (Details) - USD ($) $ in Millions | Mar. 27, 2020 | Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | ||||
Balance at the beginning of the period | $ 193 | $ 174 | $ 174 | |
Additions based on tax positions related to the current year | 10 | 7 | 13 | |
Additions for tax positions of prior years | 9 | 16 | 8 | |
Reductions for tax positions of prior years | (108) | (1) | ||
Settlements | (19) | |||
Lapse of statute | (4) | (4) | (1) | |
Balance at the end of the period | 100 | 193 | 174 | |
Impact on effective tax rate, if amount of unrecognized tax benefits is recognized | 73 | 85 | 74 | |
Interest and penalties recognized (recoveries) | (15) | 7 | 7 | |
Interest and penalties | 22 | 38 | $ 30 | |
CARES Act- Deferred social security tax payment period | 2 years | |||
CARES Act - Payment of deferred social security taxes | 311 | |||
CARES Act - Deferred payment of social security taxes | $ 622 | |||
Other current liabilities | ||||
Reconciliation of the beginning and ending amount of unrecognized tax benefits | ||||
CARES Act - Deferred payment of social security taxes | $ 311 |
DEBT OBLIGATIONS (Details)
DEBT OBLIGATIONS (Details) $ in Millions | 12 Months Ended | |||
Jan. 29, 2022USD ($)Optionproperty | Jan. 30, 2021USD ($) | Jul. 06, 2021USD ($) | Mar. 18, 2020USD ($) | |
Debt | ||||
Total debt, excluding obligations under finance leases | $ 11,745 | $ 12,410 | ||
Less current portion | (451) | (844) | ||
Total long-term debt, excluding obligations under finance leases | $ 11,294 | 11,566 | ||
Number of leased propertied acquired | property | 28 | |||
Purchase price | $ 455 | |||
Proceeds from sale of lease assets | 621 | |||
Total cash proceeds from lease transactions | 166 | |||
Finance lease recorded in PPE | 455 | |||
Finance obligation recorded | $ 621 | |||
Leases base term | 25 years | |||
Number of options | Option | 12 | |||
Renewal Term | 5 years | |||
Obligation to repurchase the property if lessor exercises put option | $ 300 | |||
Minimum Number Of Days Notice Required Prior to the Date of Redemption | 5 days | |||
Redemption event | 50.00% | |||
Terminated hedge | Cash flow hedges | ||||
Debt | ||||
Notional amount | 450 | |||
Unamortized loss, before tax | 41 | |||
Unamortized loss, net of tax | 31 | |||
Minimum | ||||
Debt | ||||
Leases base term | 10 years | |||
Maximum | ||||
Debt | ||||
Leases base term | 20 years | |||
Senior notes due through 2049 | ||||
Debt | ||||
Total debt, excluding obligations under finance leases | $ 10,607 | 11,899 | ||
Senior notes due through 2049 | Minimum | ||||
Debt | ||||
Interest rate (as a percent) | 1.70% | |||
Senior notes due through 2049 | Maximum | ||||
Debt | ||||
Interest rate (as a percent) | 8.00% | |||
Senior notes 2.20% due 2030 | ||||
Debt | ||||
Debt issued | $ 500 | |||
Interest rate (as a percent) | 2.20% | |||
Senior notes 1.70% due 2030 | ||||
Debt | ||||
Debt issued | $ 500 | |||
Interest rate (as a percent) | 1.70% | |||
Senior notes 2.60% due 2021 | ||||
Debt | ||||
Repayment of debt | $ 300 | |||
Interest rate (as a percent) | 2.60% | |||
Senior notes 2.95% due 2021 | ||||
Debt | ||||
Repayment of debt | $ 500 | |||
Interest rate (as a percent) | 2.95% | |||
Senior notes 3.30% due 2021 | ||||
Debt | ||||
Repayment of debt | $ 700 | |||
Interest rate (as a percent) | 3.30% | |||
Senior notes 3.40% due 2021 | ||||
Debt | ||||
Repayment of debt | $ 500 | |||
Interest rate (as a percent) | 3.40% | |||
Commercial paper borrowings | ||||
Debt | ||||
Total debt, excluding obligations under finance leases | $ 0 | $ 0 | ||
Repayment of debt | 1,150 | |||
Other. | ||||
Debt | ||||
Total debt, excluding obligations under finance leases | 1,138 | 511 | ||
Unsecured revolving credit facility | ||||
Debt | ||||
Total debt, excluding obligations under finance leases | 0 | 0 | ||
Debt issued | $ 1,000 | |||
Repayment of debt | 1,000 | |||
Maximum borrowing capacity | $ 2,750 | |||
Additional borrowing capacity | $ 1,250 | |||
Outstanding letters of credit | 363 | 381 | ||
Reduction in funds available under letter of credit agreement | $ 2 | $ 2 | ||
Unsecured revolving credit facility | Federal Funds Rate | ||||
Debt | ||||
Debt instrument variable basis rate | Federal Funds Rate | |||
Interest rate margin (as a percent) | 0.50% | |||
Unsecured revolving credit facility | Bank of America prime rate | ||||
Debt | ||||
Debt instrument variable basis rate | Bank of America prime rate | |||
Unsecured revolving credit facility | One-month LIBOR plus 1.0 percent plus a market rate spread based on the company's public debt rating | ||||
Debt | ||||
Debt instrument variable basis rate | one-month LIBOR plus 1.0%, plus a market rate spread based on the Company’s Public Debt Rating | |||
Interest rate margin (as a percent) | 1.00% | |||
Unsecured revolving credit facility | Maximum | ||||
Debt | ||||
Leverage ratio (as a percent) | 3.50 |
DEBT OBLIGATIONS - MATURITIES (
DEBT OBLIGATIONS - MATURITIES (Details) - USD ($) $ in Millions | Jan. 29, 2022 | Jan. 30, 2021 |
Aggregate annual maturities and scheduled payments of long-term debt | ||
2022 | $ 451 | |
2023 | 1,130 | |
2024 | 5 | |
2025 | 84 | |
2026 | 1,387 | |
Thereafter | 8,688 | |
Total debt, excluding obligations under finance leases | $ 11,745 | $ 12,410 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - DERIVATIVE INSTRUMENTS (Details) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022USD ($) | Jan. 30, 2021USD ($)DerivativeInstrument | Feb. 01, 2020USD ($) | |
Interest Rate Risk Management | |||
Interest rate risk management guideline of floating debt to total debt portfolio (as a percent) | 25.00% | ||
Designated | Cash flow hedges | Forward-starting interest rate swaps | Interest expense | |||
Interest Rate Risk Management | |||
Gain/(Loss) in AOCI on Derivatives (Effective Portion) | $ (47) | $ (54) | $ (42) |
Gain/(Loss) Reclassified from AOCI into Income (Effective Portion) | $ (7) | $ (2) | $ (4) |
Designated | Cash flow hedges | Terminated With Maturity Dates Of January 2021 | |||
Interest Rate Risk Management | |||
Number of interest-rate swaps | DerivativeInstrument | 9 | ||
Notional amount | $ 450 | ||
Unamortized loss, before tax | 41 | ||
Unamortized loss, net of tax | $ 31 | ||
Designated | Cash flow hedges | One Derivative instrument Terminated with Maturity Date of January 2021 | |||
Interest Rate Risk Management | |||
Number of interest-rate swaps | DerivativeInstrument | 1 | ||
Notional amount | $ 50 | ||
Designated | Cash flow hedges | One Derivative instrument Terminated with Maturity Date of January 2021 | Interest income | |||
Interest Rate Risk Management | |||
Gain on derivative | $ 7 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | Jun. 22, 2018 | |
Fair value of financial instruments carried at fair value | ||||
Other long-lived asset impairment charge | $ 64 | $ 70 | $ 120 | |
Revaluation of contingent consideration | 66 | 189 | (69) | |
Gain (loss) on investments | (821) | 1,105 | $ 157 | |
Carrying Value | ||||
Fair value of financial instruments carried at fair value | ||||
Long-lived assets before impairment | 74 | 72 | ||
Fair value of total debt | 11,745 | 12,410 | ||
Fair value | ||||
Fair value of financial instruments carried at fair value | ||||
Fair value of total debt | 13,189 | 14,680 | ||
Recurring | ||||
Fair value of financial instruments carried at fair value | ||||
Marketable Securities | 1,882 | |||
Other Investments | 160 | |||
Total | 2,042 | |||
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||||
Fair value of financial instruments carried at fair value | ||||
Marketable Securities | 1,054 | 1,882 | ||
Total | 1,882 | |||
Recurring | Significant Unobservable Inputs (Level 3) | ||||
Fair value of financial instruments carried at fair value | ||||
Other Investments | 160 | |||
Total | 160 | |||
Nonrecurring | Fair value | ||||
Fair value of financial instruments carried at fair value | ||||
Long-Lived Assets | 10 | 2 | ||
Home Chef | ||||
Fair value of financial instruments carried at fair value | ||||
Contingent consideration | $ 91 | |||
Ocado | Quoted Prices in Active Markets for Identical Assets (Level 1) | Other Assets. | ||||
Fair value of financial instruments carried at fair value | ||||
Far value | 987 | 1,808 | ||
Ocado | Quoted Prices in Active Markets for Identical Assets (Level 1) | (Loss) Gain on investments | ||||
Fair value of financial instruments carried at fair value | ||||
Gain (loss) on investments | (821) | 1,032 | ||
Other equity investments | ||||
Fair value of financial instruments carried at fair value | ||||
Gain (loss) on investments | 73 | |||
Observable price changes or impairments | 0 | |||
Other equity investments | Other Assets. | ||||
Fair value of financial instruments carried at fair value | ||||
Other equity investments of fair value | $ 309 | 189 | ||
Other equity investments | Carrying Value | ||||
Fair value of financial instruments carried at fair value | ||||
Other equity investments of fair value | 87 | |||
Other equity investments | Recurring | Significant Unobservable Inputs (Level 3) | Fair value | ||||
Fair value of financial instruments carried at fair value | ||||
Other equity investments of fair value | $ 160 |
FAIR VALUE MEASUREMENTS - Other
FAIR VALUE MEASUREMENTS - Other assets (Details) - USD ($) $ in Millions | Jan. 29, 2022 | Jan. 30, 2021 |
FAIR VALUE MEASUREMENTS | ||
Equity method and other long-term investments | $ 282 | $ 250 |
Notes receivable | 191 | 240 |
Prepaid deposits under certain contractual arrangements | 214 | 186 |
Implementation costs related to cloud computing arrangements | 151 | 81 |
Funded asset status of pension plans | 156 | 21 |
Other | 120 | 129 |
Total | $ 1,114 | $ 907 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - CHANGES IN AOCI BY COMPONENT (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
Accumulated other comprehensive income (loss) | |||
Balance at the beginning of the period | $ 9,576 | ||
Amounts reclassified out of AOCI | 81 | $ 16 | $ 33 |
Total other comprehensive income (loss) | 163 | 10 | (294) |
Balance at the end of the period | 9,452 | 9,576 | |
Accumulated Other Comprehensive Gain (Loss) | |||
Accumulated other comprehensive income (loss) | |||
Balance at the beginning of the period | (630) | (640) | |
OCI before reclassifications | 82 | (6) | |
Amounts reclassified out of AOCI | 81 | 16 | |
Total other comprehensive income (loss) | 163 | 10 | (294) |
Balance at the end of the period | (467) | (630) | (640) |
Cash Flow Hedging Activities | |||
Accumulated other comprehensive income (loss) | |||
Balance at the beginning of the period | (54) | (42) | |
OCI before reclassifications | (14) | ||
Amounts reclassified out of AOCI | 7 | 2 | |
Total other comprehensive income (loss) | 7 | (12) | |
Balance at the end of the period | (47) | (54) | (42) |
OCI before reclassifications, tax | (8) | ||
Amounts reclassified out of AOCI, tax | 3 | 2 | |
Pension and Postretirement Defined Benefit Plans | |||
Accumulated other comprehensive income (loss) | |||
Balance at the beginning of the period | (576) | (598) | |
OCI before reclassifications | 82 | 8 | |
Amounts reclassified out of AOCI | 74 | 14 | 29 |
Total other comprehensive income (loss) | 156 | 22 | |
Balance at the end of the period | (420) | (576) | (598) |
OCI before reclassifications, tax | 25 | 2 | |
Amounts reclassified out of AOCI, tax | $ 23 | $ 5 | $ 9 |
ACCUMULATED OTHER COMPREHENSI_4
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - ITEMS RECLASSIFIED OUT OF AOCI (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
Reclassification out of AOCI and the related tax effects | |||
Amortization of gains and losses on cash flow hedging activities | $ 571 | $ 544 | $ 603 |
Income tax expense | 385 | 782 | 469 |
Net of tax | (1,655) | (2,585) | (1,659) |
Total reclassifications, net of tax | 81 | 16 | 33 |
Cash Flow Hedging Activities | |||
Reclassification out of AOCI and the related tax effects | |||
Tax expense | (3) | (2) | |
Total reclassifications, net of tax | 7 | 2 | |
Pension and Postretirement Defined Benefit Plans | |||
Reclassification out of AOCI and the related tax effects | |||
Amortization of amounts included in net periodic pension cost | 97 | 19 | 38 |
Tax expense | (23) | (5) | (9) |
Total reclassifications, net of tax | 74 | 14 | 29 |
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 | 10 | 4 | 7 |
Income tax expense | (3) | (2) | (3) |
Net of tax | $ 7 | $ 2 | $ 4 |
LEASES AND LEASE-FINANCED TRA_3
LEASES AND LEASE-FINANCED TRANSACTIONS - BALANCE SHEET CLASSIFICATION (Details) - USD ($) $ in Millions | Jan. 29, 2022 | Jan. 30, 2021 |
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Operating | $ 6,695 | $ 6,796 |
Finance lease assets | $ 1,525 | $ 844 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Property, Plant and Equipment, Net. | Property, Plant and Equipment, Net. |
Total lease assets | $ 8,220 | $ 7,640 |
Current - Operating | 650 | 667 |
Current - Finance | $ 104 | $ 67 |
Current - Finance - Financial position | Current portion of long-term debt including obligations under finance leases | Current portion of long-term debt including obligations under finance leases |
Noncurrent - Operating | $ 6,426 | $ 6,507 |
Noncurrent - Finance | $ 1,515 | $ 936 |
Noncurrent - Finance - Financial position | Long-term debt including obligations under finance leases | Long-term debt including obligations under finance leases |
Total lease liabilities | $ 8,695 | $ 8,177 |
Finance leases - accumulated amortization | $ 414 | $ 321 |
LEASES AND LEASE-FINANCED TRA_4
LEASES AND LEASE-FINANCED TRANSACTIONS - LEASE COST (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jan. 29, 2022 | Jan. 30, 2021 | |
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Net lease cost | $ 992 | $ 974 |
Rent Expense | ||
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Operating lease cost | 954 | 981 |
Sublease and other rental income | (109) | (107) |
Depreciation and Amortization | ||
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Amortization of leased assets | 95 | 55 |
Interest expense | ||
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Interest on lease liabilities | $ 52 | $ 45 |
LEASES AND LEASE-FINANCED TRA_5
LEASES AND LEASE-FINANCED TRANSACTIONS - MATURITIES (Details) - USD ($) $ in Millions | Jan. 29, 2022 | Jan. 30, 2021 |
Operating leases maturities: | ||
2022 | $ 920 | |
2023 | 862 | |
2024 | 791 | |
2025 | 717 | |
2026 | 664 | |
Thereafter | 5,961 | |
Total lease payments | 9,915 | |
Less amount representing interest | 2,839 | |
Present value of lease liabilities | 7,076 | |
Finance leases maturities: | ||
2022 | 159 | |
2023 | 158 | |
2024 | 156 | |
2025 | 152 | |
2026 | 152 | |
Thereafter | 1,323 | |
Total lease payments | 2,100 | |
Less amount representing interest | 481 | |
Present value of lease liabilities | $ 1,619 | |
Finance Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Long Term Debt and Finance Lease, Long Term Debt and Finance Lease Current | Long Term Debt and Finance Lease, Long Term Debt and Finance Lease Current |
Maturities | ||
2022 | $ 1,079 | |
2023 | 1,020 | |
2024 | 947 | |
2025 | 869 | |
2026 | 816 | |
Thereafter | 7,284 | |
Total lease payments | 12,015 | |
Current - Operating | 650 | $ 667 |
Current finance leases | $ 104 | $ 67 |
LEASES AND LEASE-FINANCED TRA_6
LEASES AND LEASE-FINANCED TRANSACTIONS - SUB LEASES (Details) $ in Millions | Jan. 29, 2022USD ($) |
LEASES AND LEASE-FINANCED TRANSACTIONS | |
Future minimum rentals under non-cancellable subleases | $ 256 |
LEASES AND LEASE-FINANCED TRA_7
LEASES AND LEASE-FINANCED TRANSACTIONS - QUANTITATIVE INFORMATION (Details) | Jan. 29, 2022 | Jan. 30, 2021 |
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Operating leases -Weighted-average remaining lease term (years) | 14 years 10 months 24 days | 15 years 3 months 18 days |
Finance leases - Weighted-average remaining lease term (years) | 14 years 8 months 12 days | 16 years 2 months 12 days |
Operating leases - Weighted-average discount rate | 4.10% | 4.20% |
Finance leases - Weighted-average discount rate | 3.70% | 4.40% |
LEASES AND LEASE-FINANCED TRA_8
LEASES AND LEASE-FINANCED TRANSACTIONS - CASH FLOW INFORMATION (Details) $ in Millions | 12 Months Ended | |
Jan. 29, 2022USD ($)property | Jan. 30, 2021USD ($)property | |
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Operating cash flows from operating leases | $ 897 | $ 849 |
Operating cash flows from finance leases | 52 | 45 |
Financing cash flows from finance leases | 127 | 37 |
Leased assets obtained in exchange for new operating lease liabilities | 669 | 679 |
Leased assets obtained in exchange for new finance lease liabilities | 753 | 190 |
Net gain recognized from sale and leaseback transactions | 35 | 39 |
Impairment of operating lease assets including Lucky's Market | 8 | 4 |
Impairment of finance lease assets | $ 4 | $ 2 |
Number of properties in sales leaseback transaction | property | 7 | 7 |
Total proceeds | $ 79 | $ 78 |
LEASES AND LEASE-FINANCED TRA_9
LEASES AND LEASE-FINANCED TRANSACTIONS (Details) $ in Millions | 12 Months Ended | |
Jan. 29, 2022USD ($)facility | Jan. 30, 2021USD ($) | |
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Term - Finance | 25 years | |
Option to renew - Operating | true | |
Option to renew - Finance | true | |
Finance lease assets | $ 1,525 | $ 844 |
Lease financing obligation | $ 1,619 | |
Digital and Robotic Facilities | ||
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Number of delivery facilities | facility | 3 | |
Term - Finance | 10 years | |
Finance lease assets | $ 401 | |
Lease financing obligation | $ 372 | |
Minimum | ||
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Term - Operating | 10 years | |
Term - Finance | 10 years | |
Sublease term - Operating | 1 year | |
Sublease term - Finance | 1 year | |
Maximum | ||
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Term - Operating | 20 years | |
Term - Finance | 20 years | |
Sublease term - Operating | 20 years | |
Sublease term - Finance | 20 years |
EARNINGS PER COMMON SHARE (Deta
EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
EARNINGS PER COMMON SHARE | |||
Net earnings numerator (basic) | $ 1,639 | $ 2,556 | $ 1,640 |
Net earnings numerator (diluted) | $ 1,639 | $ 2,556 | $ 1,640 |
Average number of common shares used in basic calculation | 744 | 773 | 799 |
Net earnings attributable to The Kroger Co. per basic common share | $ 2.20 | $ 3.31 | $ 2.05 |
Dilutive effect of stock options (in shares) | 10 | 8 | 6 |
Average number of common shares used in diluted calculation | 754 | 781 | 805 |
Net earnings attributable to The Kroger Co. per diluted common share | $ 2.17 | $ 3.27 | $ 2.04 |
Undistributed and distributed earnings to participating securities | $ 16 | $ 29 | $ 19 |
Shares excluded from the earnings per share calculation due to anti-dilutive effect on earnings per share | 2.4 | 9.1 | 18.4 |
STOCK-BASED COMPENSATION - STOC
STOCK-BASED COMPENSATION - STOCK OPTIONS AND RESTRICTED STOCK (Details) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Jan. 29, 2022USD ($)$ / sharesshares | Jan. 30, 2021$ / sharesshares | Feb. 01, 2020$ / sharesshares | |
Stock Options Plans | |||
Common stock available for future grants (in shares) | shares | 19 | ||
Frequency of equity grants made | at one of four meetings of its Board of Directors | ||
Stock options | |||
Stock Options Plans | |||
Expiration period from date of grant | 10 years | ||
Share pool ratio | 1 | ||
Shares subject to option | |||
Outstanding at the beginning of the period (in shares) | shares | 26.8 | 32.2 | 34.1 |
Granted (in shares) | shares | 2.1 | 2.9 | 3.1 |
Exercised (in shares) | shares | (7.1) | (7.3) | (4) |
Canceled or Expired (in shares) | shares | (0.7) | (1) | (1) |
Outstanding at the end of the period (in shares) | shares | 21.1 | 26.8 | 32.2 |
Weighted-average exercise price | |||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 26.65 | $ 24.52 | $ 23.42 |
Granted (in dollars per share) | $ / shares | 35.45 | 29.31 | 24.63 |
Exercised (in dollars per share) | $ / shares | 24.70 | 17.72 | 14.17 |
Canceled or Expired (in dollars per share) | $ / shares | 28.88 | 30.53 | 28.87 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 28.15 | 26.65 | 24.52 |
Options Outstanding and Exercisable | |||
Options Outstanding, Weighted-average remaining contractual life | 5 years 3 months 21 days | ||
Options Outstanding, Aggregate intrinsic value | $ | $ 324 | ||
Options Exercisable, Number of shares | shares | 14.6 | ||
Options Exercisable, Weighted-average remaining contractual life | 4 years 2 months 8 days | ||
Options Exercisable, Weighted-average exercise price | $ / shares | $ 27.58 | ||
Options Exercisable, Aggregate intrinsic value | $ | $ 232 | ||
Options Expected to Vest | |||
Options Expected to Vest, Number of shares | shares | 6.4 | ||
Options Expected to Vest, Weighted-average remaining contractual life | 7 years 9 months 14 days | ||
Options Expected to Vest, Weighted-average exercise price | $ / shares | $ 29.35 | ||
Options Expected to Vest, Aggregate intrinsic value | $ | $ 90 | ||
Weighted-average grant-date fair value | |||
Weighted-average grant date fair value of stock options granted in period (in dollars per share) | $ / shares | $ 8.54 | $ 6.43 | $ 6 |
Weighted average assumptions for grants awarded to option holders | |||
Expected volatility | 28.52% | 26.96% | 25.37% |
Risk-free interest rate | 1.21% | 0.82% | 2.54% |
Expected dividend yield | 2.00% | 2.00% | 2.00% |
Expected term | 7 years 2 months 12 days | 7 years 2 months 12 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 | |||
Stock Options Plans | |||
Share pool ratio | 2.83 | ||
Restricted shares outstanding | |||
Outstanding at the beginning of the period (in shares) | shares | 7.8 | 9.3 | 8.8 |
Granted (in shares) | shares | 3.9 | 4 | 5.4 |
Lapsed (in shares) | shares | (4) | (4.9) | (4.1) |
Canceled or Expired (in shares) | shares | (0.5) | (0.6) | (0.8) |
Outstanding at the end of the period (in shares) | shares | 7.2 | 7.8 | 9.3 |
Weighted-average grant-date fair value | |||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 28.46 | $ 24.85 | $ 27.86 |
Granted (in dollars per share) | $ / shares | 37.29 | 31.99 | 22.72 |
Lapsed (in dollars per share) | $ / shares | 29.58 | 24.69 | 28.07 |
Canceled or Expired (in dollars per share) | $ / shares | 31.31 | 26.71 | 25.68 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 32.52 | $ 28.46 | $ 24.85 |
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 |
STOCK-BASED COMPENSATION - COMP
STOCK-BASED COMPENSATION - COMPENSATION AND VALUE (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
STOCK-BASED COMPENSATION | |||
Share-based employee compensation | $ 203 | $ 185 | $ 155 |
Stock option compensation | 20 | 22 | 24 |
Restricted shares compensation | 183 | 163 | 131 |
Intrinsic value of options exercised | 121 | 115 | 51 |
Cash received from the exercise of options | 172 | ||
Compensation expenses related to non-vested share-based compensation arrangements | $ 194 | ||
Weighted-average period for recognition of expenses related to non-vested share-based compensation arrangements | 2 years | ||
Total fair value of options vested | $ 20 | $ 23 | $ 26 |
Common stock repurchase from proceeds of stock option exercises (in shares) | 5 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 12 Months Ended |
Jan. 29, 2022case | |
COMMITMENTS AND CONTINGENCIES | |
Number of cases consolidated as Multi-District Litigation | 2,000 |
Number of bellwether cases in which the Company entities have been named in | 5 |
STOCK - COMMON STOCK, PREFERRED
STOCK - COMMON STOCK, PREFERRED STOCK AND REPURCHASES (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
Preferred Shares | |||
Preferred Stock, Shares Authorized | 5 | 5 | |
Preferred stock, shares available for issuance | 2 | ||
Preferred shares, per share (in dollars per share) | $ 100 | $ 100 | |
Common Shares | |||
Common shares, shares authorized | 2,000 | 2,000 | |
Common shares, par per share (in dollars per share) | $ 1 | $ 1 | |
Common Stock Repurchase Program | |||
Repurchase stock amount | $ 1,422 | $ 1,196 | $ 400 |
Common stock repurchased from stock option proceeds | 225 | 128 | 65 |
Open Market Repurchases | |||
Common Stock Repurchase Program | |||
Repurchase stock amount | $ 1,422 | $ 1,196 | $ 400 |
COMPANY-SPONSORED BENEFIT PLA_2
COMPANY-SPONSORED BENEFIT PLANS - AMOUNTS RECOGNIZED IN AOCI AND OTHER CHANGES IN OCI (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
Amounts recognized in AOCI (pre-tax): | |||
Net actuarial loss (gain) | $ 588 | $ 804 | |
Prior service credit | (43) | (55) | |
Total | 545 | 749 | |
Other changes recognized in other comprehensive income (loss) (pre-tax): | |||
Incurred net actuarial loss (gain) | (107) | (10) | $ 188 |
Amortization of prior service credit | 12 | 13 | 11 |
Amortization of net actuarial gain (loss) | (109) | (32) | (49) |
Other | (13) | ||
Total recognized in other comprehensive income (loss) | (204) | (29) | 137 |
Total recognized in net periodic benefit cost and other comprehensive income (loss) | (154) | (38) | 176 |
Pension Benefits | |||
Amounts recognized in AOCI (pre-tax): | |||
Net actuarial loss (gain) | 715 | 951 | |
Total | 715 | 951 | |
Other changes recognized in other comprehensive income (loss) (pre-tax): | |||
Incurred net actuarial loss (gain) | (109) | 36 | 179 |
Amortization of net actuarial gain (loss) | (126) | (40) | (61) |
Other | (1) | ||
Total recognized in other comprehensive income (loss) | (235) | (4) | 117 |
Total recognized in net periodic benefit cost and other comprehensive income (loss) | (164) | (4) | 165 |
Other Benefits | |||
Amounts recognized in AOCI (pre-tax): | |||
Net actuarial loss (gain) | (127) | (147) | |
Prior service credit | (43) | (55) | |
Total | (170) | (202) | |
Other changes recognized in other comprehensive income (loss) (pre-tax): | |||
Incurred net actuarial loss (gain) | 2 | (46) | 9 |
Amortization of prior service credit | 12 | 13 | 11 |
Amortization of net actuarial gain (loss) | 17 | 8 | 12 |
Other | (12) | ||
Total recognized in other comprehensive income (loss) | 31 | (25) | 20 |
Total recognized in net periodic benefit cost and other comprehensive income (loss) | $ 10 | $ (34) | $ 11 |
COMPANY-SPONSORED BENEFIT PLA_3
COMPANY-SPONSORED BENEFIT PLANS - FUNDED STATUS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
Change in plan assets: | |||
Fair value of plan assets at beginning of fiscal year | $ 21 | ||
Fair value of plan assets at end of fiscal year | 156 | $ 21 | |
Other assets | 156 | 21 | |
Other current liabilities | 34 | 35 | |
Settlement expense, before tax | 87 | ||
Settlement expense, after tax | 68 | ||
Pension Benefits | Qualified Plan | |||
Change in benefit obligation: | |||
Benefit obligations at beginning of fiscal year | 3,615 | 3,518 | |
Service cost | 12 | 13 | $ 32 |
Interest cost | 92 | 104 | 124 |
Actuarial (gain) loss | (125) | 175 | |
Plan settlements | (442) | (16) | |
Benefits paid | (172) | (171) | |
Other | (3) | (8) | |
Benefit obligations at end of fiscal year | 2,977 | 3,615 | 3,518 |
Change in plan assets: | |||
Fair value of plan assets at beginning of fiscal year | 3,569 | 3,422 | |
Actual return on plan assets | 141 | 342 | |
Settlement loss recognized | (442) | (16) | |
Benefits paid | (172) | (171) | |
Other | (8) | ||
Fair value of plan assets at end of fiscal year | 3,096 | 3,569 | 3,422 |
Funded status and net asset and liability recognized at end of fiscal year | 119 | (46) | |
Pension Benefits | Nonqualified Plan | |||
Change in benefit obligation: | |||
Benefit obligations at beginning of fiscal year | 351 | 328 | |
Service cost | 1 | ||
Interest cost | 9 | 10 | 12 |
Actuarial (gain) loss | (12) | 35 | |
Benefits paid | (24) | (21) | |
Other | 1 | (1) | |
Benefit obligations at end of fiscal year | 325 | 351 | 328 |
Change in plan assets: | |||
Employer contributions | 24 | 21 | |
Benefits paid | (24) | (21) | |
Funded status and net asset and liability recognized at end of fiscal year | (325) | (351) | |
Other Benefits | |||
Change in benefit obligation: | |||
Benefit obligations at beginning of fiscal year | 152 | 198 | |
Service cost | 4 | 7 | 6 |
Interest cost | 4 | 6 | 8 |
Plan participants' contributions | 13 | 12 | |
Actuarial (gain) loss | 2 | (47) | |
Benefits paid | (25) | (24) | |
Benefit obligations at end of fiscal year | 150 | 152 | $ 198 |
Change in plan assets: | |||
Employer contributions | 12 | 12 | |
Plan participants' contributions | 13 | 12 | |
Benefits paid | (25) | (24) | |
Funded status and net asset and liability recognized at end of fiscal year | $ (150) | $ (152) |
COMPANY-SPONSORED BENEFIT PLA_4
COMPANY-SPONSORED BENEFIT PLANS - ASSUMPTIONS (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Jan. 29, 2022 | Dec. 31, 2021 | Jan. 30, 2021 | Feb. 01, 2020 | |
Pension Benefits | ||||
Weighted average assumptions used to determine pension benefits and other benefits | ||||
Discount rate - Benefit obligation (as a percent) | 3.17% | 2.72% | 3.01% | |
Discount rate - Net periodic benefit cost (as a percent) | 2.72% | 3.01% | 4.23% | |
Expected long-term rate of return on plan assets (as a percent) | 5.50% | 5.50% | 6.00% | |
Rate of compensation increase - Net periodic benefit cost (as a percent) | 3.03% | 3.03% | 3.04% | |
Rate of compensation increase - Benefit obligation (as a percent) | 3.05% | 3.03% | 3.03% | |
Cash Balance plan interest crediting rate | 3.30% | 3.30% | 3.60% | |
Increase in discount rate used to determine pension benefit obligation, as compared to prior year (in basis points) | 100 | |||
Decrease in pension benefit obligation due to change in discount rate | $ 316 | |||
Percentage increase (decrease) in value of all investments in Qualified Plans, net of investment management fees and expenses | 4.20% | 5.90% | ||
Pension plan's average rate of return for the 10 calendar years ended December 31, net of all investment management fees and expenses (as a percent) | 8.20% | |||
Measurement period for the pension plan's average annual rate of return, rate in calendar years | 10 years | |||
Number of years in which the Company average annual return rate has been at the current rate | 20 years | |||
Average annual rate of return for the past 20 years (as a percent) | 7.80% | |||
Period of recognition of gains or losses on plan assets | 5 years | |||
Other Benefits | ||||
Weighted average assumptions used to determine pension benefits and other benefits | ||||
Discount rate - Benefit obligation (as a percent) | 3.01% | 2.43% | 2.97% | |
Discount rate - Net periodic benefit cost (as a percent) | 2.43% | 2.97% | 4.19% |
COMPANY-SPONSORED BENEFIT PLA_5
COMPANY-SPONSORED BENEFIT PLANS - BENEFIT COST, PBO-ABO,FUTURE PAYMENTS, ASSET ALLOCATIONS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
Pension Benefits | |||
Estimated future benefit payments | |||
2022 | $ 207 | ||
2023 | 204 | ||
2024 | 207 | ||
2025 | 209 | ||
2026 | 209 | ||
2027-2031 | $ 1,009 | ||
Target and actual pension plan asset allocations | |||
Target allocations (as a percent) | 100.00% | ||
Total actual allocations (as a percent) | 100.00% | 100.00% | |
2022 net periodic benefit costs | $ (38) | ||
Defined Benefit Plan, Assumed Health Care Cost Trend Rates | |||
Initial health care cost trend rate (as a percent) | 5.30% | ||
Ultimate health care cost trend rate (as a percent) | 4.50% | ||
Pension Benefits | Global equity securities | |||
Target and actual pension plan asset allocations | |||
Target allocations (as a percent) | 2.00% | ||
Total actual allocations (as a percent) | 7.00% | 6.00% | |
Pension Benefits | Emerging market equity securities | |||
Target and actual pension plan asset allocations | |||
Target allocations (as a percent) | 1.00% | ||
Total actual allocations (as a percent) | 1.70% | 1.60% | |
Pension Benefits | Investment grade debt securities | |||
Target and actual pension plan asset allocations | |||
Target allocations (as a percent) | 80.00% | ||
Total actual allocations (as a percent) | 73.60% | 77.90% | |
Pension Benefits | High yield debt securities | |||
Target and actual pension plan asset allocations | |||
Target allocations (as a percent) | 4.00% | ||
Total actual allocations (as a percent) | 2.50% | 2.70% | |
Pension Benefits | Private Equity | |||
Target and actual pension plan asset allocations | |||
Target allocations (as a percent) | 10.00% | ||
Total actual allocations (as a percent) | 10.60% | 8.10% | |
Pension Benefits | Hedge Funds | |||
Target and actual pension plan asset allocations | |||
Total actual allocations (as a percent) | 2.90% | 2.20% | |
Pension Benefits | Real Estate | |||
Target and actual pension plan asset allocations | |||
Target allocations (as a percent) | 3.00% | ||
Total actual allocations (as a percent) | 1.70% | 1.50% | |
Pension Benefits | Qualified Plan | |||
Components of net periodic benefit cost: | |||
Service cost | $ 12 | $ 13 | $ 32 |
Interest cost | 92 | 104 | 124 |
Expected return on plan assets | (168) | (168) | (182) |
Amortization of: | |||
Actuarial loss (gain) | 33 | 35 | 55 |
Settlement loss recognized | 87 | ||
Other | (1) | 1 | |
Net periodic benefit cost | 55 | (15) | 29 |
Projected benefit obligation ("PBO"), accumulated benefit obligation ("ABO") and the fair value of plan assets for all Company-sponsored pension plans | |||
PBO at end of fiscal year | 244 | 3,415 | |
ABO at end of fiscal year | 244 | 3,415 | |
Fair value of plan assets at end of year | 207 | 3,349 | |
Pension Benefits | Nonqualified Plan | |||
Components of net periodic benefit cost: | |||
Service cost | 1 | ||
Interest cost | 9 | 10 | 12 |
Amortization of: | |||
Actuarial loss (gain) | 6 | 5 | 6 |
Other | 1 | ||
Net periodic benefit cost | 16 | 15 | 19 |
Projected benefit obligation ("PBO"), accumulated benefit obligation ("ABO") and the fair value of plan assets for all Company-sponsored pension plans | |||
PBO at end of fiscal year | 325 | 351 | |
ABO at end of fiscal year | 325 | 351 | |
Other Benefits | |||
Components of net periodic benefit cost: | |||
Service cost | 4 | 7 | 6 |
Interest cost | 4 | 6 | 8 |
Amortization of: | |||
Prior service cost | (12) | (13) | (11) |
Actuarial loss (gain) | (17) | (8) | (12) |
Other | (1) | ||
Net periodic benefit cost | (21) | $ (9) | $ (9) |
Estimated future benefit payments | |||
2022 | 12 | ||
2023 | 12 | ||
2024 | 13 | ||
2025 | 13 | ||
2026 | 13 | ||
2027-2031 | $ 58 |
COMPANY-SPONSORED BENEFIT PLA_6
COMPANY-SPONSORED BENEFIT PLANS - FAIR VALUE OF PLAN ASSETS (Details) - USD ($) $ in Millions | Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 |
BENEFIT PLANS | |||
Fair value of plan assets | $ 156 | $ 21 | |
Recurring | |||
BENEFIT PLANS | |||
Fair value of plan assets | 3,096 | 3,569 | |
Recurring | Cash and cash equivalents | |||
BENEFIT PLANS | |||
Fair value of plan assets | 80 | 120 | |
Recurring | Corporate Stocks | |||
BENEFIT PLANS | |||
Fair value of plan assets | 98 | 89 | |
Recurring | Corporate Bonds | |||
BENEFIT PLANS | |||
Fair value of plan assets | 1,070 | 1,240 | |
Recurring | U.S. Government Securities | |||
BENEFIT PLANS | |||
Fair value of plan assets | 144 | 225 | |
Recurring | Mutual Funds | |||
BENEFIT PLANS | |||
Fair value of plan assets | 265 | 329 | |
Recurring | Collective Trusts | |||
BENEFIT PLANS | |||
Fair value of plan assets | 871 | 1,014 | |
Recurring | Hedge Funds | |||
BENEFIT PLANS | |||
Fair value of plan assets | 88 | 81 | |
Recurring | Private Equity | |||
BENEFIT PLANS | |||
Fair value of plan assets | 326 | 289 | |
Recurring | Real Estate | |||
BENEFIT PLANS | |||
Fair value of plan assets | 53 | 55 | |
Recurring | Other equity investments | |||
BENEFIT PLANS | |||
Fair value of plan assets | 101 | 127 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring | |||
BENEFIT PLANS | |||
Fair value of plan assets | 443 | 538 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring | Cash and cash equivalents | |||
BENEFIT PLANS | |||
Fair value of plan assets | 80 | 120 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring | Corporate Stocks | |||
BENEFIT PLANS | |||
Fair value of plan assets | 98 | 89 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Recurring | Mutual Funds | |||
BENEFIT PLANS | |||
Fair value of plan assets | 265 | 329 | |
Significant Other Observable Inputs (Level 2) | Recurring | |||
BENEFIT PLANS | |||
Fair value of plan assets | 1,315 | 1,592 | |
Significant Other Observable Inputs (Level 2) | Recurring | Corporate Bonds | |||
BENEFIT PLANS | |||
Fair value of plan assets | 1,070 | 1,240 | |
Significant Other Observable Inputs (Level 2) | Recurring | U.S. Government Securities | |||
BENEFIT PLANS | |||
Fair value of plan assets | 144 | 225 | |
Significant Other Observable Inputs (Level 2) | Recurring | Other equity investments | |||
BENEFIT PLANS | |||
Fair value of plan assets | 101 | 127 | |
Significant Unobservable Inputs (Level 3) | Recurring | |||
BENEFIT PLANS | |||
Fair value of plan assets | 76 | 74 | |
Significant Unobservable Inputs (Level 3) | Recurring | Hedge Funds | |||
BENEFIT PLANS | |||
Fair value of plan assets | 39 | 35 | $ 43 |
Significant Unobservable Inputs (Level 3) | Recurring | Real Estate | |||
BENEFIT PLANS | |||
Fair value of plan assets | 37 | 39 | $ 43 |
Assets Measured at NAV | Recurring | |||
BENEFIT PLANS | |||
Fair value of plan assets | 1,262 | 1,365 | |
Assets Measured at NAV | Recurring | Collective Trusts | |||
BENEFIT PLANS | |||
Fair value of plan assets | 871 | 1,014 | |
Assets Measured at NAV | Recurring | Hedge Funds | |||
BENEFIT PLANS | |||
Fair value of plan assets | 49 | 46 | |
Assets Measured at NAV | Recurring | Private Equity | |||
BENEFIT PLANS | |||
Fair value of plan assets | 326 | 289 | |
Assets Measured at NAV | Recurring | Real Estate | |||
BENEFIT PLANS | |||
Fair value of plan assets | $ 16 | $ 16 |
COMPANY-SPONSORED BENEFIT PLA_7
COMPANY-SPONSORED BENEFIT PLANS - LEVEL 3 RECONCILIATION (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jan. 29, 2022 | Jan. 30, 2021 | |
Roll-forward of assets measured at fair value using Level 3 inputs | ||
Fair value of plan assets at beginning of fiscal year | $ 21 | |
Fair value of plan assets at end of fiscal year | 156 | $ 21 |
Recurring | ||
Roll-forward of assets measured at fair value using Level 3 inputs | ||
Fair value of plan assets at beginning of fiscal year | 3,569 | |
Fair value of plan assets at end of fiscal year | 3,096 | 3,569 |
Recurring | Significant Unobservable Inputs (Level 3) | ||
Roll-forward of assets measured at fair value using Level 3 inputs | ||
Fair value of plan assets at beginning of fiscal year | 74 | |
Fair value of plan assets at end of fiscal year | 76 | 74 |
Hedge Funds | Recurring | ||
Roll-forward of assets measured at fair value using Level 3 inputs | ||
Fair value of plan assets at beginning of fiscal year | 81 | |
Fair value of plan assets at end of fiscal year | 88 | 81 |
Hedge Funds | Recurring | Significant Unobservable Inputs (Level 3) | ||
Roll-forward of assets measured at fair value using Level 3 inputs | ||
Fair value of plan assets at beginning of fiscal year | 35 | 43 |
Contributions into Fund | 2 | |
Realized gains | 2 | |
Unrealized gains | 7 | |
Distributions | (5) | (10) |
Fair value of plan assets at end of fiscal year | 39 | 35 |
Real Estate | Recurring | ||
Roll-forward of assets measured at fair value using Level 3 inputs | ||
Fair value of plan assets at beginning of fiscal year | 55 | |
Fair value of plan assets at end of fiscal year | 53 | 55 |
Real Estate | Recurring | Significant Unobservable Inputs (Level 3) | ||
Roll-forward of assets measured at fair value using Level 3 inputs | ||
Fair value of plan assets at beginning of fiscal year | 39 | 43 |
Contributions into Fund | 1 | 1 |
Realized gains | 2 | 4 |
Unrealized gains | 6 | (6) |
Distributions | (11) | (3) |
Fair value of plan assets at end of fiscal year | 37 | 39 |
Collective Trusts | Recurring | ||
Roll-forward of assets measured at fair value using Level 3 inputs | ||
Fair value of plan assets at beginning of fiscal year | 1,014 | |
Fair value of plan assets at end of fiscal year | $ 871 | $ 1,014 |
COMPANY-SPONSORED BENEFIT PLA_8
COMPANY-SPONSORED BENEFIT PLANS - DEFINED CONTRIBUTION PLAN INFORMATION (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 | |
COMPANY- SPONSORED BENEFIT PLANS | |||
Contribution to 401(k) retirement savings accounts | $ 289 | $ 294 | $ 264 |
Severance expenses, before tax | 80 | ||
Severance expenses, net of tax | 61 | ||
Severance and related benefits included in other current liabilities | $ 42 |
MULTI-EMPLOYER PENSION PLANS (D
MULTI-EMPLOYER PENSION PLANS (Details) $ in Millions | 12 Months Ended | ||
Jan. 29, 2022USD ($)item | Jan. 30, 2021USD ($) | Feb. 01, 2020USD ($) | |
Prepaid expenses and other current assets | |||
Multiemployer Plans | |||
Escrow deposits | $ 271 | ||
Other Health And Welfare Benefits Multiemployer Plans | |||
Multiemployer Plans | |||
Employer contribution to multi-employer plans | $ 1,197 | 1,262 | $ 1,252 |
Pension Benefits | |||
Multiemployer Plans | |||
Employer contribution to multi-employer plans | 1,109 | 619 | 461 |
Charge (before-tax) related to pension plan agreements | 135 | ||
Charge (after-tax) related to pension plan agreements | 104 | ||
Total withdrawal liability and commitment to transition reserve, after-tax | 754 | ||
Payment of commitment | 523 | ||
Pension Benefits | Other current liabilities | |||
Multiemployer Plans | |||
Short-term commitments to transition reserve | 233 | 523 | |
Pension Benefits | Other long-term liabilities | |||
Multiemployer Plans | |||
Long-term commitments to transition reserve | $ 233 | 466 | |
Pension Benefits | Red zone | Maximum | |||
Multiemployer Plans | |||
Percentage of funded status | 65.00% | ||
Pension Benefits | Yellow zone | Maximum | |||
Multiemployer Plans | |||
Percentage of funded status | 80.00% | ||
Pension Benefits | Green zone | Minimum | |||
Multiemployer Plans | |||
Percentage of funded status | 80.00% | ||
Pension Benefits | SO CA UFCW Unions & Food Employers Joint Pension Trust Fund | |||
Multiemployer Plans | |||
Employer contribution to multi-employer plans | $ 83 | 86 | 75 |
Minimum percentage of total contributions received by pension fund | 5.00% | ||
Most significant collective bargaining agreements count | item | 2 | ||
Pension Benefits | Desert States Employers & UFCW Unions Pension Plan | |||
Multiemployer Plans | |||
Employer contribution to multi-employer plans | $ 22 | 19 | 19 |
Minimum percentage of total contributions received by pension fund | 5.00% | ||
Most significant collective bargaining agreements count | item | 1 | ||
Pension Benefits | Sound Retirement Trust (formerly Retail Clerks Pension Plan) | |||
Multiemployer Plans | |||
Employer contribution to multi-employer plans | $ 24 | 29 | 25 |
Minimum percentage of total contributions received by pension fund | 5.00% | ||
Most significant collective bargaining agreements count | item | 4 | ||
Pension Benefits | Rocky Mountain UFCW Unions and Employers Pension Plan | |||
Multiemployer Plans | |||
Employer contribution to multi-employer plans | $ 29 | 28 | 23 |
Minimum percentage of total contributions received by pension fund | 5.00% | ||
Most significant collective bargaining agreements count | item | 1 | ||
Pension Benefits | Oregon Retail Employees Pension Plan | |||
Multiemployer Plans | |||
Employer contribution to multi-employer plans | $ 10 | 9 | 9 |
Minimum percentage of total contributions received by pension fund | 5.00% | ||
Most significant collective bargaining agreements count | item | 3 | ||
Pension Benefits | Bakery and Confectionary Union & Industry International Pension Fund | |||
Multiemployer Plans | |||
Employer contribution to multi-employer plans | $ 8 | 8 | 10 |
Minimum percentage of total contributions received by pension fund | 5.00% | ||
Most significant collective bargaining agreements count | item | 3 | ||
Pension Benefits | Retail Food Employers & UFCW Local 711 Pension | |||
Multiemployer Plans | |||
Employer contribution to multi-employer plans | $ 11 | 11 | 10 |
Minimum percentage of total contributions received by pension fund | 5.00% | ||
Most significant collective bargaining agreements count | item | 1 | ||
Pension Benefits | United Food & Commercial Workers Intl Union - Industry Pension Fund | |||
Multiemployer Plans | |||
Employer contribution to multi-employer plans | $ 550 | 29 | 32 |
Charge (before-tax) related to pension plan agreements | $ 962 | ||
Repayment period of commitments to transition reserve liability | 3 years | ||
Minimum percentage of total contributions received by pension fund | 5.00% | ||
Most significant collective bargaining agreements count | item | 2 | ||
Pension Benefits | Western Conference of Teamsters Pension Plan | |||
Multiemployer Plans | |||
Employer contribution to multi-employer plans | $ 37 | $ 35 | 34 |
Most significant collective bargaining agreements count | item | 4 | ||
Pension Benefits | Central States, Southeast & Southwest Areas Pension Plan | |||
Multiemployer Plans | |||
Employer contribution to multi-employer plans | $ 37 | 12 | |
Pension Benefits | UFCW Consolidated Pension Plan | |||
Multiemployer Plans | |||
Employer contribution to multi-employer plans | 243 | 321 | 174 |
Amount transferred, before tax, in net accrued pension liabilities and prepaid escrow funds | 449 | ||
Amount transferred, net of tax, in net accrued pension liabilities and prepaid escrow funds | $ 344 | ||
Period of additional contribution | 7 years | ||
Minimum percentage of total contributions received by pension fund | 5.00% | ||
Most significant collective bargaining agreements count | item | 4 | ||
Pension Benefits | IBT Consolidated Pension Plan | |||
Multiemployer Plans | |||
Employer contribution to multi-employer plans | $ 29 | 18 | 33 |
Minimum percentage of total contributions received by pension fund | 5.00% | ||
Most significant collective bargaining agreements count | item | 3 | ||
Pension Benefits | Others. | |||
Multiemployer Plans | |||
Employer contribution to multi-employer plans | $ 26 | 14 | $ 17 |
Pension Benefits | New Variable Annuity Pension Plan | |||
Multiemployer Plans | |||
Additional commitment to transition reserve | $ 27 |
DISPOSAL OF BUSINESS (Details)
DISPOSAL OF BUSINESS (Details) - USD ($) $ in Millions | Apr. 26, 2019 | Mar. 13, 2019 | Feb. 01, 2020 | Nov. 09, 2019 | Jan. 29, 2022 | Jan. 30, 2021 | Feb. 01, 2020 |
HELD FOR SALE | |||||||
Gain on sale of businesses | $ 176 | ||||||
Impairment of finance lease assets | $ 4 | $ 2 | |||||
Other long-lived asset impairment charge | $ 64 | $ 70 | 120 | ||||
You Technology business unit | Disposed by Sale | |||||||
HELD FOR SALE | |||||||
Consideration for sale | $ 565 | ||||||
Proceeds received upon closing | 396 | ||||||
Preferred equity | 64 | ||||||
Other cash consideration | $ 105 | ||||||
Other cash consideration receivable period | 5 years | ||||||
Gain on sale of businesses | $ 70 | ||||||
Gain on sale of business, net of tax | 52 | ||||||
You Technology business unit | Disposed by Sale | Other Liabilities | |||||||
HELD FOR SALE | |||||||
Fair value of long-term service agreement | $ 358 | ||||||
Term to be recorded as sales | 10 years | ||||||
Turkey Hill Dairy Business | Disposed by Sale | |||||||
HELD FOR SALE | |||||||
Proceeds received upon closing | $ 225 | ||||||
Gain on sale of businesses | 106 | ||||||
Gain on sale of business, net of tax | $ 80 | ||||||
Lucky's Market | Disposal Group, Disposed of by Means Other than Sale | |||||||
HELD FOR SALE | |||||||
Asset Impairment Charges | $ 238 | ||||||
Impairment of property, plant and equipment | 200 | ||||||
Impairment of finance lease assets | 40 | ||||||
Goodwill impairment charge | 19 | ||||||
Operating Lease, Impairment Loss | 11 | ||||||
Other long-lived asset impairment charge | 8 | ||||||
Impairment charges attributable to The Kroger Co. | $ 174 | 131 | 305 | ||||
Impairment charges attributable to The Kroger Co., net of tax | $ 125 | $ 100 | $ 225 |
RECENTLY ADOPTED ACCOUNTING S_2
RECENTLY ADOPTED ACCOUNTING STANDARDS (Details) - USD ($) $ in Millions | Jan. 29, 2022 | Jan. 30, 2021 | Feb. 02, 2019 |
Recently adopted accounting standards | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ (467) | $ (630) | |
Retained Earnings (Accumulated Deficit) | 24,066 | 23,018 | |
ASU 2018-02 | Cumulative Effect, Period of Adoption, Adjustment | |||
Recently adopted accounting standards | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ (146) | ||
Retained Earnings (Accumulated Deficit) | $ 146 | ||
ASU 2018-15 | Other assets | |||
Recently adopted accounting standards | |||
Capitalized implementation costs | 151 | 81 | |
Accumulated Amortization | $ 15 | $ 2 |