The Kroger Co. (KR) 10-Q 24 Jun 22 2022 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - $ / shares	4 Months Ended
	May 21, 2022	Jun. 21, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	May 21, 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 Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		715,560,381
Entity Listing, Par Value Per Share	$ 1
Current Fiscal Year End Date	--01-28
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Entity Central Index Key	0000056873
Amendment Flag	false

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	4 Months Ended
	May 21, 2022	May 22, 2021
CONSOLIDATED STATEMENTS OF OPERATIONS
Sales	$ 44,600	$ 41,298
Operating expenses
Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below	34,952	31,947
Operating, general and administrative	6,997	7,424
Rent	256	261
Depreciation and amortization	890	861
Operating profit	1,505	805
Other income (expense)
Interest expense	(177)	(165)
Non-service component of company-sponsored pension plan costs	16	18
Loss on investments	(532)	(479)
Net earnings before income tax expense	812	179
Income tax expense	146	36
Net earnings including noncontrolling interests	666	143
Net income attributable to noncontrolling interests	2	3
Net earnings attributable to The Kroger Co.	$ 664	$ 140
Net earnings attributable to The Kroger Co. per basic common share	$ 0.91	$ 0.18
Average number of common shares used in basic calculation	722	752
Net earnings attributable to The Kroger Co. per diluted common share	$ 0.90	$ 0.18
Average number of common shares used in diluted calculation	733	760

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions		4 Months Ended
		May 21, 2022	May 22, 2021
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net earnings including noncontrolling interests		$ 666	$ 143
Other comprehensive income
Change in pension and other postretirement defined benefit plans, net of income tax	[1]		1
Amortization of unrealized gains and losses on cash flow hedging activities, net of income tax	[2]	2	2
Total other comprehensive income		2	3
Comprehensive income		668	146
Comprehensive income attributable to noncontrolling interests		2	3
Comprehensive income attributable to The Kroger Co.		$ 666	$ 143
[1] Amount is net of tax of ($1) for the first quarter of 2022 and $1 for the first quarter of 2021. Amount is net of tax of $1 for the first quarters of 2022 and 2021.

CONSOLIDATED STATEMENTS OF CO_2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions	4 Months Ended
	May 21, 2022	May 22, 2021
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Change in pension and other postretirement defined benefit plans, income tax	$ (1)	$ 1
Amortization of unrealized gains and losses on cash flow hedging activities, income tax	$ 1	$ 1

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	May 21, 2022	Jan. 29, 2022
Current assets
Cash and temporary cash investments	$ 1,382	$ 1,821
Store deposits in-transit	1,110	1,082
Receivables	1,887	1,828
FIFO inventory	9,021	8,353
LIFO reserve	(1,663)	(1,570)
Prepaid and other current assets	539	660
Total current assets	12,276	12,174
Property, plant and equipment, net	24,209	23,789
Operating lease assets	6,760	6,695
Intangibles, net	928	942
Goodwill	3,076	3,076
Other assets	1,842	2,410
Total Assets	49,091	49,086
Current liabilities
Current portion of long-term debt including obligations under finance leases	587	555
Current portion of operating lease liabilities	652	650
Trade accounts payable	7,556	7,117
Accrued salaries and wages	1,171	1,736
Other current liabilities	6,272	6,265
Total current liabilities	16,238	16,323
Long-term debt including obligations under finance leases	13,052	12,809
Noncurrent operating lease liabilities	6,460	6,426
Deferred income taxes	1,532	1,562
Pension and postretirement benefit obligations	455	478
Other long-term liabilities	1,961	2,059
Total Liabilities	39,698	39,657
Commitments and contingencies see Note 6
SHAREHOLDERS' EQUITY
Preferred shares, $100 par per share, 5 shares authorized and unissued
Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2022 and 2021	1,918	1,918
Additional paid-in capital	3,714	3,657
Accumulated other comprehensive loss	(465)	(467)
Accumulated earnings	24,583	24,066
Common shares in treasury, at cost, 1,198 shares in 2022 and 1,191 shares in 2021	(20,339)	(19,722)
Total Shareholders' Equity - The Kroger Co.	9,411	9,452
Noncontrolling interests	(18)	(23)
Total Equity	9,393	9,429
Total Liabilities and Equity	$ 49,091	$ 49,086

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Millions	May 21, 2022	Jan. 29, 2022
CONSOLIDATED BALANCE SHEETS
Preferred shares, per share (in dollars per share)	$ 100	$ 100
Preferred shares, shares authorized	5	5
Common shares, par per share (in dollars per share)	$ 1	$ 1
Common shares, shares authorized	2,000	2,000
Common shares, shares issued	1,918	1,918
Common shares in treasury, shares	1,198	1,191

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	4 Months Ended
	May 21, 2022	May 22, 2021
Cash Flows from Operating Activities:
Net earnings including noncontrolling interests	$ 666	$ 143
Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities:
Depreciation and amortization	890	861
Operating lease asset amortization	186	191
LIFO charge	93	37
Share-based employee compensation	57	56
Company-sponsored pension plans	(12)	(14)
Deferred income taxes	(30)	(2)
Loss on the sale of assets		9
Loss on investments	532	479
Other	54	100
Changes in operating assets and liabilities:
Store deposits in-transit	(28)	84
Receivables	(2)	14
Inventories	(676)	205
Prepaid and other current assets	117	369
Trade accounts payable	439	341
Accrued expenses	(748)	(548)
Income taxes receivable and payable	(70)	(175)
Operating lease liabilities	(214)	(214)
Other	(152)	320
Net cash provided by operating activities	1,102	2,256
Cash Flows from Investing Activities:
Payments for property and equipment, including payments for lease buyouts	(745)	(820)
Proceeds from sale of assets	14	7
Other	8	(40)
Net cash used by investing activities	(723)	(853)
Cash Flows from Financing Activities:
Payments on long-term debt including obligations under finance leases	(45)	(328)
Dividends paid	(154)	(138)
Proceeds from issuance of capital stock	113	31
Treasury stock purchases	(665)	(402)
Proceeds from financing arrangement		166
Other	(67)	(110)
Net cash used by financing activities	(818)	(781)
Net (decrease) increase in cash and temporary cash investments	(439)	622
Cash and temporary cash investments:
Beginning of year	1,821	1,687
End of period	1,382	2,309
Reconciliation of capital investments:
Payments for property and equipment, including payments for lease buyouts	(745)	(820)
Payments for lease buyouts	3
Changes in construction-in-progress payables	(229)	154
Total capital investments, excluding lease buyouts	(971)	(666)
Disclosure of cash flow information:
Cash paid during the year for interest	198	185
Cash paid during the year for income taxes	$ 244	$ 205

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 Earnings	Noncontrolling Interest	Total
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			$ 31				31
Stock options exercised (in shares)			(2)
Restricted stock issued		(35)	$ 17				(18)
Restricted stock issued (in shares)			(1)
Treasury stock activity:
Treasury stock purchases, at cost			$ (338)				(338)
Treasury stock purchases, at cost (in shares)			10
Stock options exchanged			$ (64)				(64)
Stock options exchanged (in shares)			2
Share-based employee compensation		56					56
Other comprehensive income net of income tax (benefit)				3			3
Other		23	$ (23)		1	3	4
Cash dividends declared per common share					(138)		(138)
Net earnings (loss) including non-controlling interests					140	3	143
Balances at May. 22, 2021	$ 1,918	3,505	$ (18,568)	(627)	23,021	(20)	9,229
Balances (in shares) at May. 22, 2021	1,918		1,169
Issuance of common stock:
Stock options exercised			$ 54				54
Stock options exercised (in shares)			(2)
Restricted stock issued		(99)	$ 56				(43)
Restricted stock issued (in shares)			(2)
Treasury stock activity:
Treasury stock purchases, at cost			$ (299)				(299)
Treasury stock purchases, at cost (in shares)			8
Stock options exchanged			$ (50)				(50)
Stock options exchanged (in shares)			1
Share-based employee compensation		52					52
Other comprehensive income net of income tax (benefit)				2			2
Other		69	$ (69)			(2)	(2)
Cash dividends declared per common share					(154)		(154)
Net earnings (loss) including non-controlling interests					467	2	469
Balances at Aug. 14, 2021	$ 1,918	3,527	$ (18,876)	(625)	23,334	(20)	9,258
Balances (in shares) at Aug. 14, 2021	1,918		1,174
Issuance of common stock:
Stock options exercised			$ 33				33
Stock options exercised (in shares)			(1)
Restricted stock issued		(3)					(3)
Treasury stock activity:
Treasury stock purchases, at cost			$ (251)				(251)
Treasury stock purchases, at cost (in shares)			6
Stock options exchanged			$ (47)				(47)
Stock options exchanged (in shares)			1
Share-based employee compensation		51					51
Other comprehensive income net of income tax (benefit)				134			134
Other		15	$ (15)		(1)	(10)	(11)
Cash dividends declared per common share					(158)		(158)
Net earnings (loss) including non-controlling interests					483	2	485
Balances at Nov. 06, 2021	$ 1,918	3,590	$ (19,156)	(491)	23,658	(28)	9,491
Balances (in shares) at Nov. 06, 2021	1,918		1,180
Issuance of common stock:
Stock options exercised			$ 54				54
Stock options exercised (in shares)			(2)
Treasury stock activity:
Treasury stock purchases, at cost			$ (534)				(534)
Treasury stock purchases, at cost (in shares)			11
Stock options exchanged			$ (64)				(64)
Stock options exchanged (in shares)			2
Share-based employee compensation		44					44
Other comprehensive income net of income tax (benefit)				24			24
Other		23	$ (22)			1	2
Cash dividends declared per common share					(157)		(157)
Net earnings (loss) including non-controlling interests					565	4	569
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
Issuance of common stock:
Stock options exercised			$ 113				113
Stock options exercised (in shares)			(4)
Restricted stock issued		(77)	$ 12				(65)
Restricted stock issued (in shares)			(2)
Treasury stock activity:
Treasury stock purchases, at cost			$ (520)				(520)
Treasury stock purchases, at cost (in shares)			10
Stock options exchanged			$ (145)				(145)
Stock options exchanged (in shares)			3
Share-based employee compensation		57					57
Other comprehensive income net of income tax (benefit)				2			2
Other		77	$ (77)			3	3
Cash dividends declared per common share					(147)		(147)
Net earnings (loss) including non-controlling interests					664	2	666
Balances at May. 21, 2022	$ 1,918	$ 3,714	$ (20,339)	$ (465)	$ 24,583	$ (18)	$ 9,393
Balances (in shares) at May. 21, 2022	1,918		1,198

CONSOLIDATED STATEMENT OF CHA_2

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY (Parenthetical) - USD ($) $ in Millions	3 Months Ended			4 Months Ended
	Jan. 29, 2022	Nov. 06, 2021	Aug. 14, 2021	May 21, 2022	May 22, 2021
CONSOLIDATED STATEMENT OF CHANGES IN SHAREOWNERS' EQUITY
Other comprehensive income (loss) net of income tax	$ 8	$ 37	$ 4		$ 2
Cash dividends declared per common share (in dollars per share)	$ 0.21	$ 0.21	$ 0.21	$ 0.21	$ 0.18

ACCOUNTING POLICIES

ACCOUNTING POLICIES	4 Months Ended
	May 21, 2022
ACCOUNTING POLICIES
ACCOUNTING POLICIES	1. ACCOUNTING POLICIES ​ Basis of Presentation and Principles of Consolidation ​ The accompanying financial statements include the consolidated accounts of The Kroger Co., its wholly-owned subsidiaries and other consolidated entities. The January 29, 2022 balance sheet was derived from audited financial statements and, due to its summary nature, does not include all disclosures required by generally accepted accounting principles (“GAAP”). Significant intercompany transactions and balances have been eliminated. References to the “Company” in these Consolidated Financial Statements mean the consolidated company. ​ In the opinion of management, the accompanying unaudited Consolidated Financial Statements include adjustments, all of which are of a normal, recurring nature that are necessary for a fair statement of results of operations for such periods but should not be considered as indicative of results for a full year. The financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted, pursuant to SEC regulations. Accordingly, the accompanying Consolidated Financial Statements should be read in conjunction with the financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2022. ​ The unaudited information in the Consolidated Financial Statements for the first quarter ended May 21, 2022 and May 22, 2021, includes the results of operations of the Company for the 16-week periods then ended. ​ Fair Value Measurements ​ Fair value measurements are classified and disclosed in one of the following three categories: ​ Level 1 – Quoted prices are available in active markets for identical assets or liabilities; ​ Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable; ​ Level 3 – Unobservable pricing inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing an asset or liability. ​ The Company records cash and temporary cash investments, store deposits in-transit, receivables, prepaid and other current assets, trade accounts payable, accrued salaries and wages and other current liabilities at approximated fair value. Certain other investments and derivatives are recorded as Level 1, 2 or 3 instruments. The equity investment in Ocado is measured at fair value through net earnings. The fair value of all shares owned, which is measured using Level 1 inputs, was as of May 21, 2022 and January 29, 2022, respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. for the first quarters of 2022 and 2021, respectively, are included in “Loss on investments” in the Company’s Consolidated Statements of Operations. ​

DEBT OBLIGATIONS

DEBT OBLIGATIONS	4 Months Ended
	May 21, 2022
DEBT OBLIGATIONS
DEBT OBLIGATIONS	2. DEBT OBLIGATIONS ​ Long-term debt consists of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ May 21, ​ January 29, ​ 2022 2022 1.70% to 8.00% Senior Notes due through 2049 ​ $ 10,609 ​ $ 10,607 Other ​ 1,122 ​ 1,138 ​ ​ ​ ​ ​ ​ ​ Total debt, excluding obligations under finance leases ​ 11,731 ​ 11,745 Less current portion ​ (452) ​ (451) ​ ​ ​ ​ ​ ​ ​ Total long-term debt, excluding obligations under finance leases ​ $ 11,279 ​ $ 11,294 ​ The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted market prices for the same or similar issues adjusted for illiquidity based on available market evidence. If quoted market prices were not available, the fair value was based upon the net present value of the future cash flow using the forward interest rate yield curve in effect at May 21, 2022 and January 29, 2022. At May 21, 2022, the fair value of total debt was $11,366 compared to a carrying value of $11,731 . At January 29, 2022, the fair value of total debt was $13,189 compared to a carrying value of $11,745. ​ During the first quarter of 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.

BENEFIT PLANS

BENEFIT PLANS	4 Months Ended
	May 21, 2022
BENEFIT PLANS
BENEFIT PLANS	3. BENEFIT PLANS ​ The following table provides the components of net periodic benefit cost for the company-sponsored defined benefit pension plans and other post-retirement benefit plans for the first quarters of 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Quarter Ended ​ ​ Pension Benefits ​ Other Benefits ​ ​ May 21, ​ May 22, ​ May 21, ​ May 22, ​ 2022 2021 2022 2021 Components of net periodic benefit cost: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service cost $ 3 $ 3 $ 1 $ 1 ​ Interest cost ​ 30 ​ 32 ​ 2 ​ 1 ​ Expected return on plan assets ​ (47) ​ (53) ​ — ​ — ​ Amortization of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prior service cost ​ — ​ — ​ (4) ​ (4) ​ Actuarial loss (gain) ​ 8 ​ 12 ​ (5) ​ (6) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net periodic benefit cost $ (6) $ (6) $ (6) $ (8) ​ ​ The Company is not required to make any contributions to its company-sponsored pension plans in 2022, but may make contributions to the extent such contributions are beneficial to the Company. The Company did not make any contributions to its company-sponsored pension plans in the first quarters of 2022 and 2021. ​ The Company contributed $105 and $95 to employee 401(k) retirement savings accounts in the first quarters of 2022 and 2021, respectively. ​ The Company also contributes to various multi-employer pension plans based on obligations arising from most of its collective bargaining agreements. These plans provide retirement benefits to participants based on their service to contributing employers. The Company recognizes expense in connection with these plans as contributions are funded. In addition to the recurring multi-employer pension contributions the Company makes in the normal course of business, in the first quarter of 2021, the Company contributed an incremental $70 , $54 net of tax, to multi-employer pension plans, helping stabilize future associate benefits. ​ During the first quarter of 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 . ​

EARNINGS PER COMMON SHARE

EARNINGS PER COMMON SHARE	4 Months Ended
	May 21, 2022
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE	4. EARNINGS PER COMMON SHARE ​ Net earnings attributable to The Kroger Co. per basic common share equal net earnings attributable to The Kroger Co. less income allocated to participating securities divided by the weighted-average number of common shares outstanding. Net earnings attributable to The Kroger Co. per diluted common share equal net earnings attributable to The Kroger Co. less income allocated to participating securities divided by the weighted-average number of common shares outstanding, after giving effect to dilutive stock options. The following table provides a reconciliation of net earnings attributable to The Kroger Co. and shares used in calculating net earnings attributable to The Kroger Co. per basic common share to those used in calculating net earnings attributable to The Kroger Co. per diluted common share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Quarter Ended ​ First Quarter Ended ​ ​ ​ May 21, 2022 ​ May 22, 2021 ​ ​ ​ ​ ​ Per ​ ​ ​ Per ​ ​ Earnings ​ Shares ​ Share ​ Earnings ​ Shares ​ Share ​ ​ ​ (Numerator) ​ (Denominator) ​ Amount ​ (Numerator) ​ (Denominator) ​ Amount Net earnings attributable to The Kroger Co. per basic common share ​ $ 657 722 ​ $ 0.91 ​ $ 139 752 ​ $ 0.18 ​ Dilutive effect of stock options ​ ​ ​ 11 ​ ​ ​ ​ ​ ​ 8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net earnings attributable to The Kroger Co. per diluted common share ​ $ 657 733 ​ $ 0.90 ​ $ 139 760 ​ $ 0.18 ​ ​ The Company had combined undistributed and distributed earnings to participating securities totaling $7 and $1 in the first quarters of 2022 and 2021, respectively. ​ The Company had options outstanding for approximately 1 million and 8 million shares during the first quarters of 2022 and 2021, respectively, that were excluded from the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive effect on net earnings per share.

LEASES AND LEASE-FINANCED TRANS

LEASES AND LEASE-FINANCED TRANSACTIONS	4 Months Ended
	May 21, 2022
LEASES AND LEASE-FINANCED TRANSACTIONS
LEASES AND LEASE-FINANCED TRANSACTIONS	5. LEASES AND LEASE-FINANCED TRANSACTIONS ​ 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. In the first quarter of 2022, the Company opened two additional Kroger Delivery customer fulfillment centers in Dallas, Texas and Pleasant Prairie, Wisconsin, which brings the Company’s total Kroger Delivery customer fulfillment centers to five as of May 21, 2022. The Company determined the arrangement with Ocado contains a lease of the robotic equipment used to fulfill customer orders. As a result, the Company establishes a finance lease when each facility begins fulfilling orders to customers. 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, the Company will account for all payments to Ocado as lease payments. During the first quarter of 2022, the Company recorded finance lease assets of $339 and finance lease liabilities of $313 related to the Company’s agreement with Ocado.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	4 Months Ended
	May 21, 2022
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	6. COMMITMENTS AND CONTINGENCIES ​ The Company continuously evaluates contingencies based upon the best available evidence. ​ The Company believes that allowances for loss have been provided to the extent necessary and that its assessment of contingencies is reasonable. To the extent that resolution of contingencies results in amounts that vary from the Company’s estimates, future earnings will be charged or credited. ​ 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. A Stipulation and Order for Voluntary Dismissal was entered by the Court on June 6, 2022, and the case is now concluded. ​ 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 ​ Assignments —

ACCUMULATED OTHER COMPREHENSIVE

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	4 Months Ended
	May 21, 2022
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS).
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ​ The following table represents the changes in AOCI by component for the first quarters of 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension and ​ ​ ​ ​ ​ Cash Flow ​ Postretirement ​ ​ ​ ​ ​ Hedging ​ Defined Benefit ​ ​ ​ ​ Activities (1) Plans (1) Total (1) Balance at January 30, 2021 ​ $ (54) ​ $ (576) ​ $ (630) Amounts reclassified out of AOCI (2) ​ ​ 2 ​ 1 ​ 3 Net current-period OCI ​ ​ 2 ​ 1 ​ 3 Balance at May 22, 2021 ​ $ (52) ​ $ (575) ​ $ (627) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at January 29, 2022 ​ $ (47) ​ $ (420) ​ $ (467) Amounts reclassified out of AOCI (2) ​ 2 ​ ​ — ​ 2 Net current-period OCI ​ 2 ​ — ​ 2 Balance at May 21, 2022 ​ $ (45) ​ $ (420) ​ $ (465) (1) All amounts are net of tax. (2) Net of tax of $1 for cash flow hedging activities and $1 for pension and postretirement defined benefit plans for the first quarter of 2021. Net of tax of $1 for cash flow hedging activities and ($1 ) for pension and postretirement defined benefit plans for the first quarter of 2022. ​ The following table represents the items reclassified out of AOCI and the related tax effects for the first quarters of 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Quarter Ended ​ May 21, May 22, ​ ​ 2022 ​ 2021 ​ Cash flow hedging activity items ​ ​ ​ ​ ​ ​ ​ Amortization of gains and losses on cash flow hedging activities (1) ​ $ 3 ​ $ 3 ​ Tax expense ​ (1) ​ (1) ​ Net of tax ​ 2 ​ 2 ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension and postretirement defined benefit plan items ​ ​ ​ ​ ​ ​ ​ Amortization of amounts included in net periodic pension cost (2) ​ (1) 2 ​ Tax expense 1 (1) ​ Net of tax — 1 ​ Total reclassifications, net of tax $ 2 $ 3 ​ (1) Reclassified from AOCI into interest expense. (2) Reclassified from AOCI into non-service component of company-sponsored pension plan costs. These components are included in the computation of net periodic pension cost (see Note 3 for additional details). ​

INCOME TAXES

INCOME TAXES	4 Months Ended
	May 21, 2022
INCOME TAXES
INCOME TAXES	8. INCOME TAXES ​ The effective income tax rate was 18.0% in the first quarter of 2022 and 20.2% for the first quarter of 2021. The effective income tax rate for the first quarter of 2022 and 2021 differed from the federal statutory rate due to the utilization of tax credits and deductions, partially offset by the effect of state income taxes. The effective income tax rate decreased in the first quarter of 2022, compared to the first quarter of 2021, primarily due to an increase in deductions from share-based payments in the first quarter of 2022. ​

ACCOUNTING POLICIES (Policies)

ACCOUNTING POLICIES (Policies)	4 Months Ended
	May 21, 2022
ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation	​ Basis of Presentation and Principles of Consolidation ​ The accompanying financial statements include the consolidated accounts of The Kroger Co., its wholly-owned subsidiaries and other consolidated entities. The January 29, 2022 balance sheet was derived from audited financial statements and, due to its summary nature, does not include all disclosures required by generally accepted accounting principles (“GAAP”). Significant intercompany transactions and balances have been eliminated. References to the “Company” in these Consolidated Financial Statements mean the consolidated company. ​ In the opinion of management, the accompanying unaudited Consolidated Financial Statements include adjustments, all of which are of a normal, recurring nature that are necessary for a fair statement of results of operations for such periods but should not be considered as indicative of results for a full year. The financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted, pursuant to SEC regulations. Accordingly, the accompanying Consolidated Financial Statements should be read in conjunction with the financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2022. ​ The unaudited information in the Consolidated Financial Statements for the first quarter ended May 21, 2022 and May 22, 2021, includes the results of operations of the Company for the 16-week periods then ended.
Fair Value Measurements	Fair Value Measurements ​ Fair value measurements are classified and disclosed in one of the following three categories: ​ Level 1 – Quoted prices are available in active markets for identical assets or liabilities; ​ Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable; ​ Level 3 – Unobservable pricing inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing an asset or liability. ​ The Company records cash and temporary cash investments, store deposits in-transit, receivables, prepaid and other current assets, trade accounts payable, accrued salaries and wages and other current liabilities at approximated fair value. Certain other investments and derivatives are recorded as Level 1, 2 or 3 instruments. The equity investment in Ocado is measured at fair value through net earnings. The fair value of all shares owned, which is measured using Level 1 inputs, was as of May 21, 2022 and January 29, 2022, respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. for the first quarters of 2022 and 2021, respectively, are included in “Loss on investments” in the Company’s Consolidated Statements of Operations.

DEBT OBLIGATIONS (Tables)

DEBT OBLIGATIONS (Tables)	4 Months Ended
	May 21, 2022
DEBT OBLIGATIONS
Schedule of long-term debt	​ ​ ​ ​ ​ ​ ​ ​ ​ May 21, ​ January 29, ​ 2022 2022 1.70% to 8.00% Senior Notes due through 2049 ​ $ 10,609 ​ $ 10,607 Other ​ 1,122 ​ 1,138 ​ ​ ​ ​ ​ ​ ​ Total debt, excluding obligations under finance leases ​ 11,731 ​ 11,745 Less current portion ​ (452) ​ (451) ​ ​ ​ ​ ​ ​ ​ Total long-term debt, excluding obligations under finance leases ​ $ 11,279 ​ $ 11,294 ​

BENEFIT PLANS (Tables)

BENEFIT PLANS (Tables)	4 Months Ended
	May 21, 2022
BENEFIT PLANS
Schedule of components of net periodic benefit cost	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Quarter Ended ​ ​ Pension Benefits ​ Other Benefits ​ ​ May 21, ​ May 22, ​ May 21, ​ May 22, ​ 2022 2021 2022 2021 Components of net periodic benefit cost: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service cost $ 3 $ 3 $ 1 $ 1 ​ Interest cost ​ 30 ​ 32 ​ 2 ​ 1 ​ Expected return on plan assets ​ (47) ​ (53) ​ — ​ — ​ Amortization of: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Prior service cost ​ — ​ — ​ (4) ​ (4) ​ Actuarial loss (gain) ​ 8 ​ 12 ​ (5) ​ (6) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net periodic benefit cost $ (6) $ (6) $ (6) $ (8) ​

EARNINGS PER COMMON SHARE (Tabl

EARNINGS PER COMMON SHARE (Tables)	4 Months Ended
	May 21, 2022
EARNINGS PER COMMON SHARE
Schedule of earnings per common and diluted shares	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Quarter Ended ​ First Quarter Ended ​ ​ ​ May 21, 2022 ​ May 22, 2021 ​ ​ ​ ​ ​ Per ​ ​ ​ Per ​ ​ Earnings ​ Shares ​ Share ​ Earnings ​ Shares ​ Share ​ ​ ​ (Numerator) ​ (Denominator) ​ Amount ​ (Numerator) ​ (Denominator) ​ Amount Net earnings attributable to The Kroger Co. per basic common share ​ $ 657 722 ​ $ 0.91 ​ $ 139 752 ​ $ 0.18 ​ Dilutive effect of stock options ​ ​ ​ 11 ​ ​ ​ ​ ​ ​ 8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net earnings attributable to The Kroger Co. per diluted common share ​ $ 657 733 ​ $ 0.90 ​ $ 139 760 ​ $ 0.18 ​ ​

ACCUMULATED OTHER COMPREHENSI_2

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)	4 Months Ended
	May 21, 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 January 30, 2021 ​ $ (54) ​ $ (576) ​ $ (630) Amounts reclassified out of AOCI (2) ​ ​ 2 ​ 1 ​ 3 Net current-period OCI ​ ​ 2 ​ 1 ​ 3 Balance at May 22, 2021 ​ $ (52) ​ $ (575) ​ $ (627) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at January 29, 2022 ​ $ (47) ​ $ (420) ​ $ (467) Amounts reclassified out of AOCI (2) ​ 2 ​ ​ — ​ 2 Net current-period OCI ​ 2 ​ — ​ 2 Balance at May 21, 2022 ​ $ (45) ​ $ (420) ​ $ (465) (1) All amounts are net of tax. (2) Net of tax of $1 for cash flow hedging activities and $1 for pension and postretirement defined benefit plans for the first quarter of 2021. Net of tax of $1 for cash flow hedging activities and ($1 ) for pension and postretirement defined benefit plans for the first quarter of 2022. ​
Schedule of items reclassified out of AOCI and the related tax effects	​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Quarter Ended ​ May 21, May 22, ​ ​ 2022 ​ 2021 ​ Cash flow hedging activity items ​ ​ ​ ​ ​ ​ ​ Amortization of gains and losses on cash flow hedging activities (1) ​ $ 3 ​ $ 3 ​ Tax expense ​ (1) ​ (1) ​ Net of tax ​ 2 ​ 2 ​ ​ ​ ​ ​ ​ ​ ​ ​ Pension and postretirement defined benefit plan items ​ ​ ​ ​ ​ ​ ​ Amortization of amounts included in net periodic pension cost (2) ​ (1) 2 ​ Tax expense 1 (1) ​ Net of tax — 1 ​ Total reclassifications, net of tax $ 2 $ 3 ​ (1) Reclassified from AOCI into interest expense. (2) Reclassified from AOCI into non-service component of company-sponsored pension plan costs. These components are included in the computation of net periodic pension cost (see Note 3 for additional details).

ACCOUNTING POLICIES - DESCRIPTI

ACCOUNTING POLICIES - DESCRIPTION OF BUSINESS (Details) - USD ($) $ in Millions	4 Months Ended
	May 21, 2022	May 22, 2021	Jan. 29, 2022
Fair Value Measurements
Loss on investments	$ 532	$ 479
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value Measurements
Loss on investments	532	$ 479
Other Assets. | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value Measurements
Fair value of equity securities	$ 455		$ 987

DEBT OBLIGATIONS (Details)

DEBT OBLIGATIONS (Details) $ in Millions	4 Months Ended
	May 22, 2021 USD ($) Option property	May 21, 2022 USD ($)	Jan. 29, 2022 USD ($)
Debt
Total debt, excluding obligations under finance leases		$ 11,731	$ 11,745
Less current portion		(452)	(451)
Total long-term debt, excluding obligations under finance leases		11,279	11,294
Fair value of total debt		11,366	13,189
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 assets	455
Lease financing obligation	$ 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
Senior notes due through 2049
Debt
Total debt, excluding obligations under finance leases		$ 10,609	10,607
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%
Other.
Debt
Total debt, excluding obligations under finance leases		$ 1,122	$ 1,138

BENEFIT PLANS - COMPONENTS OF N

BENEFIT PLANS - COMPONENTS OF NET PERIODIC BENEFIT COSTS (Details) - USD ($) $ in Millions	4 Months Ended
	May 21, 2022	May 22, 2021
Pension Benefits
Components of net periodic benefit cost:
Service cost	$ 3	$ 3
Interest cost	$ 30	$ 32
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) Excluding Service Cost, Statement of Income or Comprehensive Income [Extensible Enumeration]	Net Periodic Defined Benefits Expense (Reversal of Expense), Excluding Service Cost Component	Net Periodic Defined Benefits Expense (Reversal of Expense), Excluding Service Cost Component
Expected return on plan assets	$ (47)	$ (53)
Amortization of:
Actuarial loss (gain)	8	12
Net periodic benefit cost	(6)	(6)
Contributions into Fund	0	0
Other Benefits
Components of net periodic benefit cost:
Service cost	1	1
Interest cost	$ 2	$ 1
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) Excluding Service Cost, Statement of Income or Comprehensive Income [Extensible Enumeration]	Net Periodic Defined Benefits Expense (Reversal of Expense), Excluding Service Cost Component	Net Periodic Defined Benefits Expense (Reversal of Expense), Excluding Service Cost Component
Amortization of:
Prior service cost	$ (4)	$ (4)
Actuarial loss (gain)	(5)	(6)
Net periodic benefit cost	$ (6)	$ (8)

BENEFIT PLANS - DEFINED CONTRIB

BENEFIT PLANS - DEFINED CONTRIBUTION PLAN INFORMATION (Details) - USD ($) $ in Millions	4 Months Ended
	May 21, 2022	May 22, 2021
BENEFIT PLANS
Contribution to 401(k) retirement savings accounts	$ 105	$ 95

BENEFIT PLANS - MULTI EMPLOYER

BENEFIT PLANS - MULTI EMPLOYER PLAN (Details) - Pension Benefits $ in Millions	4 Months Ended
	May 22, 2021 USD ($)
Multiemployer Plans
Incremental contributions (before-tax)	$ 70
Incremental contributions (after-tax)	54
Net accrued pension liabilities and prepaid escrow funds - before tax	449
Net accrued pension liabilities and prepaid escrow funds - after tax	$ 344
Repayment period of commitments to transition reserve liability	7 years

EARNINGS PER COMMON SHARE (Deta

EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	4 Months Ended
	May 21, 2022	May 22, 2021
EARNINGS PER COMMON SHARE
Net earnings numerator (basic)	$ 657	$ 139
Net earnings numerator (diluted)	$ 657	$ 139
Average number of common shares used in basic calculation	722	752
Net earnings attributable to The Kroger Co. per basic common share	$ 0.91	$ 0.18
Dilutive effect of stock options (in shares)	11	8
Average number of common shares used in diluted calculation	733	760
Net earnings attributable to The Kroger Co. per diluted common share	$ 0.90	$ 0.18
Undistributed and distributed earnings to participating securities	$ 7	$ 1
Shares excluded from the earnings per share calculation due to anti-dilutive effect on earnings per share	1	8

LEASES AND LEASE-FINANCED TRA_2

LEASES AND LEASE-FINANCED TRANSACTIONS (Details) $ in Millions	4 Months Ended
	May 21, 2022 USD ($) facility	May 22, 2021 USD ($)
LEASES AND LEASE-FINANCED TRANSACTIONS
Term - Finance		25 years
Finance lease assets		$ 455
Finance lease liabilities		$ 621
Digital and Robotic Facilities
LEASES AND LEASE-FINANCED TRANSACTIONS
Number of additional delivery facilities | facility	2
Number of delivery facilities | facility	5
Term - Finance	10 years
Option to renew - Finance	true
Finance lease assets	$ 339
Finance lease liabilities	$ 313

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Details)	4 Months Ended
	May 21, 2022 case
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

ACCUMULATED OTHER COMPREHENSI_3

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - CHANGES IN AOCI BY COMPONENT (Details) - USD ($) $ in Millions	3 Months Ended			4 Months Ended
	Jan. 29, 2022	Nov. 06, 2021	Aug. 14, 2021	May 21, 2022	May 22, 2021
Accumulated other comprehensive income (loss)
Balance at the beginning of the period				$ 9,452
Amounts reclassified out of AOCI				2	$ 3
Total other comprehensive income	$ 24	$ 134	$ 2	2	3
Balance at the end of the period	9,452			9,411
Accumulated Other Comprehensive Gain (Loss)
Accumulated other comprehensive income (loss)
Balance at the beginning of the period			(627)	(467)	(630)
Amounts reclassified out of AOCI				2	3
Total other comprehensive income	24	$ 134	2	2	3
Balance at the end of the period	(467)			(465)	(627)
Cash Flow Hedging Activities
Accumulated other comprehensive income (loss)
Balance at the beginning of the period			(52)	(47)	(54)
Amounts reclassified out of AOCI				2	2
Total other comprehensive income				2	2
Balance at the end of the period	(47)			(45)	(52)
Amounts reclassified out of AOCI, tax				1	1
Pension and Postretirement Defined Benefit Plans
Accumulated other comprehensive income (loss)
Balance at the beginning of the period			$ (575)	(420)	(576)
Amounts reclassified out of AOCI					1
Total other comprehensive income					1
Balance at the end of the period	$ (420)			(420)	(575)
Amounts reclassified out of AOCI, tax				$ (1)	$ 1

ACCUMULATED OTHER COMPREHENSI_4

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - ITEMS RECLASSIFIED OUT OF AOCI (Details) - USD ($) $ in Millions	4 Months Ended
	May 21, 2022	May 22, 2021
Reclassification out of AOCI and the related tax effects
Amortization of gains and losses on cash flow hedging activities	$ 177	$ 165
Income tax expense	146	36
Net of tax	(664)	(140)
Total reclassifications, net of tax	2	3
Cash Flow Hedging Activities
Reclassification out of AOCI and the related tax effects
Tax expense	(1)	(1)
Total reclassifications, net of tax	2	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	(1)	2
Tax expense	1	(1)
Total reclassifications, net of tax		1
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	3	3
Income tax expense	(1)	(1)
Net of tax	$ 2	$ 2

INCOME TAXES - EFFECTIVE INCOME

INCOME TAXES - EFFECTIVE INCOME TAX RATE (Details)	4 Months Ended
	May 21, 2022	May 22, 2021
INCOME TAXES
Effective income tax rate (as a percent)	18%	20.20%