THE KROGER CO. (NYSE:KR) Files An 8-K Results of Operations and Financial Condition

THE KROGER CO. (NYSE:KR) Files An 8-K Results of Operations and Financial Condition

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Item 2.02 Results of Operations and Financial
Condition.

On March2, 2017, The Kroger Co. issued a press release announcing
its fourth quarter and full year 2017 results. Attached hereto as
Exhibit99.1, and filed herewith, is a copy of that release.

Item 7.01 Regulation FD
Disclosure.

Fiscal 2017 Annual Guidance

Identical supermarket sales (excluding fuel sales)

Flat to 1.0% growth

Net earnings per diluted share

For 2017, we expect net earnings to range from $2.21 to
$2.25 per diluted share, including an estimated $0.09 for
the 53rdweek. We expect the first quarter to be in the
$0.55 to $0.59 range, the second quarter to be up slightly
compared to last year, the third quarter to be up strongly
compared to last year, and the fourth quarter to be up high
single-digits compared to last year, without the benefit of
the 53rdweek.

Non-fuel FIFO operating margin

We expect full-year FIFO operating margin in 2017,
excluding fuel, to decline approximately 10 basis points
compared to 2016 results.

Capital investments

We expect capital investments, excluding mergers,
acquisitions and purchases of leased facilities, to be $3.2
to $3.5 billion. These capital investments include
approximately 55 major projects covering new stores,
expansions and relocations; 175 major remodels; and other
investments including digital, technology, minor remodels,
and upgrades to logistics, merchandising systems and
infrastructure to support our Customer 1stbusiness
strategy.

Supermarket square footage growth

Approximately 1.8% before mergers, acquisitions and
operational closings.

Expected tax rate

We expect the 2017 tax rate to be approximately 35%,
excluding the resolution of certain tax items.

Product Cost Inflation/LIFO

We anticipate product cost, without fuel, to be
inflationary in 2017 and a LIFO charge of approximately $25
million.

Pension Contributions/Expenses

Company-sponsored pension plans We expect 2017
expense to be approximately $110 million. We are not
required to make a cash contribution in 2017.
Multi-employer plans In 2017, we expect to
contribute approximately $360 million to multi-employer
pension funds. Of this amount, $35 million has been accrued
for as of year-end. This excludes any additional
multi-employer restructuring that could occur.

Labor

We are currently negotiating agreements with UFCW for store
associates in Atlanta and Michigan. In 2017, we will also
negotiate agreements with UFCW for store associates in
Dallas and Food 4 Less Warehouse Stores. Negotiations this
year will be challenging as we must have competitive cost
structures in each market while meeting our associates
needs for solid wages and good quality, affordable health
care and retirement benefits.

Also, continued long-term financial viability of our
current Taft-Hartley pension plan participation is
important to address.

Long-Term Guidance

Our long-term net earnings per diluted share growth rate
guidance is 8-11%, plus a dividend that we expect to increase
over time.

Forward Looking Statements

This Current Report contains certain statements that constitute
forward-looking statements about the future performance of The
Kroger Co. These statements are based on managements
assumptions and beliefs in light of the information currently
available to it. Such statements are indicated by words such as
guidance, expect, estimate, anticipate, will, could, and
continue. Various uncertainties and other factors could cause
actual results to differ materially from those contained in the
forward-looking statements. These include the specific risk
factors identified in Risk Factors and Outlook in our annual
report on Form10-K for our last fiscal year and any subsequent
filings, as well as the following:

The extent to which our sources of liquidity are sufficient to
meet our requirements may be affected by the state of the
financial markets and the effect that such condition has on our
ability to issue commercial paper at acceptable rates. Our
ability to borrow under our committed lines of credit,
including our bank credit facilities, could be impaired if one
or more of our lenders under those lines is unwilling or unable
to honor its contractual obligation to lend to us, or in the
event that natural disasters or weather conditions interfere
with the ability of our lenders to lend to us. Our ability to
refinance maturing debt may be affected by the state of the
financial markets.

Our ability to achieve sales, earnings and cash flow goals may
be affected by: labor negotiations or disputes; changes in the
types and numbers of businesses that compete with us; pricing
and promotional activities of existing and new competitors,
including non-traditional competitors, and the aggressiveness
of that competition; our response to these actions; the state
of the economy, including interest rates, the inflationary and
deflationary trends in certain commodities, and the
unemployment rate; the effect that fuel costs have on consumer
spending; volatility of fuel margins; changes in
government-funded benefit programs; manufacturing commodity
costs; diesel fuel costs related to our logistics operations;
trends in consumer spending; the extent to which our customers
exercise caution in their purchasing in response to economic
conditions; the inconsistent pace of the economic recovery;
changes in inflation or deflation in product and operating
costs; stock repurchases; our ability to retain pharmacy sales
from third party payors; consolidation in the healthcare
industry, including pharmacy benefit managers; our ability to
negotiate modifications to multi-employer pension plans;
natural disasters or adverse weather conditions; the potential
costs and risks associated with potential cyber-attacks or data
security breaches; the success of our future growth plans; and
the successful integration of Harris Teeter and Roundys. Our
ability to achieve sales and earnings goals may also be
affected by our ability to manage the factors identified above.
Our ability to execute our financial strategy may be affected
by our ability to generate cash flow.

During the first three quarters of each fiscal year, our LIFO
charge and the recognition of LIFO expense is affected
primarily by estimated year-end changes in product costs. Our
fiscal year LIFO charge is affected primarily by changes in
product costs at year-end.

Our effective tax rate may differ from the expected rate due to
changes in laws, the status of pending items with various
taxing authorities, and the deductibility of certain expenses.

Changes in our product mix may negatively affect certain
financial indicators. For example, we continue to add
supermarket fuel centers to our store base. Since fuel
generates lower profit margins than our supermarket sales, we
expect to see our FIFO gross margins decline as fuel sales
increase.

Item 9.01 Financial Statements and
Exhibits.

(d)Exhibits.

ExhibitNo.

Description

99.1

Press Release dated March2, 2017


About THE KROGER CO. (NYSE:KR)

The Kroger Co. operates retail food and drug stores, multi-department stores, jewelry stores and convenience stores across the United States. The Company operates through retail operations segment. It also manufactures and processes food for sale in its supermarkets. Its supermarkets operate under various formats, such as combination food and drug stores (combo stores), multi-department stores, marketplace stores or price impact warehouses. Its brands include Private Selection and banner brand. Its banner brand includes Kroger, Fred Meyer and King Soopers. Its other brands include Simple Truth and Simple Truth Organic. It has approximately 350 Murray’s Cheese shops. Each shop carries cheeses, charcuterie, olives, crackers and specialty food items from around the world. It also operates approximately 2,250 pharmacies, over 790 convenience stores, approximately 320 fine jewelry stores, over 1,440 supermarket fuel centers and approximately 40 food production plants in the United States.

THE KROGER CO. (NYSE:KR) Recent Trading Information

THE KROGER CO. (NYSE:KR) closed its last trading session 00.00 at 32.06 with 13,137,393 shares trading hands.

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