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 December1, 2016, The Kroger Co. issued a press release
announcing its third quarter 2016 results. Attached hereto as
Exhibit99.1, and filed herewith, is a copy of that release.

Item 7.01 Regulation FD
Disclosure.

Fiscal 2016 Annual Guidance (unless otherwise
noted)

Identical supermarket sales growth (excluding fuel
sales)

For the fourth quarter of 2016, we expect slightly positive
identical supermarket sales growth, excluding fuel.

Net earnings per diluted share

We expect net earnings to be $2.03 to $2.08 per diluted
share for 2016. Our 2016 adjusted net earnings per diluted
share guidance range is $2.10 to $2.15, which excludes the
$0.07 charge from our commitment to restructure certain
multi-employer pension obligations in the second quarter.

Non-fuel FIFO operating margin

We expect full-year FIFO operating margin in 2016,
excluding fuel, to decline compared to 2015 results.

Capital investments

We expect capital investments, excluding mergers,
acquisitions and purchases of leased facilities, to be $3.6
to $3.9 billion for 2016 and for 2017. For 2016, these
capital investments include approximately 85 major projects
covering new stores, expansions and relocations; 150-170
major remodels; and other investments including minor
remodels and technology and infrastructure to support our
Customer 1stbusiness strategy.

Supermarket square footage growth

Approximately 2.9% to 3.3% before mergers, acquisitions and
operational closings.

Return on invested capital

We expect 2016 year-end ROIC to decrease compared to the
fiscal 2015 result, excluding Roundys and ModernHEALTH.

Expected tax rate

We expect the 2016 tax rate to be approximately 35%,
excluding the effect of early adopting ASU 2016-09,
Compensation-Stock Compensation (Topic 718): Improvements
to Employee Share-Based Payment Accounting and the
resolution of certain tax items.

Product Cost Deflation

We anticipate product cost deflation, excluding fuel.

LIFO

We expect an annualized LIFO charge of approximately $25
million, primarily related to our pharmacy inventory.

Pension Contributions/Expenses

Company-sponsored pension plans We expect 2016
expense to be approximately $80 million. We do not expect
to make a cash contribution in 2016. Multi-employer
plans
In 2016, we expect to contribute approximately
$260 million to multi-employer pension funds, excluding the
multi-employer pension commitment entered into during the
second quarter of 2016.

Labor

We are currently negotiating agreements with UFCW for
store associates in Atlanta, Michigan and North Carolina.
We are also negotiating an agreement with the Teamsters
for our Roundys distribution center in Wisconsin.
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.

Fiscal 2017

We are completing our business plan process for 2017 and will
provide specific 2017 guidance in March. We anticipate both
positive identical supermarket sales and net earnings per
diluted share growth, excluding the 53rd week. Net earnings
growth will likely be below the low end of our 8 11% net
earnings per diluted share long-term growth rate guidance.

We expect the operating environment in the first half of 2017
to be similar to today. The second half of 2017 should show
improvement as we cycle the current environment.

We expect 2017 capital investments of $3.6 to $3.9 billion,
excluding mergers, acquisitions and purchases of leased
facilities.

Long-Term Guidance

We define long term as over a three-to-five year time horizon.
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, believe, anticipate, will, should, 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 December1, 2016


About THE KROGER CO. (NYSE:KR)

The Kroger Co. (Kroger) operates retail food and drug stores, multi-department stores, jewelry stores and convenience stores across the United States. The Company also manufactures and processes food for sale in its supermarkets. It operates through retail operations segment. The Company operates, either directly or through its subsidiaries, approximately 2,778 retail food stores under a range of local banner names, approximately 1,387 of which have fuel centers. The Company’s supermarkets are operated under combination food and drug stores (combo stores), multi-department stores, marketplace stores or price impact warehouses. The Company’s corporate brand products are primarily produced and sold in approximately three tiers. Private Selection is the brand designed to beat the gourmet or upscale brands. The banner brand includes Kroger, Ralphs, Fred Meyer and King Soopers. The Company’s other brands also include Simple Truth and Simple Truth Organic.

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

THE KROGER CO. (NYSE:KR) closed its last trading session down -0.80 at 32.30 with 13,713,004 shares trading hands.

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