Slides
Page 1
1 Kroger Q2 2026 Earnings Release September 11, 2026
Page 2
2 Safe Harbor This presentation includes certain statements that constitute “forward-looking statements” about Kroger’s financial position and expected performance. These statements are based on management’s assumptions and beliefs in light of currently available information. Such statements are indicated by words or phrases such as “committed,” “could,” “delivering,” “guidance,” “may,” “model,” “opportunities,” “thesis,” and other similar statements. 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” in our annual report on Form 10-K for our last fiscal year and any subsequent filings. Kroger assumes no obligation to update the information contained herein unless required by applicable law. Please refer to Kroger's reports and filings with the Securities and Exchange Commission for a further discussion of these risks and uncertainties. This presentation includes certain non-GAAP financial measures. Please refer to the supplemental information presented in the tables for reconciliations of the non-GAAP financial measures used in this presentation to the most comparable GAAP financial measure and related disclosure. This presentation also includes certain forward-looking non-GAAP financial measures, which management believes to be useful to investors and analysts. Kroger is unable to provide a full reconciliation of the non- GAAP measures used in our guidance, including, but not limited to, adjusted FIFO operating profit to operating profit and adjusted free cash flow, without unreasonable effort because it is not possible to predict with a reasonable degree of certainty the information necessary to calculate such measures on a GAAP basis. It is not possible to estimate with a reasonable degree of certainty certain of our adjustment items because such information is dependent on future events that may be outside of our control. The unavailable information could have a significant impact on our GAAP financial results.
Page 3
3 Q2 2026 Results +0.2% ID Sales(1) $971M GAAP Operating Profit $1.05 GAAP EPS +20% Adjusted eCommerce Sales(2) $1,076M Adj. FIFO Operating Profit $1.09 Adj. EPS +5% growth (1) Without fuel, and includes an unfavorable 138 basis point impact from the Inflation Reduction Act (2) Adjusted eCommerce sales exclude the effect of fulfillment center exits in markets where Kroger does not operate stores, the sale of Vitacost, and the discontinuation of Ship Marketplace
Page 4
4 Supermarket Health and Wellness eCommerce: Sales grew 20%**, led by strong growth in delivery Our Brands: Outpaced national brands by 250 basis points driven by Private Selection innovation Pharmacy: Delivered strong operating profit growth, benefiting from branded to generic medication mix shift Continued market share gains led by strong core script growth Fuel Media and Insights Gallons sold grew and outpaced the industry by 520 basis points, supported by our industry-leading rewards program Kroger Precision Marketing: Grew profit 24%, best since 2021, driven by increased monetization rates and on-site customer traffic Strengthening our Value Creation Model Delivering Sustainable Total Shareholder Return of 8 – 11%* Strong, Durable Retail Business including Grocery, Pharmacy, and Fuel DATA & TRAFFIC TRAFFIC & PROFITS Fast Growing, High Margin Profit Streams *Total shareholder return assumes no change in Kroger’s P/E Ratio. ** Adjusted eCommerce sales exclude the effect of fulfillment center exits in markets where Kroger does not operate stores, t he sale of Vitacost, and the discontinuation of Ship Marketplace
Page 5
5 2026 Full-Year Guidance* * Without adjusted items, if applicable. Kroger is unable to provide a full reconciliation of the GAAP and non- GAAP measures used in 2026 guidance without unreasonable effort because it is not possible to predict certain of our adjustment items with a reasonable degree of certainty. This information is dependent upon future events and may be outside of our control and its unavailability could have a significant impact on 2026 GAAP financial results. ** Includes approximately 140 basis points unfavorable impact from the Inflation Reduction Act. *** The adjusted tax rate reflects typical tax adjustments and does not reflect changes to the rate from the completion of incom e tax audit examinations and changes in tax laws and policies, which cannot be predicted. Adjusted Metric* FY26 Guidance as of June 18, 2026 FY26 Guidance as of September 11, 2026 Identical Sales without fuel** (%) 1.0% – 2.0% 0.2% – 0.8% FIFO Operating Profit ($B) $5.0 – $5.2 $5.0 – $5.2 EPS ($) $5.10 – $5.30 $5.10 – $5.30 Free Cash Flow ($B) $2.7 – $2.9 $2.7 – $2.9 Cap Ex ($B) $3.8 – $4.0 $3.8 – $4.0 Tax Rate*** 23% 23%
Page 6
6 Investment Thesis • Conveniently located ~2,700 stores • First Party Data on 63M Households • ~$39B Our Brands Business(1) • Significant eCommerce Business, ~$16B(1) • Robust New Store Growth • Strong Free Cash Flow Yield • Investment Grade Debt Rating • Growing Dividend Subject to Board Approval • Committed to Repurchasing Shares with Excess Cash • Current Net Debt : EBITDA 1.91x • Net Earnings Growth, 3-5% • ID Sales Growth (ex. Fuel), 2-4% • Margin Expansion (net of investments), 1-2% • Cost Optimization • High Growth, Margin accretive Media and Insights Profits • Disciplined Capital Investments • Cash Payout 5-6% (Dividends & Share Repurchases) 6 Proven Value Creation Model Strong Business with Exciting Growth Opportunities Strong Balance Sheet & Resilient Free Cash Flow (1) In FY2025, Kroger restated its sales definitions for Our Brands and eCommerce. These numbers reflect the total annual sales for 2025 under the new definitions.
Page 7
Appendix
Page 8
SALES 34,621 $ 100.0% 33,940 $ 100.0% 80,742 $ 100.0% 79,058 $ 100.0% OPERATING EXPENSES MERCHANDISE COSTS, INCLUDING ADVERTISING, WAREHOUSING AND TRANSPORTATION (a), AND LIFO CHARGE (b) 26,763 77.3 26,130 77.0 62,256 77.1 60,681 76.8 OPERATING, GENERAL AND ADMINISTRATIVE (a) 5,952 17.2 5,967 17.6 13,915 17.2 13,890 17.6 RENT 198 0.6 202 0.6 467 0.6 473 0.6 DEPRECIATION AND AMORTIZATION 737 2.1 778 2.3 1,726 2.1 1,829 2.3 OPERATING PROFIT 971 2.8 863 2.5 2,378 2.9 2,185 2.8 OTHER INCOME (EXPENSE) NET INTEREST EXPENSE (156) (0.5) (144) (0.4) (365) (0.5) (343) (0.4) NON-SERVICE COMPONENT OF COMPANY-SPONSORED PENSION PLAN EXPENSE (9) - (3) - (16) - (4) - GAIN ON INVESTMENTS 34 - 56 - 20 - 37 0.1 NET EARNINGS BEFORE INCOME TAX EXPENSE 840 2.4 772 2.3 2,017 2.5 1,875 2.4 INCOME TAX EXPENSE 198 0.6 162 0.5 471 0.6 397 0.5 NET EARNINGS INCLUDING NONCONTROLLING INTERESTS 642 1.9 610 1.8 1,546 1.9 1,478 1.9 NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS 1 - 1 - 3 - 3 - NET EARNINGS ATTRIBUTABLE TO THE KROGER CO. 641 $ 1.9% 609 $ 1.8% 1,543 $ 1.9% 1,475 $ 1.9% NET EARNINGS ATTRIBUTABLE TO THE KROGER CO. PER BASIC COMMON SHARE 1.05 $ 0.91 $ 2.52 $ 2.22 $ AVERAGE NUMBER OF COMMON SHARES USED IN BASIC CALCULATION 606 662 610 661 NET EARNINGS ATTRIBUTABLE TO THE KROGER CO. PER DILUTED COMMON SHARE 1.05 $ 0.91 $ 2.51 $ 2.20 $ AVERAGE NUMBER OF COMMON SHARES USED IN DILUTED CALCULATION 608 665 612 664 DIVIDENDS DECLARED PER COMMON SHARE 0.39 $ 0.35 $ 0.74 $ 0.67 $ Note: Note: The Company defines FIFO gross margin as FIFO gross profit divided by sales. The Company defines FIFO operating profit as operating profit excluding the LIFO charge. (a) (b) The Company defines FIFO operating margin as FIFO operating profit divided by sales. 2025 Certain percentages may not sum due to rounding. 2025 2026 The above FIFO financial metrics are important measures used by management to evaluate operational effectiveness. Management believes these FIFO financial metrics are useful to investors and analysts because they measure our day-to-day operational effectiveness. 2026 Merchandise costs ("COGS") and operating, general and administrative expenses ("OG&A") exclude depreciation and amortization expense and rent expense which are included in separate expense lines. LIFO charges of $39 and $62 were recorded in the second quarters of 2026 and 2025, respectively. For the year-to-date period, LIFO charges of $91 and $102 were recorded for 2026 and 2025, respectively. The Company defines First-In First-Out (FIFO) gross profit as sales minus merchandise costs, including advertising, warehousing and transportation, but excluding the Last-In First-Out (LIFO) charge, rent and depreciation and amortization. Table 1. SECOND QUARTER (in millions, except per share amounts) CONSOLIDATED STATEMENTS OF OPERATIONS YEAR-TO-DATE THE KROGER CO. (unaudited)
Page 9
August 15, August 16, 2026 2025 ASSETS Current Assets Cash 201 $ 215 $ Temporary cash investments 1,475 4,668 Store deposits in-transit 1,060 1,133 Receivables 2,187 2,211 Inventories 7,282 6,843 Prepaid and other current assets 721 735 Total current assets 12,926 15,805 Property, plant and equipment, net 25,265 25,947 Operating lease assets 6,753 6,812 Intangibles, net 848 866 Goodwill 2,624 2,674 Other assets 1,075 1,486 Total Assets 49,491 $ 53,590 $ LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities Current portion of long-term debt including obligations under finance leases 1,838 $ 827 $ Current portion of operating lease liabilities 664 673 Accounts payable 10,775 10,183 Accrued salaries and wages 1,206 1,315 Other current liabilities 3,935 3,701 Total current liabilities 18,418 16,699 Long-term debt including obligations under finance leases 15,159 17,132 Noncurrent operating lease liabilities 6,497 6,546 Deferred income taxes 1,184 1,387 Pension and postretirement benefit obligations 409 376 Other long-term liabilities 1,978 2,173 Total Liabilities 43,645 44,313 Shareowners' equity 5,846 9,277 Total Liabilities and Shareowners' Equity 49,491$ 53,590 $ Total common shares outstanding at end of period 596 662 Total diluted shares year-to-date 612 664 (unaudited) Table 2. THE KROGER CO. CONSOLIDATED BALANCE SHEETS (in millions)
Page 10
2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings including noncontrolling interests 1,546 $ 1,478 $ Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities: Depreciation and amortization 1,726 1,829 Asset impairment and store closure charges 66 114 Operating lease asset amortization 314 318 LIFO charge 91 102 Share-based employee compensation 101 83 Deferred income taxes 94 (31) Gain on the sale of assets (26) (6) Gain on investments (20) (37) Other 15 (29) Changes in operating assets and liabilities: Store deposits in-transit 185 179 Receivables (162) (12) Inventories (460) 92 Prepaid and other current assets (85) (91) Accounts payable (4) (14) Accrued expenses 38 181 Income taxes receivable and payable 219 6 Operating lease liabilities (367) (291) Other (186) (183) Net cash provided by operating activities 3,085 3,688 CASH FLOWS FROM INVESTING ACTIVITIES: Payments for property and equipment, including payments for lease buyouts (2,437) (1,968) Other 42 (139) Net cash used by investing activities (2,395) (2,107) CASH FLOWS FROM FINANCING ACTIVITIES: Payments on long-term debt including obligations under finance leases (604) (122) Dividends paid (431) (422) Proceeds from issuance of capital stock 36 163 Treasury stock purchases (1,271) (203) Other (78) (73) Net cash used by financing activities (2,348) (657) NET (DECREASE) INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS (1,658) 924 CASH AND TEMPORARY CASH INVESTMENTS: BEGINNING OF YEAR 3,334 3,959 END OF PERIOD 1,676 $ 4,883 $ Reconciliation of capital investments: Payments for property and equipment, including payments for lease buyouts (2,437)$ $ (1,968) Payments for lease buyouts 37 11 Changes in construction-in-progress payables (251) (73) Total capital investments, excluding lease buyouts (2,651) $ (2,030) $ Disclosure of cash flow information: Cash paid during the year for net interest 372 $ 370 $ Cash paid during the year for income taxes 159 $ 415 $ Table 3. (in millions) CONSOLIDATED STATEMENTS OF CASH FLOWS THE KROGER CO. YEAR-TO-DATE (unaudited)
Page 11
2026 2025 2026 2025 2026 2025 EXCLUDING FUEL 29,957 $ 29,892$ 69,759 $ 69,309$ 70,093 $ 69,567$ EXCLUDING FUEL 0.2% 3.4% 0.6% 3.3% 0.8% 3.2% (a) Identical sales, excluding fuel, were adjusted to exclude stores involved in the labor disputes in Colorado in the first quarter of 2025. Identical sales, excluding fuel, were excluded for the first four weeks of the first quarters of 2026 and 2025 for stores involved in this labor dispute. (unaudited) (in millions, except percentages) Table 4. Supplemental Sales Information IDENTICAL SALES YEAR-TO-DATE EXCLUDING ADJUSTMENT Items identified below should not be considered as alternatives to sales or any other GAAP measure of performance. Identical sales is an industry-specific measure, and it is important to review it in conjunction with Kroger's financial results reported in accordance with GAAP. Other companies in our industry may calculate identical sales differently than Kroger does, limiting the comparability of the measure. Kroger defines identical sales, excluding fuel, as sales to retail customers, including sales from all departments at identical supermarket locations, jewelry and ship-to-home solutions. Kroger defines a supermarket as identical when it has been in operation without expansion or relocation for five full quarters. We include Kroger Delivery sales as identical if the delivery occurs in an existing Kroger Supermarket geography or when the location has been in operation for five full quarters. YEAR-TO-DATE (a)SECOND QUARTER
Page 12
August 15, August 16, 2026 2025 Change Current portion of long-term debt including obligations under finance leases 1,838$ 827$ 1,011$ Long-term debt including obligations under finance leases 15,159 17,132 (1,973) Total debt 16,997 17,959 (962) Less: Temporary cash investments 1,475 4,668 (3,193) Net total debt 15,522$ 13,291$ 2,231$ August 15, August 16, 2026 2025 Net earnings attributable to The Kroger Co. 1,085 $ 2,727$ LIFO charge 146 135 Depreciation and amortization 3,230 3,347 Net interest expense 661 586 Income tax expense 251 685 Adjustment for loss on investments 57 6 Adjustment for severance charge and related benefits - 79 Adjustment for impairment of intangible assets 50 30 Adjustment for labor dispute charges - 44 Adjustment for store closures - 100 Adjustment for executive stock compensation for a former executive - (21) Adjustment for merger-related costs (a) - 361 Adjustment for merger-related litigation and settlement charges 63 136 Adjustment for property losses - 25 Adjustment for opioid settlement charges and vendor reserves (28) (5) Adjustment for gain on sale of Kroger Specialty Pharmacy - (79) Adjustment for fulfillment network impairment and related charges 2,497 - Adjustment for transformation costs (b) 119 - Other (9) (14) Adjusted EBITDA 8,122$ 8,142$ Net total debt to adjusted EBITDA ratio 1.91 1.63 (a) Merger-related costs primarily include third-party professional fees and credit facility fees associated with the terminated merger with Albertsons Companies, Inc. ROLLING FOUR QUARTERS ENDED (b) Transformation costs primarily include costs related to third-party professional consulting fees associated with business transformation and cost saving initiatives. The following table provides a reconciliation from net earnings attributable to The Kroger Co. to adjusted EBITDA, as defined in the Company's credit agreement, on a rolling four quarter basis. Table 5. Reconciliation of Net Total Debt and (in millions, except for ratio) The items identified below should not be considered an alternative to any GAAP measure of performance or access to liquidity. Net total debt to adjusted EBITDA is an important measure used by management to evaluate the Company's access to liquidity. The items below should be reviewed in conjunction with Kroger's financial results reported in accordance with GAAP. The following table provides a reconciliation of net total debt. (unaudited) Net Earnings Attributable to The Kroger Co. to Adjusted EBITDA
Page 13
2026 2025 2026 2025 Net earnings attributable to The Kroger Co. 641$ 609$ 1,543$ 1,475$ Adjustment for gain on investments (a)(b) (26) (43) (16) (28) Adjustment for labor dispute charges (a)(c) - - - 33 - - - 77 Adjustment for executive stock compensation for a former executive (a)(e) - - - (16) Adjustment for merger-related litigation and settlement charges (a)(f) 9 92 29 102 Adjustment for opioid settlement charges and vendor reserves (a)(g) - - - 17 Adjustment for severance charge and related benefits (a)(h) - 37 - 37 Adjustment for transformation costs (a)(i) 43 - 91 - Executive stock compensation for a former executive income tax adjustment - - - (7) 2026 and 2025 Adjustment Items 26 86 104 215 Net earnings attributable to The Kroger Co. excluding the adjustment items above 667$ 695$ 1,647$ 1,690$ Net earnings attributable to The Kroger Co. per diluted common share 1.05$ 0.91$ 2.51$ 2.20$ Adjustment for gain on investments (j) (0.04) (0.06) (0.03) (0.04) Adjustment for labor dispute charges (j) - - - 0.05 - - - 0.12 Adjustment for executive stock compensation for a former executive (j) - - - (0.03) Adjustment for merger-related litigation and settlement charges (j) 0.01 0.14 0.04 0.16 Adjustment for opioid settlement charges and vendor reserves (j) - - - 0.03 Adjustment for severance charge and related benefits (j) - 0.05 - 0.05 Adjustment for transformation costs (j) 0.07 - 0.15 - Executive stock compensation for a former executive income tax adjustment (j) - - - (0.01) 2026 and 2025 Adjustment Items 0.04 0.13 0.16 0.33 Net earnings attributable to The Kroger Co. per diluted common share excluding the adjustment items above 1.09$ 1.04$ 2.67$ 2.53$ Average number of common shares used in diluted calculation 608 665 612 664 Adjustment for store closures (a)(d) SECOND QUARTER Adjustment for store closures (j) YEAR-TO-DATE Table 6. Net Earnings Per Diluted Share Excluding the Adjustment Items (in millions, except per share amounts) (unaudited) The purpose of this table is to better illustrate comparable operating results from our ongoing business, after removing the effects on net earnings per diluted common share for certain items described below. Adjusted net earnings and adjusted net earnings per diluted share are useful metrics to investors and analysts because they present more accurately year-over-year comparisons for net earnings and net earnings per diluted share because adjusted items are not the result of normal operations. Items identified in this table should not be considered alternatives to net earnings attributable to The Kroger Co. or any other GAAP measure of performance. These items should not be reviewed in isolation or considered substitutes for the Company's financial results as reported in accordance with GAAP. Due to the nature of these items, as further described below, it is important to identify these items and to review them in conjunction with the Company's financial results reported in accordance with GAAP. The following table summarizes items that affected the Company's financial results during the periods presented.
Page 14
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Note: 2026 Adjustment Items include the Second Quarter Adjustment Items plus the adjustments that occurred in the first quarter of 2026 for loss on investments, merger-related litigation costs and transformation costs. 2025 Second Quarter Adjustment items include adjustments for the gain on investments, merger-related litigation and settlement charges and the severance charge and related benefits. 2025 Adjustment Items include the Second Quarter Adjustment Items plus the adjustments that occurred in the first quarter of 2025 for the loss on investments, labor dispute charges, store closures, executive stock compensation for a former executive, merger-related litigation costs, opioid settlement charges and vendor reserves and executive stock compensation for a former executive income tax. The amounts presented represent the net earnings (loss) per diluted common share effect of each adjustment. The pre-tax adjustment to OG&A expenses for transformation costs was $56 in the second quarter of 2026. The year-to-date pre-tax adjustment to OG&A expenses for transformation costs was $119 for the first two quarters of 2026. Transformation costs primarily include costs related to third-party professional consulting fees associated with business transformation and cost saving initiatives. The pre-tax adjustment to OG&A expenses for severance charge and related benefits was $47. 2026 Second Quarter Adjustment Items include adjustments for the gain on investments, merger-related litigation and settlement charges and transformation costs. The pre-tax adjustment to OG&A expenses for opioid settlement charges and vendor reserves was $22. The pre-tax adjustments to Sales, COGS and OG&A expenses for labor dispute charges were $44. The pre-tax adjustment to OG&A expenses for store closures was $100. The pre-tax adjustment to OG&A expenses for executive stock compensation for a former executive was $(21). The pre-tax adjustments to OG&A expenses for merger-related litigation and settlement charges were $13 and $121 in the second quarters of 2026 and 2025, respectively. The year-to-date pre-tax adjustments to OG&A expenses for merger-related litigation and settlement charges were $38 and $136 for the first two quarters of 2026 and 2025, respectively. Table 6. Net Earnings Per Diluted Share Excluding the Adjustment Items (continued) (in millions, except per share amounts) (unaudited) The amounts presented represent the after-tax effect of each adjustment. The pre-tax adjustments for gain on investments were $(34) and $(56) in the second quarters of 2026 and 2025, respectively. The year-to-date pre-tax adjustments for gain on investments were $(20) and $(37) on the first two quarters of 2026 and 2025, respectively.
Page 15
2026 2025 2026 2025 Operating profit 971 $ 863$ 2,378$ 2,185$ LIFO charge 39 62 91 102 FIFO operating profit 1,010 925 2,469 2,287 Adjustment for labor dispute charges - - - 44 Adjustment for store closures - - - 100 Adjustment for executive stock compensation for a former executive - - - (21) Adjustment for merger-related litigation and settlement charges 13 121 38 136 Adjustment for opioid settlement charges and vendor reserves - - - 22 Adjustment for severance charge and related benefits - 47 - 47 Adjustment for transformation costs (a) 56 - 119 - Other (3) (2) (6) (5) 2026 and 2025 Adjustment items 66 166 151 323 Adjusted FIFO operating profit excluding the adjustment items above 1,076 $ 1,091$ 2,620$ 2,610$ (a) Transformation costs primarily include costs related to third-party professional consulting fees associated with business transformation and cost saving initiatives. SECOND QUARTER YEAR-TO-DATE Table 7. Operating Profit Excluding the Adjustment Items (in millions) (unaudited) The purpose of this table is to better illustrate comparable operating results from our ongoing business, after removing the effects on operating profit for certain items described below. Adjusted FIFO operating profit is a useful metric to investors and analysts because it presents more accurately year-over-year comparisons for operating profit because adjusted items are not the result of normal operations. Items identified in this table should not be considered alternatives to operating profit or any other GAAP measure of performance. These items should not be reviewed in isolation or considered substitutes for the Company's financial results as reported in accordance with GAAP. Due to the nature of these items, as further described below, it is important to identify these items and to review them in conjunction with the Company's financial results reported in accordance with GAAP. The following table summarizes items that affected the Company's financial results during the periods presented.
Page 16
2026 2025 2026 2025 Sales 34,621 $ 33,940$ 80,742$ 79,058$ Merchandise costs, including advertising, warehousing and transportation and LIFO charge, excluding rent and depreciation and amortization 26,763 26,130 62,256 60,681 Rent 12 13 29 31 Depreciation and amortization 96 151 235 344 Gross profit 7,750 $ 7,646$ 18,222$ 18,002$ Gross margin 22.4% 22.5% 22.6% 22.8% Table 8. Gross Margin (in millions, except percentages) (unaudited) In the Consolidated Statements of Operations within Table 1, the Company separately presents rent and depreciation and amortization to evaluate operational effectiveness. The table below calculates gross margin in accordance with Generally Accepted Accounting Principles ("GAAP") by including a portion of rent and depreciation and amortization related to the Company's manufacturing and warehousing and transportation activities. The following table provides the calculation of gross profit and gross margin in accordance with GAAP. SECOND QUARTER YEAR-TO-DATE