KROGER CO

Previous wording

This discussion and analysis contains certain forward-looking statements about our future performance. These statements are based on management’s assumptions and beliefs in light of the information currently available to it. Such statements are indicated by words such as “accelerate,” “achieve,” “affect,” “anticipate,” “believe,” “committed,” “continue,” “could,” “creating,” “drive,” “enable,” “estimate,” “expect,” “future,” “goals,” “initiatives,” “maintain,” “may,” “model,” “plan,” “position,” “strategy,” “target,” “trend,” and “will,” and similar words or phrases. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially. 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, as well as those identified in this Form 10-Q.

Current wording

This discussion and analysis contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), about our future performance. These statements are based on management’s assumptions and beliefs in light of the information currently available to it. Such statements are indicated by words such as “accelerate,” “achieve,” “affect,” “anticipate,” “believe,” “committed,” “continue,” “could,” “creating,” “drive,” “enable,” “estimate,” “expect,” “future,” “goals,” “initiatives,” “maintain,” “may,” “model,” “plan,” “position,” “strategy,” “target,” “trend,” and “will,” and similar words or phrases. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially. 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, as well as those identified in this Form 10-Q.

Previous wording

Statements elsewhere in this Form 10-Q and below regarding our expectations, projections, beliefs, intentions or strategies are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). While we believe that the statements are accurate, uncertainties about the general economy, our labor relations, our ability to execute our plans on a timely basis and other uncertainties described in this report and other reports that we file with the Securities and Exchange Commission (“SEC”) could cause actual results to differ materially. We assume no obligation to update the information contained in this report unless required by applicable law.

Current wording

Statements elsewhere in this Form 10-Q and below regarding our expectations, projections, beliefs, intentions or strategies are forward-looking statements. While we believe that the statements are accurate, uncertainties about the general economy, our labor relations, our ability to execute our plans on a timely basis and other uncertainties described in this report and other reports that we file with the Securities and Exchange Commission (“SEC”) could cause actual results to differ materially. We assume no obligation to update the information contained in this Form 10-Q unless required by applicable law.

Previous wording

The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with generally accepted accounting principles (“GAAP”). We provide non-GAAP measures, including FIFO gross margin, FIFO operating profit (loss), adjusted FIFO operating profit, adjusted net earnings and adjusted net earnings per diluted share because management believes these metrics are useful to investors and analysts. These non-GAAP financial measures should not be considered as an alternative to gross margin, operating profit (loss), net earnings (loss) and net earnings (loss) per diluted share or any other GAAP measure of performance. These measures should not be reviewed in isolation or considered as a substitute for our financial results as reported in accordance with GAAP.

Current wording

The accompanying Consolidated Financial Statements, including the related notes, are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). We provide non-GAAP measures, including FIFO gross margin, FIFO operating profit, adjusted FIFO operating profit, adjusted net earnings and adjusted net earnings per diluted share, because management believes these metrics are useful to investors and analysts. These non-GAAP financial measures should not be considered as an alternative to gross margin, operating profit, net earnings and net earnings per diluted share or any other GAAP measure of performance. These measures should not be reviewed in isolation or considered as a substitute for our financial results as reported in accordance with GAAP.

Previous wording

We calculate FIFO gross margin as FIFO gross profit divided by sales. FIFO gross profit is calculated as sales less merchandise costs, including advertising, warehousing and transportation expenses, but excluding the LIFO charge, rent and depreciation and amortization. FIFO gross margin is an important measure used by management, and management believes FIFO gross margin is a useful metric to investors and analysts because it measures the merchandising and operational effectiveness of our go-to-market strategy.

Current wording

We calculate FIFO gross margin as FIFO gross profit divided by sales. FIFO gross profit is calculated as sales less merchandise costs, including advertising, warehousing and transportation expenses, but excluding the Last-In, First-Out (“LIFO”) charge, rent and depreciation and amortization. FIFO gross margin is an important measure used by management, and management believes FIFO gross margin is a useful metric to investors and analysts because it measures the merchandising and operational effectiveness of our go-to-market strategy.

Previous wording

We calculate FIFO operating profit (loss) as operating profit (loss) excluding the LIFO charge. FIFO operating profit (loss) is an important measure used by management, and management believes FIFO operating profit (loss) is a useful metric to investors and analysts because it measures the operational effectiveness of our financial model.

Current wording

We calculate FIFO operating profit as operating profit excluding the LIFO charge. FIFO operating profit is an important measure used by management, and management believes FIFO operating profit is a useful metric to investors and analysts because it measures the operational effectiveness of our financial model.

Previous wording

The adjusted net earnings, adjusted net earnings per diluted share and adjusted FIFO operating profit metrics are important measures used by management to compare the performance of core operating results between periods. We believe adjusted net earnings, adjusted net earnings per diluted share and adjusted FIFO operating profit are useful metrics to investors and analysts because they present more accurate year-over-year comparisons of our net earnings (loss), net earnings (loss) per diluted share and FIFO operating profit (loss) because adjusted items are not the result of our normal operations. Net earnings for the first three quarters of 2025 include the following, which we define as the “2025 Adjusted Items”:

Current wording

The adjusted net earnings, adjusted net earnings per diluted share and adjusted FIFO operating profit metrics are important measures used by management to compare the performance of core operating results between periods. We believe adjusted net earnings, adjusted net earnings per diluted share and adjusted FIFO operating profit are useful metrics to investors and analysts because they present more accurate year-over-year comparisons of our net earnings, net earnings per diluted share and FIFO operating profit because adjusted items are not the result of our normal operations. Net earnings for the first quarter of 2026 include the following, which we define as the “2026 Adjusted Items”:

Previous wording

The following table provides a reconciliation of net earnings (loss) attributable to The Kroger Co. to adjusted net earnings attributable to The Kroger Co. and a reconciliation of net earnings (loss) attributable to The Kroger Co. per diluted common share to adjusted net earnings attributable to The Kroger Co. per diluted common share, excluding the 2025 and 2024 Adjusted Items:

Current wording

The following table provides a reconciliation of net earnings attributable to The Kroger Co. to adjusted net earnings attributable to The Kroger Co. and a reconciliation of net earnings attributable to The Kroger Co. per diluted common share to adjusted net earnings attributable to The Kroger Co. per diluted common share, excluding the 2026 and 2025 Adjusted Items:

Previous wording

Total sales increased in the first three quarters of 2025, compared to the first three quarters of 2024, by 0.1%. The increase was primarily due to an increase in total sales to retail customers without fuel, partially offset by a decrease in supermarket fuel sales and the sale of Kroger Specialty Pharmacy. Total supermarket fuel sales decreased 9.6% in the first three quarters of 2025, compared to the first three quarters of 2024, primarily due to a decrease in the average retail fuel price of 6.4% and a decrease in fuel gallons sold of 3.5%. The decrease in the average retail fuel price was caused by a decrease in the product cost of fuel. Total sales, excluding fuel, Kroger Specialty Pharmacy and the Labor Dispute, increased 3.4% in the first three quarters of 2025, compared to the first three quarters of 2024, which was primarily due to our identical sales increase, excluding fuel and the Labor Dispute, of 3.1%. Identical sales, excluding fuel and the Labor Dispute, for the first three quarters of 2025, compared to the first three quarters of 2024, increased primarily due to increased pharmacy, eCommerce and Fresh sales and increased spend per item, partially offset by a reduction in the number of units sold.

Current wording

Total sales increased in the first quarter of 2026, compared to the first quarter of 2025, by 2.2%. The increase was primarily due to an increase in supermarket fuel sales and identical sales, excluding fuel and the Labor Dispute, partially offset by the sale of Vitacost.com and closed stores. Total supermarket fuel sales increased 21.3% in the first quarter of 2026, compared to the first quarter of 2025, primarily due to an increase in the average retail fuel price of 22.7%. Total sales, excluding fuel and Vitacost.com, increased 0.5% in the first quarter of 2026, compared to the first quarter of 2025, which was primarily due to our identical sales increase, excluding fuel and the Labor Dispute, of 1.0%, partially offset by closed stores. Identical sales, excluding fuel and the Labor Dispute, for the first quarter of 2026, compared to the first quarter of 2025, increased primarily due to increased eCommerce, pharmacy, Fresh andOur Brands sales and increased spend per item, partially offset by a reduction in the number of units sold, and the effects from the Inflation Reduction Act of 130 basis points, a customer shift from brand to generic prescriptions of 40 basis points and egg deflation of 64 basis points.

Previous wording

We calculate identical sales, excluding fuel, as sales to retail customers, including sales from all departments at identical supermarket locations and Delivery and Ship solutions. We define a supermarket as identical when it has been in operation without expansion or relocation for five full quarters. We include Kroger Delivery sales from customer fulfillment centers in the identical sales calculation if the delivery occurs in an existing Kroger supermarket geography or when the location has been in operation for five full quarters. Although identical sales is a relatively standard term, numerous methods exist for calculating identical sales growth. As a result, the method used by our management to calculate identical sales may differ from methods other companies use to calculate identical sales. It is important to understand the methods used by other companies to calculate identical sales before comparing our identical sales to those of other such companies. Our identical sales results, excluding fuel, are summarized in the following tables. We used the identical sales, excluding fuel, dollar figures presented below to calculate percentage changes for the third quarter and first three quarters of 2025.

Current wording

We calculate identical sales, excluding fuel, as sales to retail customers, including sales from all departments at identical supermarket locations and Delivery solutions. We define a supermarket as identical when it has been in operation without expansion or relocation for five full quarters. We include Kroger Delivery sales from customer fulfillment centers in the identical sales calculation if the delivery occurs in an existing Kroger supermarket geography or when the location has been in operation for five full quarters; closed facilities in which the delivery occurs in an existing Kroger supermarket geography remain in the identical sales calculation, while closed facilities in which delivery does not occur in an existing Kroger supermarket geography are excluded from the identical sales calculation starting in the quarter the closure is announced. Although identical sales is a relatively standard term, numerous methods exist for calculating identical sales growth. As a result, the method used by our management to calculate identical sales may differ from methods other companies use to calculate identical sales. It is important to understand the methods used by other companies to calculate identical sales before comparing our identical sales to those of other such companies. Our identical sales results, excluding fuel, are summarized in the following tables. We used the identical sales, excluding fuel, dollar figures presented below to calculate percentage changes for the first quarter of 2026.

Previous wording

Our gross margin rates, as a percentage of sales, were 22.8% in the first three quarters of 2025 and 22.1% in the first three quarters of 2024. This increase resulted primarily from the sale of our Kroger Specialty Pharmacy business, which has a lower gross margin rate, lower shrink, lower supply chain costs and decreased fuel sales, which have a lower gross margin rate, partially offset by increased pharmacy sales, which have a lower gross margin rate, increased promotional price investments and the LIFO charge.

Current wording

Our gross margin rates, as a percentage of sales, were 22.7% in the first quarter of 2026 and 23.0% in the first quarter of 2025. This decrease resulted primarily from increased fuel sales, which have a lower gross margin rate, higher transportation costs, as a percentage of sales, egg deflation and increased price investments, partially offset by higher pharmacy margins, improved eCommerce profitability, sourcing improvements and lower depreciation and amortization, as a percentage of sales.

Previous wording

The following table provides the calculation of gross profit and gross margin in accordance with GAAP:

Current wording

The following table provides the calculation of gross profit and gross margin in accordance with GAAP ($ in millions):

Previous wording

Our LIFO charge was $44 million in the third quarter of 2025, compared to $4 million in the third quarter of 2024. Our LIFO charge was $146 million in the first three quarters of 2025, compared to $66 million in the first three quarters of 2024. The increase in the LIFO charge was due to our higher expected annualized product cost inflation for 2025, compared to 2024.

Current wording

Our LIFO charge was $52 million in the first quarter of 2026, compared to $40 million in the first quarter of 2025. The increase in the LIFO charge was due to higher expected annualized product cost inflation for 2026, compared to 2025.

Previous wording

Our fuel sales lower our FIFO gross margin rate due to the very low FIFO gross margin rate, as a percentage of sales, of fuel sales compared to non-fuel sales. Excluding the effect of fuel, our FIFO gross margin rate increased 49 basis points in the third quarter of 2025, compared to the third quarter of 2024. This increase resulted primarily from the sale of our Kroger Specialty Pharmacy business, which has a lower gross margin rate,Our Brands performance, lower shrink and lower supply chain costs, partially offset by increased pharmacy sales, which have a lower gross margin rate, and increased promotional price investments. Excluding the effect of fuel and Kroger Specialty Pharmacy, our FIFO gross margin rate increased 24 basis points in the third quarter of 2025, compared to the third quarter of 2024.

Current wording

Our fuel sales lower our FIFO gross margin rate due to the very low FIFO gross margin rate, as a percentage of sales, of fuel sales compared to non-fuel sales. Excluding the effect of fuel and the Labor Dispute, our FIFO gross margin rate decreased 9 basis points in the first quarter of 2026, compared to the first quarter of 2025. This decrease resulted primarily from higher transportation costs, as a percentage of sales, egg deflation and increased price investments, partially offset by higher pharmacy margins, improved eCommerce profitability and sourcing improvements.

Previous wording

OG&A expenses, as a percentage of sales, were 19.8% in the first three quarters of 2025 and 17.2% in the first three quarters of 2024. The increase in the first three quarters of 2025, compared to the first three quarters of 2024, resulted primarily from the effect of decreased fuel sales, which increases our OG&A rate, as a percentage of sales, the sale of our Kroger Specialty Pharmacy business, which has a lower OG&A rate to sales, the 2025 OG&A Adjusted Items, increased healthcare costs and increased multi-employer pension contributions, partially offset by the 2024 OG&A Adjusted Item and continued execution of broad-based cost savings initiatives that drive administrative efficiencies, including store productivity.

Current wording

OG&A expenses, as a percentage of sales, were 17.3% in the first quarter of 2026 and 17.6% in the first quarter of 2025. The decrease in the first quarter of 2026, compared to the first quarter of 2025, resulted primarily from the effect of increased fuel sales, which decreases our OG&A rate, as a percentage of sales, continued execution of broad-based cost savings initiatives that drive administrative efficiencies, including store productivity, decreased multi-employer pension contributions and the 2025 OG&A Adjusted Items, partially offset by planned investments in associates, increased maintenance costs and the 2026 OG&A Adjusted Items.

Previous wording

Our fuel sales lower our OG&A rate, as a percentage of sales, due to the very low OG&A rate, as a percentage of sales, of fuel sales compared to non-fuel sales. Excluding the effect of fuel, the 2025 Third Quarter OG&A Adjusted Items and the 2024 Third Quarter OG&A Adjusted Item, our OG&A rate increased 27 basis points in the third quarter of 2025, compared to the third quarter of 2024. This increase resulted primarily from the sale of our Kroger Specialty Pharmacy business, which has a lower OG&A rate to sales, increased healthcare costs andplanned investment in associates, partially offset by continued execution of broad-based cost savings initiatives that drive administrative efficiencies, including store productivity, and decreased incentive plan costs.

Current wording

Our fuel sales lower our OG&A rate, as a percentage of sales, due to the very low OG&A rate, as a percentage of sales, of fuel sales compared to non-fuel sales. Excluding the effect of fuel, the 2026 OG&A Adjusted Items, the 2025 OG&A Adjusted Items and the Labor Dispute, our OG&A rate increased 16 basis points in the first quarter of 2026, compared to the first quarter of 2025. This increase resulted primarily from planned investment in associates and increased maintenance costs, partially offset by continued execution of broad-based cost savings initiatives that drive administrative efficiencies, including store productivity and decreased multi-employer pension contributions.

Previous wording

Rent expense remained relatively consistent, as a percentage of sales, for the third quarter and first three quarters of 2025, compared to the same periods of 2024.

Current wording

Rent expense remained relatively consistent, as a percentage of sales, for the first quarter of 2026, compared to the first quarter of 2025.

Previous wording

FIFO operating profit was $790 million, or 0.70% of sales, for the first three quarters of 2025, compared to $3.0 billion, or 2.66% of sales, for the first three quarters of 2024. The results for the first three quarters of 2025 include $2.6 billion of fulfillment network impairment and related charges. FIFO operating profit, as a percentage of sales, excluding the 2025 and 2024 Adjusted Items, increased 17 basis points in the first three quarters of 2025, compared to the first three quarters of 2024, primarily due to a higher FIFO gross margin rate, partially offset by increased OG&A and depreciation and amortization expenses, as a percentage of sales.

Current wording

FIFO operating profit was $1.5 billion, or 3.16% of sales, for the first quarter of 2026, compared to $1.4 billion, or 3.02% of sales, for the first quarter of 2025. FIFO operating profit, as a percentage of sales, excluding the 2026 and 2025 Adjusted Items, decreased 1 basis point in the first quarter of 2026, compared to the first quarter of 2025, primarily due to lower FIFO gross margin, partially offset by decreased OG&A and depreciation and amortization expenses, as a percentage of sales, and increased fuel operating profit.

Previous wording

Specific factors contributing to the trends driving operating profit (loss) and FIFO operating profit (loss) identified above are discussed earlier in this section.

Current wording

Specific factors contributing to the trends driving operating profit and FIFO operating profit identified above are discussed earlier in this section.

Previous wording

The following table provides a reconciliation of operating profit (loss) to FIFO operating profit (loss), and to Adjusted FIFO operating profit, excluding the 2025 and 2024 Adjusted Items:

Current wording

The following table provides a reconciliation of operating profit to FIFO operating profit, and to Adjusted FIFO operating profit, excluding the 2026 and 2025 Adjusted Items:

Previous wording

The effective income tax rate was 26.5% for the third quarter of 2025 and 23.3% for the third quarter of 2024. The effective income tax rate was (94.0)% for the first three quarters of 2025 and 21.8% for the first three quarters of 2024. The effective income tax rate for the third quarter of 2025, which represents a tax benefit on a net loss before income tax expense, differed from the federal statutory rate due to a tax benefit related to classifying a certain subsidiary as held for sale and the utilization of tax credits and deductions, partially offset by the effect of state income taxes. The effective income tax rate for the first three quarters of 2025, which represents a tax benefit on net earnings before income tax expense, differed from the federal statutory rate due to a tax benefit related to classifying a certain subsidiary as held for sale and the utilization of tax credits and deductions including the benefit from share based payments, which includes $7 million for executive stock compensation for a former executive, partially offset by the effect of state income taxes. The effective income tax rate for the third quarter of 2024 differed from the federal statutory rate due to the effect of state income taxes, partially offset by the utilization of tax credits and deductions. The effective income tax rate for the first three quarters of 2024 differed from the federal statutory rate due to the effect of state income taxes, partially offset by a tax benefit related to classifying Kroger Specialty Pharmacy as held for sale and the utilization of tax credits and deductions.

Current wording

The effective income tax rate was 23.2% for the first quarter of 2026 and 21.3% for the first quarter of 2025. The effective income tax rate for the first quarter of 2026 differed from the federal statutory rate due to the effect of state income taxes, partially offset by the utilization of tax credits and the benefit from share-based payments. The effective income tax rate for the first quarter of 2025 differed from the federal statutory rate due to the effect of state income taxes, partially offset by the utilization of tax credits and deductions including the benefit from share-based payments, which includes the 2025 Income Tax Expense Adjusted Item.

Previous wording

Our net earnings (loss) are based on the factors discussed in the Results of Operations section.

Current wording

Our net earnings are based on the factors discussed in the Results of Operations section.

Previous wording

Net earnings of $0.23 per diluted share for the first three quarters of 2025 represented a decrease of 92% compared to net earnings of $2.77 per diluted share for the first three quarters of 2024. Excluding the 2025 and 2024 Adjusted Items, adjusted net earnings of $3.58 per diluted share for the first three quarters of 2025 represented an increase of 7% compared to adjusted net earnings of $3.34 per diluted share for the first three quarters of 2024. The increase in adjusted net earnings per diluted share resulted primarily from increased adjusted FIFO operating profit, excluding fuel, lower income tax expense and lower common shares outstanding, partially offset by increased net interest expense, decreased fuel earnings and an increased LIFO charge.

Current wording

Net earnings of $1.46 per diluted share for the first quarter of 2026 represented an increase compared to net earnings of $1.29 per diluted share for the first quarter of 2025. Excluding the 2026 and 2025 Adjusted Items, adjusted net earnings of $1.58 per diluted share for the first quarter of 2026 represented an increase of 6% compared to adjusted net earnings of $1.49 per diluted share for the first quarter of 2025. The increase in adjusted net earnings per diluted share resulted primarily from increased fuel earnings and lower common shares outstanding, partially offset by decreased adjusted FIFO operating profit excluding fuel.

Previous wording

The following table summarizes our net (decrease) increase in cash and temporary cash investments for the first three quarters of 2025 and 2024:

Current wording

The following table summarizes our net (decrease) increase in cash and temporary cash investments for the first quarter of 2026 and 2025 ($ in millions):

Previous wording

We generated $4.7 billion of cash from operations in the first three quarters of 2025 compared to $4.4 billion in the first three quarters of 2024. The change in net earnings including noncontrolling interests is discussed in the Results of Operations section. Other significant items affecting net cash provided by operating activities include the following:

Current wording

We generated $1.8 billion of cash from operations in the first quarter of 2026 compared to $2.1 billion in the first quarter of 2025. The change in net earnings including noncontrolling interests is discussed in the Results of Operations section. Other significant items affecting net cash provided by operating activities include the following:

Previous wording

Cash provided (used) by financing activities was $(1.6) billion in the first three quarters of 2025, compared to $9.5 billion in the first three quarters of 2024. The amount of cash used by financing activities decreased in the first three quarters of 2025, compared to the first three quarters of 2024, primarily due to decreased proceeds from the issuance of long-term debt and an increase in treasury stock purchases.

Current wording

Cash used by financing activities was $980 million in the first quarter of 2026, compared to $331 million in the first quarter of 2025. The amount of cash used by financing activities increased in the first quarter of 2026, compared to the first quarter of 2025, primarily due to increased payments on long-term debt including obligations under finance leases.

Previous wording

Capital investments, including changes in construction-in-progress payables and excluding the purchase of leased facilities, remained relatively consistent in the first three quarters of 2025, compared to the first three quarters of 2024, and totaled $2,863 million for the first three quarters of 2025, compared to $2,816 million for the first three quarters of 2024. During the rolling four quarter period ended with the third quarter of 2025, we opened, expanded, relocated or acquired 29 supermarkets and completed 199 remodels. We define a remodel as a project that is greater than or equal to a cost of $8 per square foot. Total supermarket square footage at the end of the third quarter of 2025 decreased 0.6% from the end of the third quarter of 2024. Excluding mergers, acquisitions and operational closings, total supermarket square footage at the end of the third quarter of 2025 increased 1.2% over the end of the third quarter of 2024.

Current wording

Capital investments, including changes in construction-in-progress payables and excluding the purchase of leased facilities, totaled $1.5 billion for the first quarter of 2026, compared to $1.2 billion for the first quarter of 2025. This increase is primarily due to the timing of major storing projects in the first quarter of 2026, compared to the first quarter of 2025. We expect our annual 2026 capital investments, including changes in construction-in-progress payables and excluding the purchase of leased facilities, to be relatively consistent with 2025. During the rolling four quarter period ended with the first quarter of 2026, we opened, expanded, relocated or acquired 26 supermarkets and completed 285 remodels. We define a remodel as a project that is greater than or equal to a cost of $8 per square foot. Total supermarket square footage at the end of the first quarter of 2026 decreased 1.0% from the end of the first quarter of 2025. Excluding mergers, acquisitions and operational closings, total supermarket square footage at the end of the first quarter of 2026 increased 1.0% over the end of the first quarter of 2025.

Previous wording

As of November 8, 2025, we maintained a $2.75 billion (with the ability to increase by $2.0 billion, subject to certain conditions), unsecured revolving credit facility that, unless extended, terminates on September 13, 2029. Outstanding borrowings under the credit facility, commercial paper borrowings and some outstanding letters of credit reduce funds available under the credit facility. As of November 8, 2025, we had no outstanding commercial paper and no outstanding borrowings under our revolving credit facility. The outstanding letters of credit that reduce funds available under our revolving credit facility totaled $3 million as of November 8, 2025.

Current wording

As of May 23, 2026, we maintained a $2.75 billion (with the ability to increase by $2.0 billion, subject to certain conditions), unsecured revolving credit facility that, unless extended, terminates on September 13, 2029. Outstanding borrowings under the credit facility, commercial paper borrowings and some outstanding letters of credit reduce funds available under the credit facility. As of May 23, 2026, we had no outstanding commercial paper and no outstanding borrowings under our credit facility. The outstanding letters of credit that reduce funds available under our credit facility totaled $3 million as of May 23, 2026.

Previous wording

Our credit agreement and the indentures underlying our publicly issued debt contain a financial covenant. As of November 8, 2025, we were in compliance with the financial covenant. Furthermore, management believes it is not reasonably likely that we will fail to comply with this financial covenant in the future.

Current wording

Our credit agreement contains a financial covenant. As of May 23, 2026, we were in compliance with the financial covenant. Furthermore, management believes it is not reasonably likely that we will fail to comply with this financial covenant in the future.

Previous wording

Total debt, including both the current and long-term portions of obligations under finance leases, increased $105 million as of November 8, 2025, compared to our fiscal year end 2024 debt of $17.9 billion, due to a net increase in obligations under finance leases and property transactions. During the first three quarters of 2025, we did not have any payments or issuances of senior notes or borrowings or payments that occurred on our revolving credit facility.

Current wording

Total debt, including both the current and long-term portions of obligations under finance leases, decreased $571 million as of May 23, 2026, compared to our fiscal year end 2025 debt of $17.6 billion. This decrease resulted primarily from the payment of $500 million of senior notes bearing an interest rate of 3.5%.

Previous wording

On December 11, 2024, we announced our Board of Directors approved a $7.5 billion share repurchase program to reacquire shares via open market purchase or privately negotiated transactions, including ASR transactions, block trades, or pursuant to trades intending to comply with Rule 10b5-1 under the Exchange Act (the “December 2024 Repurchase Program”).

Current wording

On December 11, 2024, we announced that our Board of Directors approved a $7.5 billion share repurchase program to reacquire shares via open market purchase or privately negotiated transactions, including accelerated share repurchase transactions, block trades and pursuant to trades intending to comply with Rule 10b5-1 under the Exchange Act (the “December 2024 Repurchase Program”).

Previous wording

On December 6, 1999, our Board of Directors approved a share repurchase program to repurchase common shares to reduce dilution resulting from our employee stock option and long-term incentive plans, under which repurchases are limited to proceeds received from exercises of stock options and the tax benefits associated therewith (“1999 Repurchase Program”). This program is solely funded by proceeds from stock option exercises and the tax benefit from these exercises.

Current wording

On December 6, 1999, our Board of Directors approved a share repurchase program to repurchase common shares to reduce dilution resulting from our employee stock option and long-term incentive plans, under which repurchases are limited to proceeds received from exercises of stock options and the tax benefits associated therewith (the “1999 Repurchase Program”). The 1999 Repurchase Program is solely funded by proceeds from stock option exercises, and the tax benefit from these exercises.

Previous wording

For the first three quarters of 2025, we invested $947 million to repurchase 14.0 million Kroger common shares at an average price of $67.47 per share, which includes excise tax related to the shares repurchased. In addition, the final delivery under the ASR agreement occurred during the third quarter of 2025, which included the settlement of 10.0 million Kroger common shares. The shares repurchased in the first three quarters of 2025 were reacquired under the December 2024 Repurchase Program and the 1999 Repurchase Program.

Current wording

During the first quarter of 2026, we invested $213 million to repurchase 3.1 million Kroger common shares at an average price of $67.77 per share, which includes excise tax on the shares repurchased. These shares were reacquired under the December 2025 Repurchase Program, the December 2024 Repurchase Program, and the 1999 Repurchase Program.

Previous wording

As of November 8, 2025, there was $1.8 billion remaining under the December 2024 Repurchase Program, which excludes excise tax on share repurchases in excess of issuances. Amounts available under the 1999 Repurchase Program are dependent upon option exercise activity. The authority remaining under the December 2024 Repurchase Program and the 1999 Repurchase Program do not have expiration dates but may be suspended or terminated by our Board of Directors at any time.

Current wording

The December 2024 Repurchase Program was exhausted during the first quarter of 2026. As of May 23, 2026, there was $1.8 billion remaining under the December 2025 Repurchase Program, which excludes excise tax on share repurchases in excess of issuances. Amounts available under the 1999 Repurchase Program are dependent upon option exercise activity. The December 2025 Repurchase Program and the 1999 Repurchase Program do not have any expiration dates, but may be suspended or terminated by our Board of Directors at any time.

Previous wording

We held cash and temporary cash investments of $4.0 billion as of November 8, 2025. We actively manage our cash and temporary cash investments in order to internally fund operating activities, support and invest in our core businesses, make scheduled interest and principal payments on our borrowings and return cash to shareholders through cash dividend payments and share repurchases. Our current levels of cash, borrowing capacity and balance sheet leverage provide us with the operational flexibility to adjust to changes in economic and market conditions. We remain committed to our dividend, and growing our dividend over time, subject to Board approval, as well as share repurchase programs, and we will continue to evaluate the optimal use of any excess free cash flow, consistent with our capital allocation strategy.

Current wording

We held cash and temporary cash investments of $2.9 billion as of May 23, 2026. We actively manage our cash and temporary cash investments in order to internally fund operating activities, support and invest in our core businesses, make scheduled interest and principal payments on our borrowings and return cash to shareholders through cash dividend payments and share repurchases. Our current levels of cash, borrowing capacity and balance sheet leverage provide us with the operational flexibility to adjust to changes in economic and market conditions. We remain committed to our dividend, and growing our dividend over time, subject to Board approval, as well as share repurchase programs and we will continue to evaluate the optimal use of any excess free cash flow, consistent with our capital allocation strategy.

Previous wording

We expect to meet our short-term and long-term liquidity needs with cash and temporary cash investments on hand as of November 8, 2025, cash flows from our operating activities and other sources of liquidity, including borrowings under our commercial paper program and bank credit facility. Our short-term and long-term liquidity needs include anticipated requirements for working capital to maintain our operations, pension plan commitments, interest payments and scheduled principal payments of debt and commercial paper, servicing our lease obligations, self-insurance liabilities, capital investments, scheduled opioid settlement payments and other purchase obligations. We may also require additional capital in the future to fund organic growth opportunities, increased capacity in our customer fulfillment network, joint ventures or other business partnerships, property development, acquisitions, dividends and share repurchases. In addition, we generally operate with a working capital deficit due to our efficient use of cash in funding operations and because we have consistent access to the capital markets. We believe we have adequate coverage of our debt covenants to continue to maintain our current investment grade debt ratings and to respond effectively to competitive conditions.

Current wording

We expect to meet our short-term and long-term liquidity needs with cash and temporary cash investments on hand as of May 23, 2026, cash flows from our operating activities and other sources of liquidity, including borrowings under our commercial paper program and revolving credit facility. Our short-term and long-term liquidity needs include anticipated requirements for working capital to maintain our operations, pension plan commitments, interest payments and scheduled principal payments of debt and commercial paper, servicing our lease obligations, self-insurance liabilities, capital investments, scheduled opioid settlement payments and other purchase obligations. We may also require additional capital in the future to fund organic growth opportunities, increased capacity of Delivery solutions, joint ventures or other business partnerships, property development, acquisitions, dividends and share repurchases. In addition, we generally operate with a working capital deficit due to our efficient use of cash in funding operations and because we have consistent access to the capital markets. We believe we have adequate coverage of our debt covenants to continue to maintain our current investment grade debt ratings and to respond effectively to competitive conditions.

Previous wording

For additional information about our debt activity in the first three quarters of 2025, see Note 2 to the Consolidated Financial Statements.

Current wording

For additional information about our debt activity in the first quarter of 2026, see Note 2 to the Consolidated Financial Statements.

Previous wording

We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating results and financial position, and we apply those accounting policies in a consistent manner. Our critical accounting policies are summarized in Note 1 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 1, 2025.

Current wording

We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating results and financial position, and we apply those accounting policies in a consistent manner. Our significant accounting policies are summarized in Note 1 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.