KROGER CO

Previous 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.

Current wording

This 10-Q, including the financial statement notes and the following 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 “achieve,” “affect,” “anticipate,” “believe,” “committed,” “continue,” “could,” “drive,” “estimate,” “expect,” “future,” “goals,” “intend,” “maintain,” “may,” “model,” “plan,” “strategy,” “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

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”:

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 two quarters of 2026 include the following, which we define as the “2026 Adjusted Items”:

Previous 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.

Current wording

Total sales increased in the first two quarters of 2026, compared to first two quarters of 2025, by 2.1%. 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, closed stores and fulfillment center exits in markets where Kroger does not operate stores. Total supermarket fuel sales increased 23.1% in the first two quarters of 2026, compared to the first two quarters of 2025, primarily due to an increase in the average retail fuel price of 23.9%. Total sales, excluding fuel, Vitacost.com and fulfillment center exits in markets where Kroger does not operate stores, increased 0.5% in the first two quarters of 2026, compared to the first two quarters of 2025, which was primarily due to our identical sales increase, excluding fuel and the Labor Dispute, of 0.6%, partially offset by closed stores. Identical sales, excluding fuel and the Labor Dispute, for the first two quarters of 2026, compared to the first two quarters of 2025, increased primarily due to increased eCommerce, natural foods, meat and seafood, bakery and pharmacy 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 133 basis points, a customer shift from brand to generic prescriptions of 50 basis points, egg deflation of 49 basis points and the effects of the Cyclospora outbreak of 15 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 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.

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 second quarter andfirst two quarters of 2026.

Previous 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.

Current wording

Our gross margin rates, as a percentage of sales, were 22.6% in the first two quarters of 2026 and 22.8% in the first two quarters 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, higher shrink and greater value delivered for customers, partially offset by higher pharmacy margins, improved eCommerce profitability, increased third-party media revenue, sourcing improvements, egg deflation, tariff refunds, which were fully invested in value, and lower depreciation and amortization, as a percentage of sales.

Previous 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.

Current wording

Our LIFO charge was $39 million in the second quarter of 2026, compared to $62 million in the second quarter of 2025. Our LIFO charge was $91 million in the first two quarters of 2026, compared to $102 million in the first two quarters of 2025. The decrease in the LIFO charge was due to lower 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 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.

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, our FIFO gross margin rate increased 13 basis points in the second quarter of 2026, compared to the second quarter of 2025. This increase resulted primarily from improvement in eCommerce profitability, increased third-party media revenue, higher pharmacy margins, sourcing improvements and tariff refunds, which were fully invested in value, partially offset by higher transportation costs, as a percentage of sales, higher shrink and greater value delivered for customers.

Previous 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.

Current wording

OG&A expenses, as a percentage of sales, were 17.2% in the first two quarters of 2026 and 17.6% in the first two quarters of 2025. The decrease in the first two quarters of 2026, compared to the first two quarters 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, lower incentive plan costs, decreased multi-employer pension contributions and the 2025 OG&A Adjusted Items, partially offset by planned investments in associates, supermarket sales deleverage 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 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.

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 Second Quarter OG&A Adjusted Items and the 2025 Second Quarter OG&A Adjusted Items, our OG&A rate increased 33 basis points in the second quarter of 2026, compared to the second quarter of 2025. This increase resulted primarily from planned investment in associates, increased healthcare costs and supermarket sales deleverage, partially offset by continued execution of broad-based cost savings initiatives that drive administrative efficiencies, including store productivity, and lower incentive plan costs.

Previous wording

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

Current wording

Rent expense remained relatively consistent, as a percentage of sales, for the second quarter and first two quarters of 2026, compared to the same periods of 2025.

Previous wording

Depreciation and amortization expense decreased 18 basis points, as a percentage of sales, in the first quarter of 2026, compared to the first quarter of 2025. This decrease was primarily due to the fulfillment network closures in the fourth quarter of 2025.

Current wording

Depreciation and amortization expense decreased 16 basis points, as a percentage of sales, in the second quarter of 2026 compared to the second quarter of 2025. Depreciation and amortization expense decreased 17 basis points in the first two quarters of 2026, compared to the first two quarters of 2025. This decrease in both periods was primarily due to the fulfillment network closures in the fourth quarter of 2025.

Previous wording

Operating profit was $1.4 billion, or 3.05% of sales, for the first quarter of 2026, compared to $1.3 billion, or 2.93% of sales, for the first quarter of 2025. Operating profit, as a percentage of sales, increased 12 basis points in the first quarter of 2026, compared to the first quarter of 2025, primarily due to decreased OG&A and depreciation and amortization expenses, as a percentage of sales, and increased fuel operating profit, partially offset by lower FIFO gross margin.

Current wording

Operating profit was $2.4 billion, or 2.94% of sales, for the first two quarters of 2026, compared to $2.2 billion, or 2.76% of sales, for the first two quarters of 2025. Operating profit, as a percentage of sales, increased 18 basis points in the first two quarters of 2026, compared to the first two quarters of 2025, primarily due to decreased OG&A and depreciation and amortization expenses, as a percentage of sales, and increased fuel operating profit, partially offset by a lower FIFO gross margin rate.

Previous 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.

Current wording

FIFO operating profit was $2.5 billion, or 3.06% of sales, for the first two quarters of 2026, compared to $2.3 billion, or 2.89% of sales, for the first two quarters of 2025. FIFO operating profit, as a percentage of sales, excluding the 2026 and 2025 Adjusted Items, decreased 5 basis points in the first two quarters of 2026, compared to the first two quarters of 2025, primarily due to a lower FIFO gross margin rate, partially offset by decreased OG&A and depreciation and amortization expenses, as a percentage of sales, and increased fuel operating profit.

Previous wording

Net interest expense totaled $209 million in the first quarter of 2026, compared to $199 million in the first quarter of 2025. This increase resulted primarily from decreased interest income earned on our cash and temporary cash investments due to decreased balances of cash and temporary cash investments in the first quarter of 2026, compared to the first quarter of 2025, partially offset by decreased interest expense on the average total outstanding debt in the first quarter of 2026, compared to the first quarter of 2025.

Current wording

Net interest expense totaled $156 million in the second quarter of 2026, compared to $144 million in the second quarter of 2025. Net interest expense totaled $365 million in the first two quarters of 2026, compared to $343 million in the first two quarters of 2025. This increase resulted primarily from decreased interest income earned on our cash and temporary cash investments due to decreased balances of cash and temporary cash investments in the first two quarters of 2026, compared to the first two quarters of 2025, partially offset by decreased interest expense on the average total outstanding debt in the first two quarters of 2026, compared to the first two quarters of 2025.

Previous 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.

Current wording

The effective income tax rate was 23.6% for the second quarter of 2026 and 21.0% for the second quarter of 2025. The effective income tax rate was 23.4% for the first two quarters of 2026 and 21.2% for the first two quarters of 2025. The effective income tax rate for the second 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 deductions. The effective income tax rate for the first two quarters 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 deductions including the benefit from share-based payments. The effective income tax rate for the second quarter of 2025 equaled the federal statutory rate due to the effect of state income taxes being fully offset by the utilization of tax credits and deductions including the benefit from share-based payments. The effective income tax rate for the first two quarters 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

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.

Current wording

Net earnings of $2.51 per diluted share for the first two quarters of 2026 represented an increase compared to net earnings of $2.20 per diluted share for the first two quarters of 2025. Excluding the 2026 and 2025 Adjusted Items, adjusted net earnings of $2.67 per diluted share for the first two quarters of 2026 represented an increase of 6% compared to adjusted net earnings of $2.53 per diluted share for the first two quarters 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, increased interest expense and higher income tax expense.

Previous 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):

Current wording

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

Previous 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:

Current wording

We generated $3.1 billion of cash from operations in the first two quarters of 2026 compared to $3.7 billion in the first two quarters 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 paid for income taxes decreased in the first quarter of 2026, compared to the first quarter of 2025, primarily due to applying a 2025 tax overpayment to reduce our 2026 estimated tax payment.

Current wording

Cash paid for income taxes decreased in the first two quarters of 2026, compared to the first two quarters of 2025, primarily due to applying a 2025 tax overpayment to reduce our 2026 estimated tax payments.

Previous wording

Investing activities used cash of $1.3 billion in the first quarter of 2026, compared to $1.0 billion in the first quarter of 2025. The amount of cash used by investing activities increased in the first quarter of 2026, compared to the first quarter of 2025, primarily due to an increase in payments for property and equipment in the first quarter of 2026, compared to first quarter 2025.

Current wording

Investing activities used cash of $2.4 billion in the first two quarters of 2026, compared to $2.1 billion in the first two quarters of 2025. The amount of cash used by investing activities increased in the first two quarters of 2026, compared to the first two quarters of 2025, primarily due to an increase in payments for property and equipment, including payments for lease buyouts, due to the timing of major storing projects in the first two quarters of 2026, compared to the first two quarters of 2025.

Previous 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.

Current wording

Cash used by financing activities was $2.3 billion in the first two quarters of 2026, compared to $657 million in the first two quarters of 2025. The amount of cash used by financing activities increased in the first two quarters of 2026, compared to the first two quarters of 2025, primarily due to an increase in treasury stock purchases and 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, 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.

Current wording

Capital investments, including changes in construction-in-progress payables and excluding the purchase of leased facilities, totaled $2.7 billion for the first two quarters of 2026, compared to $2.0 billion for the first two quarters of 2025. This increase is primarily due to the timing of major storing projects in the first two quarters of 2026, compared to the first two quarters 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 second quarter of 2026, we opened, expanded, relocated or acquired 35 supermarkets and completed 272 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 second quarter of 2026 decreased 0.1% from the end of the second quarter of 2025. Excluding mergers, acquisitions and operational closings, total supermarket square footage at the end of the second quarter of 2026 increased 1.3% over the end of the second quarter of 2025.

Previous 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.

Current wording

As of August 15, 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 August 15, 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 $4 million as of August 15, 2026.

Previous 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%.

Current wording

Total debt, including both the current and long-term portions of obligations under finance leases, decreased $569 million as of August 15, 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

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.

Current wording

During the first two quarters of 2026, we invested $1.3 billion to repurchase 21.2 million Kroger common shares at an average price of $60.63 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

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.

Current wording

The December 2024 Repurchase Program was exhausted during the first quarter of 2026. As of August 15, 2026, there was $801 million 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 $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.

Current wording

We held cash and temporary cash investments of $1.7 billion as of August 15, 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 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.

Current wording

We expect to meet our short-term and long-term liquidity needs with cash and temporary cash investments on hand as of August 15, 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, proposed acquisition of Giant Eagle and other purchase and contractual 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 quarter of 2026, see Note 2 to the Consolidated Financial Statements.

Current wording

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