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Gross margin was 22.7% of sales for the fourth quarter compared to 22.3% for the same period last year. The improvement in gross margin was primarily attributable to the sale of Kroger Specialty Pharmacy and lower shrink, partially offset by lower pharmacy margins and the LIFO charge.

The FIFO gross margin rate, excluding rent, depreciation and amortization, fuel, and the 53^rd week in 2023, increased 54 basis points compared to the same period last year. The improvement in rate was primarily attributable to the sale of Kroger Specialty Pharmacy and lower shrink, partially offset by lower pharmacy margins.

The LIFO charge for the quarter was $30 million, compared to a LIFO credit of $18 million for the same period last year.

The Operating, General and Administrative rate, excluding fuel, adjustment items and the 53^rd week in 2023, increased 16 basis points compared to the same period last year. The increase in rate, was primarily attributable to the sale of Kroger Specialty Pharmacy, increased incentive plan costs, and investment in associate wages, partially offset by the continued execution of cost savings initiatives.

Fiscal 2024 Financial Results

Total company sales were $147.1 billion in 2024, which includes $2.0 billion of Kroger Specialty Pharmacy sales, compared to $150.0 billion for the same period last year, including $2.7 billion from the 53^rd week in 2023 and $3.2 billion of Kroger Specialty Pharmacy sales. Excluding fuel, Kroger Specialty Pharmacy and the 53^rd week in 2023, sales increased 1.8% compared to the same period last year.

Gross margin was 22.3% of sales for 2024 compared to 21.8% for the same period last year. The improvement in gross margin was primarily attributable to the sale of Kroger Specialty Pharmacy, Our Brands performance and lower shrink, partially offset by lower pharmacy margins.

The FIFO gross margin rate, excluding rent, depreciation and amortization, fuel, and the 53^rd week in 2023, increased 32 basis points compared to the same period last year. The improvement in rate, excluding fuel and the 53^rd week, was primarily attributable to the sale of Kroger Specialty Pharmacy, Our Brands performance and lower shrink, partially offset by lower pharmacy margins.

The LIFO charge for 2024 was $95 million, compared to a LIFO charge of $113 million for the same period last year.

The Operating, General and Administrative rate, excluding fuel, adjustment items and the 53^rd week in 2023, increased 31 basis points compared to the same period last year. The increase in rate was primarily attributable to the sale of Kroger Specialty Pharmacy, increased incentive plan costs, an increase in costs due to the severity of general liability claims, and investment in associate wages, partially offset by the continued execution of cost savings initiatives.

Capital Allocation Strategy

Kroger expects to continue to generate strong free cash flow and remains committed to investing in the business to drive long-term sustainable net earnings growth, as well as maintaining its current investment grade debt rating. The Company expects to continue to pay its quarterly dividend and expects this to increase over time, subject to board approval.

Kroger's net total debt to adjusted EBITDA ratio is 1.79, compared to 1.33 a year ago, excluding the 53^rd week in 2023 (Table 5). The company's net total debt to adjusted EBITDA ratio target range is 2.30 to 2.50. Kroger's strong balance sheet provides ample opportunities for the Company to pursue growth and enhance shareholder value.

During the quarter, Kroger initially repurchased 65.6 million shares as part of previously announced $5 billion accelerated share repurchase program (ASR), which is expected to be completed by no later than the third fiscal quarter of Kroger's Fiscal 2025. The total numbers of shares purchased by Kroger pursuant to the ASR will be based on the average of the volume-weighted average prices of our common shares on specified dates during the term of the ASR agreement, less a discount, and subject to adjustments pursuant to their terms and conditions. The ASR is being completed under Kroger's $7.5 billion share repurchase authorization. In addition to the ASR program, Kroger has $2.5 billion of capacity remaining under its share repurchase authorization for incremental share repurchases over time.

Assuming current interest rates, we expect full-year net interest expense to be between $650 and $675 million in 2025.

Full-Year 2025 Guidance*

• Identical Sales without fuel of 2.0% – 3.0%

• Adjusted FIFO Operating Profit of $4.7 – $4.9 billion

• Adjusted net earnings per diluted share of $4.60 – $4.80

• Adjusted Free Cash Flow of $2.8 – $3.0 billion**

• Capital expenditures of $3.6 – $3.8 billion

• Adjusted effective tax rate of 23%***

Comments from Interim CFO Todd Foley

"Kroger's 2024 results demonstrate the resilience of our value creation model, which is generating solid results and strong free cash flow.

Investments made to diversify our business have added more ways for Kroger to drive sustainable future growth. With our strengthened balance sheet, we plan to continue to invest in our business through new store growth, grow our dividend subject to board approval, and return excess cash to our shareholders through share repurchases to drive shareholder returns in 2025, consistent with our long-term growth expectations.

The strength of our model and the momentum in our business give us confidence in our 2025 growth plans."

Fourth Quarter 2024 Highlights

Leading with Fresh  

• Introduced more than 900 new Our Brands items, including 370 fresh items, in 2024

• Announced new Simple Truth meal bundles designed to make healthy eating simpler for customers

• Achieved produce identical sales which outpaced total company identical sales without fuel

Accelerating with Digital

• Increased delivery sales by 18% over last year, excluding the 53^rd week in 2023, led by Customer Fulfillment Centers

• Held 12 Merry Days Savings event, a mega-sales event helping customers save with special digital offers during the holiday season

Associate Experience

• Achieved record retention rate for store and enterprise associates this year which led to improved productivity and more consistent customer experience

• Named by Computerworld to the 2025 List of Best Places to Work in IT

• Supported continuing education with almost 5,500 associates, 89% of whom are hourly, taking advantage of Kroger's education assistance program in 2024

• Recognized as a leader in Workplace Culture and Pharmacy Customer Service by Forbes

Live Our Purpose

• Responded to the Los Angeles wildfires with supplies and monetary donations to support those affected

• Recognized as one of Newsweek's "Most Responsible Companies" for 2025

• Expanded prescription drug safety program to more than 470 U.S. schools

About Kroger

At The Kroger Co. (NYSE: KR), we are dedicated to our Purpose: To Feed the Human Spirit™. We are, across our family of companies nearly 420,000 associates who serve over 11 million customers daily through a seamless digital shopping experience and retail food stores under a variety of banner names, serving America through food inspiration and uplift, and creating #ZeroHungerZeroWaste communities. To learn more about us, visit our newsroom and investor relations site.

Kroger's fourth quarter 2024 ended on February 1, 2025.

Note: Fuel sales have historically had a low gross margin rate and operating expense rate as compared to corresponding rates on non-fuel sales. As a result, Kroger discusses the changes in these rates excluding the effect of fuel.

Please refer to the supplemental information presented in the tables for reconciliations of the non-GAAP financial measures used in this press release to the most comparable GAAP financial measure and related disclosure. As noted above, Kroger is unable to provide a full reconciliation of the GAAP and non-GAAP measures used in its 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 GAAP financial results.

This press release contains certain statements that constitute "forward-looking statements" about Kroger's financial position and the future performance of the company. 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 or phrases such as "achieve," "committed," "confidence," "continue," "deliver," "drive," "expect," "future," "guidance," "model," "opportunities," "outlook," "plan," "strategy," "target," "trends," "will," and variations of such words and similar phrases. 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, as well as the following:

Kroger's ability to achieve sales, earnings, incremental FIFO operating profit, and adjusted free cash flow goals may be affected by: labor negotiations; potential work stoppages; changes in the unemployment rate; pressures in the labor market; changes in government-funded benefit programs; changes in the types and numbers of businesses that compete with Kroger; pricing and promotional activities of existing and new competitors, and the aggressiveness of that competition; Kroger's response to these actions; the state of the economy, including interest rates, the inflationary, disinflationary and/or deflationary trends and such trends in certain commodities, products and/or operating costs; the geopolitical environment including wars and conflicts; unstable political situations and social unrest; changes in tariffs; the effect that fuel costs have on consumer spending; volatility of fuel margins; manufacturing commodity costs; supply constraints; diesel fuel costs related to Kroger's logistics operations; trends in consumer spending; the extent to which Kroger's customers exercise caution in their purchasing in response to economic conditions; the uncertainty of economic growth or recession; stock repurchases; changes in the regulatory environment in which Kroger operates, along with changes in federal policy and at regulatory agencies; Kroger's ability to retain pharmacy sales from third party payors; consolidation in the healthcare industry, including pharmacy benefit managers; Kroger's ability to negotiate modifications to multi-employer pension plans; natural disasters or adverse weather conditions; the effect of public health crises or other significant catastrophic events; the potential costs and risks associated with potential cyber-attacks or data security breaches; the success of Kroger's future growth plans; the ability to execute our growth strategy and value creation model, including continued cost savings, growth of our alternative profit businesses, and our ability to better serve our customers and to generate customer loyalty and sustainable growth through our strategic pillars of fresh, our brands, personalization, and seamless; the outcome of litigation matters, including those relating to the terminated transaction with Albertsons; and the risks relating to or arising from our opioid litigation settlements, including the risk of litigation relating to persons, entities, or jurisdictions that do not participate in those settlements . Our ability to achieve these goals may also be affected by our ability to manage the factors identified above. Our ability to execute our financial strategy may be affected by our ability to generate cash flow.

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

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.

Note: Kroger's quarterly conference call with investors will broadcast live at 10 a.m. (ET) on March 6, 2025 at ir.kroger.com. An on-demand replay of the webcast will be available at approximately 1 p.m. (ET) on Thursday, March 6, 2025.

4^th Quarter 2024 Tables Include:

1. Consolidated Statements of Operations

2. Consolidated Balance Sheets

3. Consolidated Statements of Cash Flows

4. Supplemental Sales Information

5. Reconciliation of Net Total Debt and Net Earnings Attributable to The Kroger Co. to Adjusted EBITDA

6. Net Earnings Per Diluted Share Excluding the Adjustment Items

7. Operating Profit Excluding the Adjustment Items

8. Adjusted Free Cash Flow

9. Gross Margin