Kroger Reports First Quarter 2020 Results & Provides Update on COVID-19 Response.

CINCINNATI: The Kroger Co. (NYSE: KR) today reported its first quarter 2020 results, provided a Restock Kroger progress update on the three-year transformation plan and an update to the COVID-19 response.

Comments from Chairman and CEO Rodney McMullen

"The COVID-19 pandemic and the most recent instances of racial injustice have changed our country in unmistakable ways, not the least of which is the devastating loss of life and livelihood that has affected so many Americans. Kroger remains guided by our purpose and our values. I am proud of our associates who stepped up when we were called to be there for our customers, communities and each other. Our company is proud to stand with our Black associates, customers and communities against racism and for a more just and equitable society.

Under Restock Kroger, we have made significant investments over the last several years to establish a seamless digital ecosystem, strengthen Our Brands and our personalization capabilities, and to enhance product freshness and quality. These investments helped Kroger deliver improved results in 2019, a strong start to the quarter, and very much came to the forefront as we provided our customers with the fresh food and essentials they have needed during the pandemic.

We are proud of our heroic and dedicated associates who are serving our customers when they need us most. As America enters the next phase of the pandemic, we know that our associates will continue to rise to meet the challenge, delivering Fresh for Everyone and helping our customers, communities and America emerge even stronger."

Financial Results

1Q20 ($ in millions; except EPS)

1Q19 ($ in millions; except EPS)

ID Sales (Table 4)

19.0%

1.5%

EPS

$1.52

$0.95

Adjusted EPS (Table 6)

$1.22

$0.72

Operating Profit

$1,326

$901

Adjusted FIFO Operating Profit (Table 7)

$1,453

$957

FIFO Gross Margin Rate*

Increased 44 basis points

OG&A Rate*

Increased 51 basis points

*without fuel and adjustment items, if applicable

Total company sales were $42 billion in the first quarter, compared to $37 billion for the same period last year. Excluding fuel and dispositions, sales grew 19.1%.

Gross margin was 24.3% of sales for the first quarter. The FIFO gross margin rate excluding fuel increased 44 basis points, due to sales leverage related to shrink, transportation, warehousing and advertising costs.

The LIFO charge for the quarter was $31 million, compared to $15 million for the same period last year, primarily...