Cover and table of contents

​

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

​

​

FORM 10-Q

​

​

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

​

For the quarterly period ended November 8, 2025

OR

​

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

​

For the transition period from to

Commission file number 1-303

​

​

​

The Kroger Co.

(Exact name of registrant as specified in its charter)

​

​

​	​	​
Ohio	​	31-0345740
(State or other jurisdiction of	​	(I.R.S. Employer
incorporation or organization)	​	Identification No.)

​

1014 Vine Street**,** Cincinnati**,** Ohio 45202

(Address of principal executive offices)

(Zip Code)

​

(513) 762-4000

(Registrant’s telephone number, including area code)

​

Unchanged

(Former name, former address and former fiscal year, if changed since last report)

​

​

Securities registered pursuant to Section 12(b) of the Act:

​

Title of each class	Trading Symbol	Name of each exchange on which registered
Common, $1.00 Par Value	KR	New York Stock Exchange

​

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

​

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

​

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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​	​	​	​	​
Large accelerated filer	☒	​	Accelerated filer	☐
Non-accelerated filer	☐	​	Smaller reporting company	☐
​	​	​	Emerging growth company	☐

​

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

​

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

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There were 632,849,160 shares of Common Stock ($1 par value) outstanding as of December 9, 2025.

​

​

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PART I – FINANCIAL INFORMATION

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Item 1.	Financial Statements.

​

THE KROGER CO.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended					​	Three Quarters Ended					​
​	​	November 8,		​	November 9,		​	November 8,		​	November 9,		​
(In millions, except per share amounts)		2025			2024			2025			2024
Sales	​	$	33,859	​	$	33,634	​	$	112,917	​	$	112,815	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating expenses	​	​	​	​	​	​	​	​	​	​	​	​	​
Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below	​		25,957	​		25,948	​		86,638	​		87,332	​
Operating, general and administrative	​		8,467	​		5,898	​		22,358	​		19,388	​
Rent	​		194	​		203	​		667	​		672	​
Depreciation and amortization	​		782	​		757	​		2,610	​		2,486	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating profit (loss)	​		(1,541)	​		828	​		644	​		2,937	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Other income (expense)	​	​	​	​	​	​	​	​	​	​	​	​	​
Net interest expense (see Note 2)	​	​	(146)	​	​	(86)	​	​	(490)	​	​	(294)	​
Non-service component of company-sponsored pension plan (expense) benefits	​	​	(2)	​	​	3	​	​	(6)	​	​	9	​
Loss on investments	​	​	(101)	​	​	(20)	​	​	(64)	​	​	(125)	​
Gain on the sale of business	​		—	​		79	​	​	—	​		79	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings (loss) before income tax expense	​		(1,790)	​		804	​		84	​		2,606	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Income tax expense (benefit)	​		(475)	​		187	​		(79)	​		568	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings (loss) including noncontrolling interests	​		(1,315)	​		617	​		163	​		2,038	​
Net income (loss) attributable to noncontrolling interests	​		5	​		(1)	​		8	​		7	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings (loss) attributable to The Kroger Co.	​	$	(1,320)	​	$	618	​	$	155	​	$	2,031	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings (loss) attributable to The Kroger Co. per basic common share	​	$	(2.02)	​	$	0.85	​	$	0.23	​	$	2.79	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Average number of common shares used in basic calculation	​		655	​		723	​		659	​		722	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings (loss) attributable to The Kroger Co. per diluted common share	​	$	(2.02)	​	$	0.84	​	$	0.23	​	$	2.77	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Average number of common shares used in diluted calculation	​		655	​		728	​		662	​		728	​

​

The accompanying notes are an integral part of the Consolidated Financial Statements.

​

​

THE KROGER CO.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		Third Quarter Ended					​	Three Quarters Ended					​
​	​	November 8,		​	November 9,		​	November 8,		​	November 9,		​
(In millions)		2025			2024			2025			2024
Net earnings (loss) including noncontrolling interests	​	$	(1,315)	​	$	617	​	$	163	​	$	2,038	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Other comprehensive income (loss)	​	​	​	​	​	​	​	​	​	​	​	​	​
Change in pension and other postretirement defined benefit plans, net of income tax(1)	​	​	1	​	​	(1)	​	​	2	​	​	(3)	​
Unrealized gains and losses on cash flow hedging activities, net of income tax(2)	​		—	​		(50)	​		—	​		(103)	​
Amortization of unrealized gains and losses on cash flow hedging activities, net of income tax(3)	​	​	1	​	​	2	​	​	6	​	​	6	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total other comprehensive income (loss)	​		2	​		(49)	​		8	​	​	(100)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Comprehensive income (loss)	​		(1,313)	​		568	​		171	​		1,938	​
Comprehensive income (loss) attributable to noncontrolling interests	​		5	​		(1)	​		8	​		7	​
Comprehensive income (loss) attributable to The Kroger Co.	​	$	(1,318)	​	$	569	​	$	163	​	$	1,931	​

(1)	Amount is net of tax of $(1) for the first three quarters of 2024.

(2)	Amount is net of tax of $(14) for the third quarter of 2024. Amount is net of tax of $(30) for the first three quarters of 2024.

(3)	Amount is net of tax of $1 for the third quarter of 2025. Amount is net of tax of $2 for the first three quarters of 2025 and $1 for the first three quarters of 2024.

​

The accompanying notes are an integral part of the Consolidated Financial Statements.

​

​

​

THE KROGER CO.

CONSOLIDATED BALANCE SHEETS

(unaudited)

​

​	​	​	​	​	​	​	​
​		November 8,			February 1,
(In millions, except par amounts)	​	2025		​	2025
ASSETS	​	​	​	​	​	​	​
Current assets	​	​	​	​	​	​	​
Cash and temporary cash investments	​	$	3,956	​	$	3,959	​
Store deposits in-transit	​		1,111	​		1,312	​
Receivables	​		2,373	​		2,195	​
FIFO inventory	​		10,255	​		9,442	​
LIFO reserve	​		(2,541)	​		(2,404)	​
Prepaid and other current assets	​	​	840	​	​	769	​
Total current assets	​		15,994	​		15,273	​
​	​	​	​	​	​	​	​
Property, plant and equipment, net	​		24,087	​		25,703	​
Operating lease assets	​	​	6,791	​	​	6,839	​
Intangibles, net	​		860	​		834	​
Goodwill	​		2,674	​		2,674	​
Other assets	​		1,034	​		1,293	​
​	​	​	​	​	​	​	​
Total Assets	​	$	51,440	​	$	52,616	​
​	​	​	​	​	​	​	​
LIABILITIES	​	​	​	​	​	​	​
Current liabilities	​	​	​	​	​	​	​
Current portion of long-term debt including obligations under finance leases	​	$	1,929	​	$	272	​
Current portion of operating lease liabilities	​	​	673	​	​	599	​
Accounts payable	​		10,547	​		10,124	​
Accrued salaries and wages	​		1,216	​		1,330	​
Other current liabilities	​		3,857	​		3,615	​
Total current liabilities	​		18,222	​		15,940	​
​	​	​	​	​	​	​	​
Long-term debt including obligations under finance leases	​	​	16,081	​	​	17,633	​
Noncurrent operating lease liabilities	​	​	6,516	​	​	6,578	​
Deferred income taxes	​		917	​		1,417	​
Pension and postretirement benefit obligations	​		370	​		387	​
Other long-term liabilities	​		2,295	​		2,380	​
​	​	​	​	​	​	​	​
Total Liabilities	​		44,401	​		44,335	​
​	​	​	​	​	​	​	​
Commitments and contingencies (see Note 5)	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
SHAREOWNERS’ EQUITY	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
Preferred shares, $100 par per share, 5 shares authorized and unissued	​	​	—	​	​	—	​
Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2025 and 2024	​		1,918	​		1,918	​
Additional paid-in capital	​		3,871	​		3,087	​
Accumulated other comprehensive loss	​		(613)	​		(621)	​
Accumulated earnings	​		28,205	​		28,724	​
Common shares in treasury, at cost, 1,276 shares in 2025 and 1,258 shares in 2024	​		(26,339)	​		(24,823)	​
​	​	​	​	​	​	​	​
Total Shareowners’ Equity - The Kroger Co.	​		7,042	​		8,285	​
Noncontrolling interests	​		(3)	​		(4)	​
​	​	​	​	​	​	​	​
Total Equity	​		7,039	​		8,281	​
​	​	​	​	​	​	​	​
Total Liabilities and Equity	​	$	51,440	​	$	52,616	​

​

The accompanying notes are an integral part of the Consolidated Financial Statements.

​

​

THE KROGER CO.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

​

​	​	​	​	​	​	​	​
​	​	Three Quarters Ended					​
​	​	November 8,		​	November 9,		​
(In millions)		2025			2024
Cash Flows from Operating Activities:	​	​	​	​	​	​	​
Net earnings including noncontrolling interests	​	$	163	​	$	2,038	​
Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities:	​	​	​	​	​	​	​
Depreciation and amortization	​		2,610	​		2,486	​
Asset impairment and store closure charges	​	​	125	​	​	44	​
Fulfillment network impairment and related charges	​	​	2,585	​	​	—	​
Operating lease asset amortization	​	​	453	​	​	465	​
LIFO charge	​		146	​		66	​
Share-based employee compensation	​		120	​		133	​
Deferred income taxes	​		(522)	​		9	​
Gain on sale of business	​	​	—	​	​	(79)	​
Gain on sale of assets	​	​	(16)	​	​	(8)	​
Loss on investments	​	​	64	​	​	125	​
Other	​		(12)	​		(15)	​
Changes in operating assets and liabilities:	​	​	​	​	​	​	​
Store deposits in-transit	​		200	​		134	​
Receivables	​		(93)	​		(238)	​
Inventories	​		(896)	​		(662)	​
Prepaid and other current assets	​		(92)	​		(204)	​
Accounts payable	​		502	​		578	​
Accrued expenses	​		59	​		77	​
Income taxes receivable and payable	​		(86)	​	​	28	​
Operating lease liabilities	​	​	(450)	​	​	(451)	​
Other	​		(202)	​		(136)	​
​	​	​	​	​	​	​	​
Net cash provided by operating activities	​		4,658	​		4,390	​
​	​	​	​	​	​	​	​
Cash Flows from Investing Activities:	​	​	​	​	​	​	​
Payments for property and equipment, including payments for lease buyouts	​		(2,909)	​		(3,133)	​
Proceeds from sale of assets	​		54	​	​	310	​
Net proceeds from sale of business	​	​	—	​	​	464	​
Other	​		(160)	​		(43)	​
​	​	​	​	​	​	​	​
Net cash used by investing activities	​		(3,015)	​		(2,402)	​
​	​	​	​	​	​	​	​
Cash Flows from Financing Activities:	​	​	​	​	​	​	​
Proceeds from issuance of long-term debt	​		38	​		10,499	​
Payments on long-term debt including obligations under finance leases	​		(180)	​	​	(145)	​
Dividends paid	​	​	(659)	​	​	(651)	​
Financing fees paid	​	​	—	​	​	(116)	​
Proceeds from issuance of capital stock	​	​	180	​		106	​
Treasury stock purchases	​		(941)	​		(125)	​
Other	​	​	(84)	​		(81)	​
​	​	​	​	​	​	​	​
Net cash (used) provided by financing activities	​		(1,646)	​		9,487	​
​	​	​	​	​	​	​	​
Net (decrease) increase in cash and temporary cash investments	​		(3)	​		11,475	​
​	​	​	​	​	​	​	​
Cash and temporary cash investments:	​	​	​	​	​	​	​
Beginning of year	​		3,959	​		1,883	​
End of period	​	$	3,956	​	$	13,358	​
​	​	​	​	​	​	​	​
Reconciliation of capital investments:	​	​	​	​	​	​	​
Payments for property and equipment, including payments for lease buyouts	​	$	(2,909)	​	$	(3,133)	​
Payments for lease buyouts	​	​	11	​		46	​
Changes in construction-in-progress payables	​		35	​		271	​
Total capital investments, excluding lease buyouts	​	$	(2,863)	​	$	(2,816)	​
​	​	​	​	​	​	​	​
Disclosure of cash flow information:	​	​	​	​	​	​	​
Cash paid during the year for net interest	​	$	570	​	$	150	​
Cash paid during the year for income taxes	​	$	530	​	$	526	​

​

The accompanying notes are an integral part of the Consolidated Financial Statements.

​

​

THE KROGER CO.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS’ EQUITY

(unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	Accumulated		​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	Additional		​	​	​	​	​	​	Other		​	​	​	​	​	​	​	​	​
​	​	Common Stock				​	Paid-In		​	Treasury Stock				​	Comprehensive		​	Accumulated		​	Noncontrolling		​	​	​
(In millions, except per share amounts)		Shares		Amount			Capital			Shares		Amount			Income (Loss)			Earnings			Interest			Total
Balances at February 3, 2024	​	1,918	​	$	1,918	​	$	3,922		1,198	​	$	(20,682)	​	$	(489)	​	$	26,946	​	$	(14)		$	11,601
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exercised		—	​		—	​		—		(3)	​		85	​		—	​		—	​		—	​		85
Restricted stock issued		—	​		—	​		(76)		(1)	​		33	​		—	​		—	​		—	​		(43)
Treasury stock activity:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exchanged		—	​		—	​		—		2	​		(103)	​		—	​		—	​		—	​		(103)
Share-based employee compensation		—	​		—	​		57		—	​		—	​		—	​		—	​		—	​		57
Other comprehensive income net of tax of $22		—	​		—	​		—		—	​		—	​		70	​		—	​		—	​		70
Other		—	​		—	​		81		—	​		(81)	​		—	​		—	​		—	​		—
Cash dividends declared ($0.29 per common share)		—	​		—	​		—		—	​		—	​		—	​		(210)	​		—	​		(210)
Net earnings including noncontrolling interests		—	​		—	​		—		—	​		—	​		—	​		947	​		9	​		956
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances at May 25, 2024		1,918		$	1,918		$	3,984		1,196		$	(20,748)		$	(419)		$	27,683		$	(5)		$	12,413
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exercised		—	​		—	​		—		—	​		8	​		—	​		—	​		—	​		8
Restricted stock issued		—	​		—	​		(96)		(2)	​		56	​		—	​		—	​		—	​		(40)
Treasury stock activity:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exchanged		—	​		—	​		—		—	​		(13)	​		—	​		—	​		—	​		(13)
Share-based employee compensation		—	​		—	​		32		—	​		—	​		—	​		—	​		—	​		32
Other comprehensive income net of tax of $(38)		—	​		—	​		—		—	​		—	​		(121)	​		—	​		—	​		(121)
Other		—	​		—	​		67		—	​		(67)	​		—	​		—	​		—	​		—
Cash dividends declared ($0.32 per common share)		—	​		—	​		—		—	​		—	​		—	​		(232)	​		—	​		(232)
Net earnings (loss) including noncontrolling interests		—	​		—	​		—		—	​		—	​		—	​		466	​		(1)	​		465
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances at August 17, 2024		1,918		$	1,918		$	3,987		1,194		$	(20,764)		$	(540)		$	27,917		$	(6)		$	12,512
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exercised		—	​		—	​		—		—	​		13	​		—	​		—	​		—	​		13
Restricted stock issued		—	​		—	​		(2)		—	​		3	​		—	​		—	​		—	​		1
Treasury stock activity:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exchanged		—	​		—	​		—		—	​		(9)	​		—	​		—	​		—	​		(9)
Share-based employee compensation		—	​		—	​		44		—	​		—	​		—	​		—	​		—	​		44
Other comprehensive income net of income tax of $(14)		—	​		—	​		—		—	​		—	​		(49)	​		—	​		—	​		(49)
Other		—	​		—	​		9		—	​		(9)	​		—	​		—	​		1	​		1
Cash dividends declared ($0.32 per common share)		—	​		—	​		—		—	​		—	​		—	​		(236)	​		—	​		(236)
Net earnings (loss) including noncontrolling interests		—	​		—	​		—		—	​		—	​		—	​		618	​		(1)	​		617
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances at November 9, 2024		1,918		$	1,918		$	4,038		1,194		$	(20,766)		$	(589)		$	28,299		$	(6)		$	12,894
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exercised		—	​		—	​		—		—	​		21	​		—	​		—	​		—	​		21
Restricted stock issued		—	​		—	​		(2)		—	​		—	​		—	​		—	​		—	​		(2)
Treasury stock activity:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Treasury stock purchases, at cost		—	​		—	​		(1,000)		64	​		(4,038)	​		—	​		—	​		—	​		(5,038)
Stock options exchanged		—	​		—	​		—		—	​		(31)	​		—	​		—	​		—	​		(31)
Share-based employee compensation		—	​		—	​		42		—	​		—	​		—	​		—	​		—	​		42
Other comprehensive income net of income tax of $(11)		—	​		—	​		—		—	​		—	​		(32)	​		—	​		—	​		(32)
Other		—	​		—	​		9		—	​		(9)	​		—	​		—	​		2	​		2
Cash dividends declared ($0.32 per common share)		—	​		—	​		—		—	​		—	​		—	​		(209)	​		—	​		(209)
Net earnings including noncontrolling interests		—	​		—	​		—		—	​		—	​		—	​		634	​		—	​		634
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances at February 1, 2025		1,918		$	1,918		$	3,087		1,258		$	(24,823)		$	(621)		$	28,724		$	(4)		$	8,281

The accompanying notes are an integral part of the Consolidated Financial Statements.

​

THE KROGER CO.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS’ EQUITY

(unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	Accumulated		​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	Additional		​	​	​	​	​	​	Other		​	​	​	​	​	​	​	​	​
​	​	Common Stock				​	Paid-In		​	Treasury Stock				​	Comprehensive		​	Accumulated		​	Noncontrolling		​	​	​
(In millions, except per share amounts)		Shares		Amount			Capital			Shares		Amount			Income (Loss)			Earnings			Interest			Total
Balances at February 1, 2025	​	1,918	​	$	1,918	​	$	3,087		1,258	​	$	(24,823)	​	$	(621)	​	$	28,724	​	$	(4)	​	$	8,281
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exercised		—	​		—	​		—		(4)	​		145	​		—	​		—	​		—	​		145
Restricted stock issued		—	​		—	​		(65)		(1)	​		32	​		—	​		—	​		—	​		(33)
Treasury stock activity:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exchanged		—	​		—	​		—		4	​		(181)	​		—	​		—	​		—	​		(181)
Share-based employee compensation		—	​		—	​		38		—	​		—	​		—	​		—	​		—	​		38
Other comprehensive income net of tax of $2		—	​		—	​		—		—	​		—	​		2	​		—	​		—	​		2
Other		—	​		—	​		99		—	​		(99)	​		—	​		2	​		(3)	​		(1)
Cash dividends declared ($0.32 per common share)		—	​		—	​		—		—	​		—	​		—	​		(211)	​		—	​		(211)
Net earnings including noncontrolling interests		—	​		—	​		—		—	​		—	​		—	​		866	​		2	​		868
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances at May 24, 2025		1,918		$	1,918		$	3,159		1,257		$	(24,926)		$	(619)		$	29,381		$	(5)		$	8,908
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exercised		—	​		—	​		—		(1)	​		18	​		—	​		—	​		—	​		18
Restricted stock issued		—	​		—	​		(103)		(1)	​		54	​		—	​		—	​		—	​		(49)
Treasury stock activity:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exchanged		—	​		—	​		—		—	​		(22)	​		—	​		—	​		—	​		(22)
Share-based employee compensation		—	​		—	​		45		—	​		—	​		—	​		—	​		—	​		45
Other comprehensive income net of tax of $(1)		—	​		—	​		—		—	​		—	​		4	​		—	​		—	​		4
Other		—	​		—	​		73		—	​		(73)	​		—	​		(2)	​		(1)	​		(3)
Cash dividends declared ($0.35 per common share)		—	​		—	​		—		—	​		—	​		—	​		(234)	​		—	​		(234)
Net earnings including noncontrolling interests		—	​		—	​		—		—	​		—	​		—	​		609	​		1	​		610
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances at August 16, 2025		1,918		$	1,918		$	3,174		1,255		$	(24,949)		$	(615)		$	29,754		$	(5)		$	9,277
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exercised		—	​		—	​		—		(1)	​		17	​		—	​		—	​		—	​		17
Restricted stock issued		—	​		—	​		(3)		—	​		4	​		—	​		—	​		—	​		1
Treasury stock activity:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Treasury stock purchases, at cost		—	​		—	​		655		21	​		(1,381)	​		—	​		—	​		—	​		(726)
Stock options exchanged		—	​		—	​		—		1	​		(22)	​		—	​		—	​		—	​		(22)
Share-based employee compensation		—	​		—	​		37		—	​		—	​		—	​		—	​		—	​		37
Other comprehensive income net of income tax of $1		—	​		—	​		—		—	​		—	​		2	​		—	​		—	​		2
Other		—	​		—	​		8		—	​		(8)	​		—	​		—	​		(3)	​		(3)
Cash dividends declared ($0.35 per common share)		—	​		—	​		—		—	​		—	​		—	​		(229)	​		—	​		(229)
Net earnings (loss) including noncontrolling interests		—	​		—	​		—		—	​		—	​		—	​		(1,320)	​		5	​		(1,315)
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances at November 8, 2025		1,918		$	1,918		$	3,871		1,276		$	(26,339)		$	(613)		$	28,205		$	(3)		$	7,039

​

The accompanying notes are an integral part of the Consolidated Financial Statements.

​

​

​

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

​

All amounts in the Notes to the Unaudited Consolidated Financial Statements are in millions except per share amounts.

​

1.	ACCOUNTING POLICIES

​

Basis of Presentation and Principles of Consolidation

​

The accompanying financial statements include the consolidated accounts of The Kroger Co., its wholly-owned subsidiaries and other consolidated entities. The February 1, 2025 balance sheet was derived from audited financial statements and, due to its summary nature, does not include all disclosures required by generally accepted accounting principles (“GAAP”). Significant intercompany transactions and balances have been eliminated. References to the “Company” in these Consolidated Financial Statements mean the consolidated company.

​

In the opinion of management, the accompanying unaudited Consolidated Financial Statements include adjustments, all of which are of a normal, recurring nature that are necessary for a fair statement of results of operations for such periods but should not be considered as indicative of results for a full year. The financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted, pursuant to SEC regulations. Accordingly, the accompanying Consolidated Financial Statements should be read in conjunction with the financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2025.

​

The unaudited information in the Consolidated Financial Statements for the third quarters ended November 8, 2025 and November 9, 2024 includes the results of operations of the Company for the 12- and 40-week periods then ended.

​

Fair Value Measurements

​

Fair value measurements are classified and disclosed in one of the following three categories:

​

Level 1 – Quoted prices are available in active markets for identical assets or liabilities;

​

Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable; or

​

Level 3 – Unobservable pricing inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing an asset or liability.

​

The Company records cash and temporary cash investments, store deposits in-transit, receivables, prepaid and other current assets, accounts payable, accrued salaries and wages and other current liabilities at approximated fair value. Certain other investments and derivatives are recorded as Level 1, 2 or 3 instruments.

​

The fair value of certain financial instruments, measured using Level 1 inputs, was $119 and $183 as of November 8, 2025 and February 1, 2025, respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. An unrealized loss for these Level 1 investments of approximately $64 and $93 for the first three quarters of 2025 and 2024, respectively, is included in “Loss on investments” in the Company’s Consolidated Statements of Operations. An unrealized loss for these Level 1 investments of approximately $101 and $20 for the third quarters of 2025 and 2024, respectively, is included in “Loss on investments” in the Company’s Consolidated Statements of Operations.

​

In the first quarter of 2024, the Company fully exited its position in a Level 1 equity investment, receiving proceeds totaling approximately $303, resulting in a realized gain of $23, which is included in “Loss on investments” in the Company’s Consolidated Statements of Operations.

​

The Company's forward-starting interest rate swaps are considered Level 2 instruments. The Company values these forward-starting interest rate swaps using observable forward yield curves. These forward yield curves are classified as Level 2 inputs.

​

Refer to Note 2 for the disclosure of debt instrument fair values.

​

Accounts Payable Financing Arrangement

​

The Company has an agreement with a third party to provide an accounts payable tracking system which facilitates participating suppliers’ ability to finance payment obligations from the Company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not affected by suppliers’ decisions to finance amounts under this arrangement. The payment term that the Company has with participating suppliers under these programs is approximately 90 days. Outstanding obligations under these financing arrangements are included in “Accounts payable” in the Company’s Consolidated Balance Sheets for $285 and $294 as of November 8, 2025 and February 1, 2025, respectively.

​

Impairment of Long-Lived Assets

​

The Company monitors the carrying value of long-lived assets for potential impairment each quarter based on whether certain triggering events have occurred. These events include current period losses combined with a history of losses or a projection of continuing losses or a significant decrease in the market value of an asset. When a triggering event occurs, an impairment calculation is performed, comparing projected undiscounted future cash flows, utilizing current cash flow information and expected growth rates related to specific asset groups, to the carrying value for those asset groups. If the Company identifies impairment for long-lived assets to be held and used, the Company compares the assets’ current carrying value to the assets’ fair value. Fair value is based on current market values or discounted future cash flows. The Company records impairment when the carrying value exceeds fair market value. With respect to owned property and equipment held for disposal, the value of the property and equipment is adjusted to reflect recoverable values based on previous efforts to dispose of similar assets and current economic conditions. Impairment is recognized for the excess of the carrying value over the estimated fair market value, reduced by estimated direct costs of disposal. The Company recorded asset impairment and related charges totaling $2,585 for the third quarter and $2,710 for the first three quarters of 2025. This includes store closure costs recognized in the first quarter of 2025 of $100, $77 net of tax, related to the planned closing of approximately 60 stores and charges recognized in the third quarter of 2025 of $2,585, $1,968 net of tax, related to the Company’s fulfillment network not meeting operational or financial expectations, the planned closing of three automated fulfillment facilities and the cancellation of a planned site (see Note 11 for additional details). The Company recorded asset impairments totaling $13 for the third quarter and $44 for the first three quarters of 2024. Costs to reduce the carrying value of long-lived assets for each of the years presented have been included in the Consolidated Statements of Operations as Operating, general and administrative (“OG&A”) expense.

​

2.	DEBT OBLIGATIONS

​

Long-term debt consists of:

​

​	​	​	​	​	​	​
​	​	November 8,		​	February 1,
​		2025			2025
1.70% to 8.00% Senior Notes due through 2064	​	$	14,862	​	$	14,854
Other	​		1,089	​		1,055
​	​	​	​	​	​	​
Total debt, excluding obligations under finance leases	​		15,951	​		15,909
Less current portion	​		(1,402)	​		(104)
​	​	​	​	​	​	​
Total long-term debt, excluding obligations under finance leases	​	$	14,549	​	$	15,805

​

The fair value of the Company’s long-term debt, including current maturities, was estimated based on Level 2 quoted market prices for the same or similar issues adjusted for illiquidity based on available market evidence. If quoted market prices were not available, the fair value was based upon the net present value of the future cash flow using the forward interest rate yield curve in effect at November 8, 2025 and February 1, 2025. At November 8, 2025, the fair value of total debt was $15,118 compared to a carrying value of $15,951. At February 1, 2025, the fair value of total debt was $14,648 compared to a carrying value of $15,909.

​

In the second quarter of 2024, the Company terminated five forward-starting interest rate swaps with a maturity date of August 1, 2027 and an aggregate notional amount totaling $5,350. These forward-starting interest rate swaps were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt that was issued in the third quarter of 2024. A notional amount of $2,350 of these forward-starting interest rate swaps was designated as a cash-flow hedge as defined by GAAP. Accordingly, the unamortized gain of $48, $36 net of tax, was deferred in accumulated other comprehensive income and is amortized to earnings as the interest payments are made. The remainder of the notional amount of $3,000 of the forward-starting interest rate swaps was not designated as a cash-flow hedge. Accordingly, the changes in the fair value of these forward-starting interest rate swaps not designated as cash-flow hedges were recognized through net earnings. During the first three quarters of 2024, the Company recognized a realized loss of $55 related to these forward-starting interest rate swaps that is included in “Loss on investments” in the Company’s Consolidated Statements of Operations.

​

Cash paid for interest expense related to long-term debt including obligations under finance leases was $738 and $355 for the first three quarters of 2025 and 2024, respectively. Interest income of approximately $48 and $147 for the third quarters of 2025 and 2024, respectively, is included in “Net interest expense” in the Company’s Consolidated Statements of Operations. Interest income of approximately $163 and $220 for the first three quarters of 2025 and 2024, respectively, is included in “Net interest expense” in the Company’s Consolidated Statements of Operations.

​

As of November 8, 2025 and February 1, 2025, Other debt consisted primarily of a financial obligation related to a sale transaction for properties that did not qualify for sale-leaseback accounting treatment in 2021.

​

3.	BENEFIT PLANS

​

The following table provides the components of net periodic benefit cost (benefit) for the company-sponsored defined benefit pension plans and other postretirement benefit plans for the third quarters of 2025 and 2024:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended
​	​	Pension Benefits					​	Other Benefits
​	​	November 8,		​	November 9,		​	November 8,		​	November 9,
​		2025			2024			2025			2024
Components of net periodic benefit cost (benefit):	​	​	​	​	​	​	​	​	​	​	​	​	​
Service cost		$	2		$	2		$	1		$	1	​
Interest cost	​		31	​		30	​		2	​		2	​
Expected return on plan assets	​		(32)	​		(34)	​		—	​		—	​
Amortization of:	​	​	​	​	​	​	​	​	​	​	​	​	​
Prior service cost	​		—	​		—	​		—	​		(1)	​
Actuarial loss (gain)	​		3	​		2	​		(2)	​		(2)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net periodic benefit cost		$	4		$	—		$	1		$	—	​

​

The following table provides the components of net periodic benefit cost (benefit) for the company-sponsored defined benefit pension plans and other post-retirement benefit plans for the first three quarters of 2025 and 2024:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Quarters Ended
​	​	Pension Benefits					​	Other Benefits
​	​	November 8,		​	November 9,		​	November 8,		​	November 9,
​		2025			2024			2025			2024
Components of net periodic benefit cost (benefit):	​	​	​	​	​	​	​	​	​	​	​	​	​
Service cost		$	6		$	5		$	3		$	3	​
Interest cost	​		103	​		101	​		7	​		8	​
Expected return on plan assets	​		(106)	​		(114)	​		—	​		—	​
Amortization of:	​	​	​	​	​	0	​	​	​	​	​	0	​
Prior service cost	​		—	​		—	​		(3)	​		(3)	​
Actuarial loss (gain)	​		9	​		7	​		(4)	​		(8)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net periodic benefit cost (benefit)		$	12		$	(1)		$	3		$	—	​

​

​

The Company is not required to make any contributions to its company-sponsored pension plans in 2025 but may make contributions to the extent such contributions are beneficial to the Company. The Company did not make any significant contributions to its company-sponsored pension plans in the first three quarters of 2025 or 2024.

​

The Company contributed $251 and $255 to employee 401(k) retirement savings accounts in the first three quarters of 2025 and 2024, respectively.

​

4.	EARNINGS PER COMMON SHARE

​

Net earnings (loss) attributable to The Kroger Co. per basic common share equals net earnings (loss) attributable to The Kroger Co. less income (loss) allocated to participating securities divided by the weighted-average number of common shares outstanding. Net earnings (loss) attributable to The Kroger Co. per diluted common share equals net earnings attributable to The Kroger Co. less income (loss) allocated to participating securities divided by the weighted-average number of common shares outstanding, after giving effect to dilutive stock options. The following table provides a reconciliation of net earnings (loss) attributable to The Kroger Co. and shares used in calculating net earnings (loss) attributable to The Kroger Co. per basic common share to those used in calculating net earnings (loss) attributable to The Kroger Co. per diluted common share:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended							​	Third Quarter Ended							​
​	​	November 8, 2025							​	November 9, 2024
​		​	​		​		Per			​	​		​		Per		​
​	​	Earnings		​	Shares	​	Share		​	Earnings		​	Shares	​	Share		​
​	​	(Numerator)		​	(Denominator)	​	Amount		​	(Numerator)		​	(Denominator)	​	Amount		​
Net earnings (loss) attributable to The Kroger Co. per basic common share	​	$	(1,321)		655	​	$	(2.02)	​	$	613		723	​	$	0.85	​
Dilutive effect of stock options	​	​	​		—	​	​	​	​	​	​		5	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings (loss) attributable to The Kroger Co. per diluted common share	​	$	(1,321)		655	​	$	(2.02)	​	$	613		728	​	$	0.84	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Quarters Ended							​	Three Quarters Ended							​
​	​	November 8, 2025							​	November 9, 2024							​
​		​	​		​		Per			​	​		​		Per
​	​	Earnings		​	Shares	​	Share		​	Earnings		​	Shares	​	Share		​
​	​	(Numerator)		​	(Denominator)	​	Amount		​	(Numerator)		​	(Denominator)	​	Amount
Net earnings attributable to The Kroger Co. per basic common share	​	$	151		659	​	$	0.23	​	$	2,015		722	​	$	2.79	​
Dilutive effect of stock options	​	​	​		3	​	​	​	​	​	​		6	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings attributable to The Kroger Co. per diluted common share	​	$	151		662	​	$	0.23	​	$	2,015		728	​	$	2.77	​

​

The Company had combined undistributed and distributed earnings to participating securities totaling $1 and $5 in the third quarters of 2025 and 2024, respectively. For the first three quarters of 2025 and 2024, the Company had combined undistributed and distributed earnings to participating securities of $4 and $16, respectively.

​

The Company had options outstanding for approximately 3 million shares during the third quarter of 2024 that were excluded from the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive effect on net earnings per share. In the third quarter of 2025, there was no dilutive effect of stock options due to the Company having a net loss. The Company had options outstanding for approximately 1 million and 3 million shares during the first three quarters of 2025 and 2024, respectively, that were excluded from the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive effect on net earnings per share.

​

​

5.	COMMITMENTS AND CONTINGENCIES

​

The Company continuously evaluates contingencies based upon the best available evidence.

​

The Company believes that allowances for loss have been provided to the extent necessary and that its assessment of contingencies is reasonable. To the extent that resolution of contingencies results in amounts that vary from the Company’s estimates, future earnings will be charged or credited.

​

The principal contingencies are described below:

​

Insurance — The Company’s workers’ compensation risks are self-insured in most states. In addition, other workers’ compensation risks and certain levels of insured general liability risks are based on retrospective premium plans, deductible plans and self-insured retention plans. The liability for workers’ compensation risks is accounted for on a present value basis. Actual claim settlements and expenses incident thereto may differ from the provisions for loss. Property risks have been underwritten by a subsidiary and are all reinsured with unrelated insurance companies. Operating divisions and subsidiaries have paid premiums, and the insurance subsidiary has provided loss allowances, based upon actuarially determined estimates.

​

Litigation — Various claims and lawsuits arising in the normal course of business, including personal injury, contract disputes, employment discrimination, wage and hour and other regulatory claims are pending against the Company. Some of these suits purport or have been determined to be class actions and/or seek substantial damages. Although it is not possible at this time to evaluate the merits of all of these claims and lawsuits, nor their likelihood of success, the Company is of the belief that any resulting liability will not have a material effect on the Company’s financial position, results of operations, or cash flows.

​

The Company continually evaluates its exposure to loss contingencies arising from pending or threatened litigation and believes it has made provisions where it is reasonably possible to estimate and when an adverse outcome is probable. Nonetheless, assessing and predicting the outcomes of these matters involves substantial uncertainties. Management currently believes that the aggregate range of loss for the Company’s exposure is not material to the Company. It remains possible that despite management’s current belief, material differences in actual outcomes or changes in management’s evaluation or predictions could arise that could have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

​

Opioids

​

The Company is one of dozens of companies that have been named in various lawsuits alleging that defendants contributed to create a public nuisance through the distribution and dispensing of opioids.

​

On September 8, 2023, the Company announced that it reached an agreement in principle with plaintiffs to settle the majority of opioid claims that have been or could be brought against Kroger by states in which it operates, subdivisions, and Native American tribes. Along with the execution of certain non-monetary conditions, the Company agreed to pay up to $1,200 to states and subdivisions and $36 to Native American tribes in funding for abatement efforts, and approximately $177 to cover attorneys’ fees and costs. The exact payment amount will depend on several factors, including the extent to which states take action to foreclose opioid lawsuits by political subdivisions (e.g., by passing laws barring or limiting opioid lawsuits by political subdivisions), and the extent to which additional political subdivisions in participating states file additional opioid lawsuits against the Company. The settlement provides for the full resolution of all claims on behalf of participating states, subdivisions and Native American tribes and is not an admission of any wrongdoing or liability. Certain opioid-related cases against the Company will remain pending in the multidistrict litigation and in various state courts, including those brought by non-participating states and subdivisions and private parties such as hospitals and third-party payors. The Company continues to defend these cases.

​

As a result, the Company concluded that the agreement in principle for the settlement of opioid claims was probable, and for which the related loss was reasonably estimable. Accordingly, in 2023, the Company recognized opioid settlement charges of $1,413, $1,113 net of tax, relating to the nationwide opioid settlement framework. This charge was included in “Operating, general and administrative” in the Company’s Consolidated Statement of Operations.

​

​

The agreement described above includes payments of approximately $1,236 and $177, in equal installments over 11 years and 6 years, respectively. In 2024, the Company made its first annual payment for $138 into an escrow account, which was recorded in “Prepaid and other current assets” in the Company’s Consolidated Balance Sheets. This payment was subsequently released from escrow on February 20, 2025. The Company made its second annual payment of $138 on March 5, 2025. This payment was recorded in “Other” within “Changes in operating assets and liabilities” in the Company’s Consolidated Statement of Cash Flows.

​

In 2024, certain states and subdivisions confirmed their participation or lack of participation in the agreement described above, which resulted in immaterial changes to the settlement amount and timing of payments. On October 31, 2024, the Company determined that there is sufficient participation in the settlement by states and subdivisions and elected to proceed with the settlement. The settlement with states and subdivisions became effective on December 30, 2024, and the settlement with Native American tribes became effective on September 26, 2025. The Company also entered into and finalized separate agreements with certain states and their subdivisions in 2024 and 2025 that resulted in immaterial changes to the settlement amount and timing of payments.

​

As of November 8, 2025, the Company recorded $132 and $979 of the estimated settlement liability in “Other current liabilities” and “Other long-term liabilities,” respectively, in the Company’s Consolidated Balance Sheets related to these opioid settlements. As of February 1, 2025, the Company recorded $279 and $1,139 of the estimated settlement liability in “Other current liabilities” and “Other long-term liabilities,” respectively, in the Company’s Consolidated Balance Sheets related to these opioid settlements.

​

The foregoing settlements are not admissions of wrongdoing or liability by the Company and the Company will continue to vigorously defend against any other claims and lawsuits relating to opioids that the settlements do not resolve, including private plaintiff litigation. The Company continues to believe it has strong legal defenses and appellate arguments in those cases.

​

Because of the many uncertainties associated with any settlement arrangement or other resolution of opioid-related litigation matters, and because the Company continues to actively defend ongoing litigation for which it believes it has defenses and assertions that have merit, the Company is not able to reasonably estimate the range of ultimate possible loss for all opioid-related litigation matters at this time.

​

Termination of the Merger with Albertsons Companies, Inc.

​

As previously disclosed, on October 13, 2022, the Company entered into a merger agreement (the “Merger Agreement”) with Albertsons Companies, Inc. (“Albertsons”) pursuant to which the Company would have acquired Albertsons. On February 26, 2024, the Federal Trade Commission instituted an administrative proceeding to prohibit the merger and filed suit in the United States District Court for the District of Oregon requesting a preliminary injunction to block the merger. On December 10, 2024, the court issued a preliminary injunction enjoining the consummation of the merger.

​

On December 10, 2024, Albertsons sued the Company in the Delaware Court of Chancery for alleged breaches of the Merger Agreement and the implied covenant of good faith and fair dealing. Albertsons seeks payment of a $600 termination fee that Albertsons alleges it is owed under the Merger Agreement, as well as additional damages, including expenses paid by Albertsons in connection with the Merger and the lost premium Albertsons alleges is owed to its shareholders, as well as other relief.

​

On December 11, 2024, the Company delivered a notice to Albertsons terminating the Merger Agreement, which notified Albertsons that a prior termination letter sent by Albertsons to Kroger on December 10, 2024 was not an effective termination. In connection with the notice, Kroger notified Albertsons that Kroger has no obligation to pay the $600 termination fee because Albertsons failed to perform and comply in all material respects with its covenants under the Merger Agreement.

​

On March 17, 2025, the Company filed an answer denying the allegations in Albertsons’s complaint and filed counterclaims that seek recovery for breaches of the Merger Agreement by Albertsons.

​

​

Assignments — The Company is contingently liable for leases that have been assigned to various third parties in connection with facility closings and dispositions. The Company could be required to satisfy the obligations under the leases if any of the assignees are unable to fulfill their lease obligations. Due to the wide distribution of the Company’s assignments among third parties, and various other remedies available, the Company believes the likelihood that it will be required to assume a material amount of these obligations is remote.

​

6.	ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

​

The following table represents the changes in AOCI by component for the first three quarters of 2025 and 2024:

​

​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Pension and		​	​	​
​	​	Cash Flow		​	Postretirement		​	​	​
​	​	Hedging		​	Defined Benefit		​	​	​
​		Activities(1)			Plans(1)			Total(1)
Balance at February 3, 2024	​	$	60	​	$	(549)	​	$	(489)
OCI before reclassifications(2)	​	​	(103)	​	​	—	​		(103)
Amounts reclassified out of AOCI(3)	​	​	6	​		(3)	​		3
Net current-period OCI	​	​	(97)	​		(3)	​		(100)
Balance at November 9, 2024	​	$	(37)	​	$	(552)	​	$	(589)
​	​	​	​	​	​	​	​	​	​
Balance at February 1, 2025	​	$	(35)	​	$	(586)	​	$	(621)
Amounts reclassified out of AOCI(3)	​		6	​	​	2	​		8
Net current-period OCI	​		6	​		2	​		8
Balance at November 8, 2025	​	$	(29)	​	$	(584)	​	$	(613)

(1)	All amounts are net of tax.

(2)	Net of tax of $(30) for cash flow hedging activities for the first three quarters of 2024.

(3)	Net of tax of $1 for cash flow hedging activities and $(1) for pension and postretirement defined benefit plans for the first three quarters of 2024. Net of tax of $2 for cash flow hedging activities for the first three quarters of 2025.

​

The following table represents the items reclassified out of AOCI and the related tax effects for the third quarter and first three quarters of 2025 and 2024:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended					​	Three Quarters Ended
​		November 8,			November 9,			November 8,			November 9,
​	​	2025		​	2024		​	2025		​	2024		​
Cash flow hedging activity items:	​	​	​	​	​	​	​	​	​	​	​	​	​
Amortization of gains and losses on cash flow hedging activities(1)	​	$	2	​	$	2	​	$	8	​	$	7	​
Tax expense	​		(1)	​		—	​		(2)	​		(1)	​
Net of tax	​		1	​		2	​		6	​		6	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pension and postretirement defined benefit plan items:	​	​	​	​	​	​	​	​	​	​	​	​	​
Amortization of amounts included in net periodic pension cost(2)	​		1	​		(1)			2			(4)	​
Tax expense			—			—			—			1	​
Net of tax			1			(1)			2			(3)	​
Total reclassifications, net of tax		$	2		$	1		$	8		$	3	​

(1)	Reclassified from AOCI into interest expense.

(2)	Reclassified from AOCI into non-service component of company-sponsored pension plan costs. These components are included in the computation of net periodic pension cost (see Note 3 for additional details).

​

​

7.	LEASES AND LEASE-FINANCED TRANSACTIONS

​

On May 17, 2018, the Company entered into a Partnership Framework Agreement with Ocado International Holdings Limited and Ocado Group plc (“Ocado”), which has since been amended and restated. In accordance with GAAP, the Company determined the arrangement with Ocado contains a lease of the robotic equipment used to fulfill customer orders. The Company elected to combine the lease and non-lease elements in the contract. As a result, the Company will account for all payments to Ocado as lease payments. During the second quarter of 2025, Ocado drew down the entire $152 from its letter of credit under the Amended and Restated Partnership Framework Agreement. The Company recorded finance lease assets of $23 for the portion of the payment allocated to commenced leases. The remaining payment amount was treated as prepaid rent and was recorded in “Other assets” in the Company’s Consolidated Balance Sheet and in “Other” within “Cash Flows from Investing Activities” in the Company’s Consolidated Statement of Cash Flows. As of February 1, 2025, the Company had $926 of net finance lease assets included within “Property, plant and equipment, net” in the Company’s Consolidated Balance Sheets related to the Company's agreement with Ocado. During the third quarter of 2025, the Company recorded impairment and related charges related to the Company’s automated fulfillment network (see Note 11 for additional details). Due to this impairment, the Company did not have any net finance lease assets as of November 8, 2025. As of November 8, 2025 and February 1, 2025, the Company had $433 and $104, respectively, of current finance lease liabilities recorded within “Current portion of long-term debt including obligations under finance leases" and $498 and $781, respectively, of non-current finance lease liabilities recorded within “Long-term debt including obligations under finance leases” in the Company’s Consolidated Balance Sheets. The finance lease liabilities recorded within “Current portion of long-term debt including obligations under finance leases” increased, and the non-current portion of “Long-term debt including obligations under finance leases” decreased primarily due to an accrued cash termination payment to Ocado of approximately $350 for the closure and cancellation of certain fulfillment centers.

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8.	SEGMENT REPORTING

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The Company operates supermarkets, multi-department stores and fulfillment centers throughout the United States. The Company’s retail operations, which represent 99% of the Company’s consolidated sales, are its only reportable segment. The retail operations’ segment revenues are predominately earned as consumer products are sold to customers in our stores, fuel centers and via the Company’s eCommerce business. The Company aggregates its operating divisions into one reportable segment due to the operating divisions having similar economic characteristics with similar long-term financial performance. In addition, the Company’s operating divisions offer customers similar products, have similar distribution methods, operate in similar regulatory environments, purchase the majority of the merchandise for retail sale from similar (and in many cases identical) vendors on a coordinated basis from a centralized location, serve similar types of customers, and are allocated capital from a centralized location. Operating divisions are organized primarily on a geographical basis so the operating division management team can be responsive to local needs of the operating division and can execute company strategic plans and initiatives throughout the locations in their operating division. This geographical separation is the primary differentiation between these retail operating divisions. The geographical basis of organization reflects how the business is managed and how the Company’s Interim Chief Executive Officer, who acts as the Company’s chief operating decision maker (“CODM”), assesses performance internally. All of the Company’s operations are domestic.

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The Company’s CODM assesses performance and allocates resources for the retail operations segment using segment FIFO earnings before net interest expense, income tax expense and depreciation and amortization (“EBITDA”). The Company defines FIFO EBITDA as EBITDA excluding the LIFO charge. The Company’s CODM also uses segment FIFO EBITDA to measure the operational effectiveness of the Company’s financial model, compare the performance of core operating results between periods, against budget and against competitors and evaluate whether to invest capital in the retail operations segment or in other parts of the Company, such as for share repurchases or dividend payments. The Company’s CODM is not provided asset information by reportable segment as asset information is provided to the CODM on a consolidated basis.

​

​

The following table presents the Company’s retail operations segment revenue, measure of segment profit or loss, significant segment expenses and reconciliation of retail operations segment FIFO EBITDA to consolidated net earnings (loss) before income tax expense and retail operations segment sales to consolidated sales for the third quarter and first three quarters of 2025 and 2024:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended					​	Three Quarters Ended
​	​	November 8,		​	November 9,		​	November 8,		​	November 9,
​		2025			2024		​	2025			2024
Retail operations segment sales	​	$	33,568	​	$	32,965	​	$	112,019	​	$	109,916
Retail operations segment expenses:	​	​	​	​	​	​	​	​	​	​	​	​
Merchandise costs(1)	​	​	23,950	​	​	23,571	​	​	79,998	​	​	78,601
Expenses in gross(2)	​	​	1,958	​	​	2,000	​	​	6,484	​	​	6,710
Operating, general, and administrative	​	​	8,375	​	​	5,778	​	​	22,067	​	​	18,984
Rent	​	​	192	​	​	200	​	​	660	​	​	662
Retail operations segment FIFO EBITDA	​	$	(907)	​	$	1,416	​	$	2,810	​	$	4,959
​	​	​	​	​	​	​	​	​	​	​	​	​
Reconciliation of net earnings (loss) before income tax expense:	​	​	​	​	​	​	​	​	​	​	​	​
Retail operations segment FIFO EBITDA	​	$	(907)	​	$	1,416	​	$	2,810	​	$	4,959
Depreciation and amortization	​	​	(782)	​	​	(757)	​	​	(2,610)	​	​	(2,486)
LIFO charge	​	​	(44)	​	​	(4)	​	​	(146)	​	​	(66)
Other FIFO EBITDA(3)	​	​	192	​	​	173	​	​	590	​	​	530
Net interest expense	​	​	(146)	​	​	(86)	​	​	(490)	​	​	(294)
Non-service component of company-sponsored pension plan (expense) benefits	​	​	(2)	​	​	3	​	​	(6)	​	​	9
Loss on investments	​	​	(101)	​	​	(20)	​	​	(64)	​	​	(125)
Gain on the sale of business	​	​	—	​	​	79	​	​	—	​	​	79
Consolidated net earnings (loss) before income tax expense	​	$	(1,790)	​	$	804	​	$	84	​	$	2,606
​	​	​	​	​	​	​	​	​	​	​	​	​
Reconciliation of sales:	​	​	​	​	​	​	​	​	​	​	​	​
Retail operations segment sales	​	$	33,568	​	$	32,965	​	$	112,019	​	$	109,916
Other sales(3)	​	​	291	​	​	669	​	​	898	​	​	2,899
Consolidated sales	​	$	33,859	​	$	33,634	​	$	112,917	​	$	112,815

​

(1)	Merchandise costs include product costs, net of discounts and allowances, and food production costs.

(2)	Expenses in gross include advertising costs, warehousing costs, including receiving and inspection costs, and transportation costs.

(3)	Other sales and other FIFO EBITDA primarily include other operating segments that are not part of the retail operations segment such as third-party media revenue, data analytic services, specialty pharmacy and in-store health clinics.

​

​

​

9.	INCOME TAXES

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 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.

​

10.	RECENTLY ISSUED ACCOUNTING STANDARDS

​

In September 2025, the FASB issued ASU 2025-06, “Intangibles – Goodwill and Other – Internal-use Software (Subtopic 250-40): Targeted Improvements to the Accounting for Internal-use Software.” The ASU was issued to modernize the accounting for internal-use software by eliminating the accounting consideration of software project development stages, clarifying the criteria to begin capitalizing costs. The ASU is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently assessing the effect that adoption of this guidance will have on its Consolidated Financial Statements.

​

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” The guidance requires disclosures about specific expense categories, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization and selling expenses. The ASU is effective for annual reporting periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. The Company is currently assessing the effect that adoption of this guidance will have on its Consolidated Financial Statements.

​

In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This guidance amends existing income tax disclosure guidance, primarily requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation. The ASU is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retroactive basis. The adoption of the standard is not expected to have a material effect on the Company’s Consolidated Financial Statements.

​

11.	SUBSEQUENT EVENT

11.	ASSET IMPAIRMENT AND RELATED CHARGES

​

During the third quarter of 2025, the Company completed a strategic review of its eCommerce operations with the intention of improving the customer experience while accelerating eCommerce profitability. Following this review, Kroger identified opportunities to optimize its automated fulfillment network by closing facilities in Pleasant Prairie, Wis.; Frederick, Md.; and Groveland, Fla. in January 2026, which have not met operational or financial expectations, and canceling plans for the site in Charlotte, N.C. Kroger will continue to deliver eCommerce offerings using its store footprint, third-party delivery providers and automated fulfillment facilities where applicable. In geographies where Kroger sees higher density of demand, the Company will continue to utilize automated fulfillment to increase capacity and improve productivity.

​

​

The Company considered the completion of the strategic review to be a triggering event that indicated the carrying amount of the fulfillment network may not be recoverable. As a result, the Company tested the recoverability of each automated fulfillment facility asset group. Each automated fulfillment facility represents the appropriate asset group for which the long-lived assets should be evaluated, as this represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The carrying value of each asset group primarily includes real estate, equipment and finance and operating lease assets. The recoverability testing indicated the carrying value of each asset group exceeded the sum of undiscounted cash flows expected to result from the use and eventual disposition of the assets.

​

During the third quarter of 2025, these asset groups were written down to their estimated fair values. The fair value for real estate and equipment was determined using a market approach utilizing prices for similar assets. Fair value for lease assets was determined using a discounted cash flow income approach considering estimated market rent. In addition to the impairment, the Company also recognized other accrued liabilities related to these asset groups. This resulted in recognizing impairment and related charges of $2,585, $1,968 net of tax, which includes an accrued cash termination payment to Ocado of approximately $350 for the closure and cancellation of certain fulfillment centers.

​

12.	ACCELERATED SHARE REPURCHASE

​

On December 19, 2024, the Company entered into an accelerated share repurchase (“ASR”) agreement with two financial institutions to reacquire, in aggregate, $5,000 of shares of Kroger common stock. During 2024, the Company funded $5,000 and received a $4,000 initial delivery of approximately 65.6 million Kroger common shares at an average price of $61.54 per share, which includes excise tax on the shares repurchased. Final delivery under the ASR agreement occurred during the third quarter of 2025. In total, the Company invested $5,000 to repurchase 75.6 million Kroger common shares at an average price of $66.68 per share, which includes excise tax on the shares repurchased. The ASR agreement was completed under the Company’s $7,500 share repurchase authorization.

​

13.	SALE OF KROGER SPECIALTY PHARMACY

​

On October 4, 2024, the Company completed the sale of its Kroger Specialty Pharmacy business to Elevance Health, for $464. In the third quarter of 2024, the Company recognized a gain on sale for $79, $60 net of tax, due to the sale. For the first three quarters of 2024, the Company recognized a gain on sale for $79, $91 net of tax, which includes the reduction to income tax expense of $31 related to deferred tax assets recognized in the first quarter of 2024 due to recording Kroger Specialty Pharmacy as held for sale.

​

​