UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of Report:  October 30, 2013

(Date of earliest event reported)

 

THE KROGER CO.

(Exact name of registrant as specified in its charter)

 

 

1014 Vine Street

Cincinnati, OH  45202

(Address of principal executive offices)

 

Registrant’s telephone number:  (513) 762-4000

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Section 7 – Regulation FD

 

Item 7.01              Regulation FD Disclosure.

 

In connection with its Investor Conference held on October 30, 2013, The Kroger Co. reconfirms its 2013 annual guidance.  Labor disclosure has been updated.

 

2013 Guidance:

 

Identical supermarket sales growth (excluding fuel sales)		3.0% to 3.5%
Net earnings per diluted share		$2.73 to $2.80
Non-fuel FIFO operating margin		We expect FIFO non-fuel operating margin in 2013 to expand slightly compared to 2012, excluding the extra week in fiscal 2012, the UFCW consolidated pension plan liability, and credit card settlement adjustments.
Capital investments		$2.1 to $2.4 billion, excluding acquisitions and purchases of leased property.  These capital projects include approximately 45-50 major projects covering new stores, expansions and relocations, 130 to 160 remodels, and other investments including technology and infrastructure to support our Customer 1st business strategy.
Supermarket square footage growth		Approximately 1.5% before acquisitions and operational closings
Expected tax rate		Approximately 35.5%, excluding the resolution of any tax issues
LIFO		$55 million
Pension Contributions/ Expenses		Company-sponsored pension plans We expect 2013 expense to be approximately $75 million.  We made a cash contribution of $100 million in February 2013, and we do not expect to make additional contributions in 2013.   401(k) plan For 2013, we expect a slight increase in our cash contributions and expense compared to 2012.   Multi-employer plans In 2013, we expect to contribute approximately $225

 

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		million to multi-employer pension funds.
Labor		In the remainder of 2013, we will negotiate an agreement with the UFCW for store associates in Cincinnati. A tentative agreement with the UFCW for store associates in Seattle has been reached, subject to ratification. Negotiations this year will be challenging as we must have competitive cost structures in each market while meeting our associates’ needs for good wages and affordable health care.  Also, we must address the underfunding of Taft-Hartley pension plans.

 

Long Term Guidance:

 

Our long term net earnings per diluted share growth rate guidance is 8 – 11%, plus a dividend that we expect to grow over time.

 

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 our annual report on Form 10-K for our last fiscal year and any subsequent filings, as well as the following:

 

·                  The extent to which our sources of liquidity are sufficient to meet our requirements may be affected by the state of the financial markets and the effect that such condition has on our ability to issue commercial paper at acceptable rates.  Our ability to borrow under our committed lines of credit, including our bank credit facilities, could be impaired if one or more of our lenders under those lines is unwilling or unable to honor its contractual obligation to lend to us, or in the event that natural disasters or weather conditions interfere with the ability of our lenders to lend to us.  Our ability to refinance maturing debt may be affected by the state of the financial markets.

 

·                  Our ability to use free cash flow to continue to maintain our debt coverage and to reward our shareholders could be affected by unanticipated increases in net total debt, our inability to generate free cash flow at the levels anticipated, and our failure to generate expected earnings.

 

·                  Our ability to achieve sales, earnings and cash flow goals may be affected by: labor negotiations or disputes; changes in the types and numbers of businesses that compete with us; pricing and promotional activities of existing and new competitors, including non-traditional competitors, and the aggressiveness of that competition; our response to these actions; the state of the economy, including interest rates, the inflationary and deflationary trends in certain commodities, and the unemployment rate; the effect that fuel costs have on consumer spending; changes in government-funded benefit programs; manufacturing commodity costs; diesel fuel costs related to our logistics operations; trends in consumer spending; the extent to which our customers exercise caution in their purchasing in response to economic conditions; the inconsistent pace of the economic recovery; changes in inflation or deflation in product and operating costs; stock repurchases; the effect of brand prescription drugs going off patent; our ability to retain additional pharmacy sales from third party payors; natural disasters or adverse weather conditions; and the success of our future growth plans.  The extent to which the

 

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adjustments we are making to our strategy create value for our shareholders will depend primarily on the reaction of our customers and our competitors to these adjustments, as well as operating conditions, including inflation or deflation, increased competitive activity, and cautious spending behavior of our customers.  Our ability to achieve sales and earnings goals may also be affected by our ability to manage the factors identified above.

 

·                  Our capital investments could differ from our estimate if we are unsuccessful in acquiring suitable sites for new stores, if development costs vary from those budgeted, if our logistics and technology or store projects are not completed on budget or within the time frame projected, or if economic conditions fail to improve, or worsen.

 

·                  During the first three quarters of the year, our LIFO charge and the recognition of LIFO expense will be affected primarily by estimated year-end changes in product costs.  Our LIFO charge for the year will be affected primarily by changes in product costs at year-end.

 

·                  If actual results differ significantly from anticipated future results for certain reporting units including variable interest entities, an impairment loss for any excess of the carrying value of the reporting units’ goodwill over the implied fair value would have to be recognized.

 

·                  Our effective tax rate may differ from the expected rate due to changes in laws, the status of pending items with various taxing authorities, and the deductibility of certain expenses.

 

·                  The actual amount of automatic and matching cash contributions to our 401(k) Retirement Savings Account Plan will depend on the number of participants, savings rate, compensation as defined by the plan, and length of service of participants.

 

·                  Changes in our product mix may negatively affect certain financial indicators. For example, we continue to add supermarket fuel centers to our store base. Since gasoline generates low profit margins, we expect to see our FIFO gross profit margins decline as gasoline sales increase.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

	THE KROGER CO.
October 30, 2013	By:	/s/ Paul Heldman
		Paul Heldman
		Executive Vice President,
		Secretary and General Counsel

 

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