Form 8-K

8-K — KROGER CO

Accession: 0001104659-26-075395

Filed: 2026-06-18

Period: 2026-06-18

CIK: 0000056873

SIC: 5411 (RETAIL-GROCERY STORES)

Item: Results of Operations and Financial Condition

Item: Financial Statements and Exhibits

Documents

8-K — tm2618219d1_8k.htm (Primary)

EX-99.1 — EXHIBIT 99.1 (tm2618219d1_ex99-1.htm)

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8-K (Primary)

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2026-06-18

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,

D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant

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

Date of Report : June 18, 2026

(Date of earliest event

reported)

The Kroger Co.

(Exact

name of registrant as specified in its charter)

Ohio

No. 1-303

31-0345740

(State

or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS

Employer

Identification No.)

1014 Vine Street

Cincinnati, OH 45202

(Address

of principal executive offices, including zip code)

Registrant’s telephone number, including

area code: (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:

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

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

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

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

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

Title of each class

Trading Symbol(s)

Name of each exchange on

which registered

Common

Stock $1 par value

NYSE

Indicate by

check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405

of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth

company ¨

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. ¨

Item 2.02 Results of Operations and Financial Condition.

On June 18, 2026, The Kroger Co. (NYSE:KR) issued a press release announcing its first quarter 2026 results. Attached hereto as Exhibit

99.1, and furnished herewith, is a copy of that release.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit

No.

Description

99.1

Press Release dated June 18, 2026

104

Cover Page Interactive Data

File (embedded within the Inline XBRL document).

SIGNATURE

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.

June 18, 2026

By:

/s/

George H. Vincent

Executive Vice President, General

Counsel and Secretary

EX-99.1 — EXHIBIT 99.1

EX-99.1

Filename: tm2618219d1_ex99-1.htm · Sequence: 2

Exhibit 99.1

Kroger

Reports First Quarter 2026 Results

First Quarter

Highlights

· Identical

Sales without fuel increased 1.0%1

· Operating

Profit of $1,407 million; EPS of $1.46

· Adjusted

FIFO Operating Profit of $1,544 million and Adjusted EPS of $1.58

· Adjusted

eCommerce sales grew +19%2; Kroger Precision Marketing profit grew over 20%

CINCINNATI, June 18, 2026 – The

Kroger Co. (NYSE: KR) today reported its first quarter 2026 results, maintained 2026 guidance, and shared progress on key priorities.

Comments from CEO Greg Foran

“I joined Kroger because I believe it represents the best opportunity

in retail. We serve millions of families every day, in our stores and online. We have the right stores in the right places, unmatched

customer insights, and the ability to win. Our focus is clear: to become America's best grocer. We will measure ourselves against that

every day.

We are pleased with our first quarter results, but we know there is

more work to do. That is why we are building a culture that is never satisfied, with a constant focus on serving our customers better."

1 Excludes adjustment items. See table 4.

2 Adjusted eCommerce sales exclude the effect of fulfillment

center exits in markets where Kroger does not operate stores, the sale of Vitacost, and the discontinuation of Ship Marketplace.

First Quarter Financial Results

1Q26

($ in millions;

except EPS)

1Q25

($ in millions;

except EPS)

ID Sales(1) (Table 4)

1.0%

3.2%

Earnings Per Share

$1.46

$1.29

Adjusted EPS (Table 6)

$1.58

$1.49

Operating Profit

$1,407

$1,322

Adjusted FIFO Operating Profit (Table 7)

$1,544

$1,518

Gross Margin (Table 8)

22.7%

23.0%

FIFO Gross Margin Rate(2)

Decreased 9 basis points

OG&A Rate(3)

Increased 16 basis points

(1) Without fuel and adjustment

items, if applicable, and includes an unfavorable 130 basis point impact from the Inflation Reduction Act.

(2) Without rent, depreciation

and amortization, fuel and adjustment items, if applicable.

(3) Without fuel and adjustment

items, if applicable.

Total company sales were $46.1 billion in the first quarter compared

to $45.1 billion for the same period last year. Excluding fuel and Vitacost, sales increased 0.5% compared to the same period last year.

Gross margin was 22.7% of sales for the first quarter compared to 23.0%

for the same period last year. The decrease in rate was primarily driven by the mix impact of higher fuel sales, higher transportation

costs, egg deflation, and planned price investments. These pressures were partially offset by favorable pharmacy mix, improved eCommerce

profitability, sourcing benefits, and lower depreciation.

The FIFO gross margin rate, excluding rent, depreciation and amortization,

fuel, and adjustment items decreased 9 basis points compared to the same period last year. The decrease in rate was primarily driven by

the impacts from higher transportation costs, egg deflation, and planned price investments. These pressures were partially offset by favorable

pharmacy mix, improved eCommerce profitability, and sourcing benefits.

The LIFO charge for the quarter was $52 million, compared to a LIFO

charge of $40 million for the same period last year.

The Operating, General and Administrative rate, excluding fuel and

adjustment items, increased 16 basis points compared to the same period last year. The increase in rate was primarily attributable to

planned investments in associate wages and hours to enhance the customer experience, partially offset by lapping higher multi-employer

pension contributions from the prior year and ongoing productivity initiatives.

Capital Allocation

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.

In December 2025, Kroger’s Board of

Directors approved an additional $2 billion share repurchase authorization. Kroger expects to complete these repurchases by the end of

fiscal 2026.

Kroger’s net total debt to adjusted

EBITDA ratio is 1.75, compared to 1.69 a year ago (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 invest in the business and enhance

shareholder value.

Full-Year 2026 Guidance*

Reaffirmed

Adjusted

Metric*

FY26

Guidance

Identical Sales without fuel**

1.0% - 2.0%

FIFO Operating Profit

$5.0 - $5.2 billion

EPS

$5.10 - $5.30

Free Cash Flow

$2.7 - $2.9 billion

Cap Ex

$3.8 - $4.0 billion

Tax Rate***

23%

* Without adjusted items, if applicable. Kroger is unable to provide

a full reconciliation of the GAAP and non-GAAP measures used in 2026 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 2026 GAAP financial results.

** Includes approximately 130 basis points unfavorable impact from

the Inflation Reduction Act.

*** The adjusted tax rate reflects typical tax adjustments and does

not reflect changes to the rate from the completion of income tax audit examinations and changes in tax laws and policies, which cannot

be predicted.

About Kroger

The Kroger Co. (NYSE: KR) is one of America’s largest retailers,

serving more than 11 million customers daily through a digital shopping experience and retail food stores under a variety of banner names.

With more than 400,000 associates across our family of companies, Kroger is committed to providing America with affordable, great-tasting

food and creating #ZeroHungerZeroWaste communities. To learn more about us, visit our newsroom and investor relations site.

Kroger's first quarter 2026 ended on May

23, 2026.

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,” “continue,” “drive,”

“expect,” “focused,” “future,” “guidance,” “may,” “model,” “opportunities,”

“strategy,” “target,” “trends,” 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 state and federal 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 eCommerce; 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 8 a.m. (ET) on June 18, 2026 at ir.kroger.com. An on-demand replay of the webcast will be available

at approximately 1 p.m. (ET) on Thursday, June 18, 2026.

1st Quarter 2026 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. Gross

Margin

--30--

Contacts: Media: Erin Rolfes (513) 762-1080; Investors: Rob Quast (513)

762-4969

Table 1.

THE KROGER CO.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share amounts)

(unaudited)

FIRST QUARTER

2026

2025

SALES

$ 46,121

100.0 %

$ 45,118

100.0 %

OPERATING EXPENSES

MERCHANDISE COSTS, INCLUDING ADVERTISING, WAREHOUSING

AND TRANSPORTATION (a), AND LIFO CHARGE (b)

35,493

77.0

34,551

76.6

OPERATING, GENERAL AND ADMINISTRATIVE (a)

7,963

17.3

7,923

17.6

RENT

269

0.6

271

0.6

DEPRECIATION AND AMORTIZATION

989

2.1

1,051

2.3

OPERATING PROFIT

1,407

3.1

1,322

2.9

OTHER INCOME (EXPENSE)

NET INTEREST EXPENSE

(209 )

(0.5 )

(199 )

(0.5 )

NON-SERVICE COMPONENT OF COMPANY-SPONSORED PENSION PLAN

EXPENSE

(7 )

(1 )

LOSS ON INVESTMENTS

(14 )

(19 )

NET EARNINGS BEFORE INCOME TAX EXPENSE

1,177

2.6

1,103

2.4

INCOME TAX EXPENSE

273

0.6

235

0.5

NET EARNINGS INCLUDING NONCONTROLLING INTERESTS

904

2.0

868

1.9

NET INCOME ATTRIBUTABLE TO

NONCONTROLLING INTERESTS

NET EARNINGS ATTRIBUTABLE TO THE KROGER CO.

$ 903

2.0 %

$ 866

1.9 %

NET EARNINGS ATTRIBUTABLE TO THE KROGER CO. PER BASIC

COMMON SHARE

$ 1.46

$ 1.30

AVERAGE NUMBER OF COMMON SHARES USED IN BASIC

CALCULATION

613

660

NET EARNINGS ATTRIBUTABLE TO THE KROGER CO. PER DILUTED

COMMON SHARE

$ 1.46

$ 1.29

AVERAGE NUMBER OF COMMON SHARES USED IN DILUTED

CALCULATION

615

664

DIVIDENDS DECLARED PER COMMON SHARE

$ 0.35

$ 0.32

Note:

Certain percentages may not sum due to rounding.

Note:

The Company defines First-In First-Out (FIFO) gross profit as sales minus merchandise costs, including advertising, warehousing and transportation, but excluding the Last-In First-Out (LIFO) charge, rent and depreciation and amortization.

The Company defines FIFO gross margin as FIFO gross profit divided by sales.

The Company defines FIFO operating profit as operating profit excluding the LIFO charge.

The Company defines FIFO operating margin as FIFO operating profit divided by sales.

The above FIFO financial metrics are important measures used by management to evaluate operational effectiveness. Management believes these FIFO financial metrics are useful to investors and analysts because they measure our day-to-day operational effectiveness.

(a)

Merchandise costs ("COGS") and operating, general and administrative expenses ("OG&A") exclude depreciation and amortization expense and rent expense which are included in separate expense lines.

(b)

LIFO charges of $52 and $40 were recorded in the first quarters of 2026 and 2025, respectively.

Table 2.

THE KROGER CO.

CONSOLIDATED BALANCE SHEETS

(in millions)

(unaudited)

May 23,

May 24,

2026

2025

ASSETS

Current Assets

Cash

$ 218

$ 340

Temporary cash investments

2,655

4,398

Store deposits in-transit

1,225

1,179

Receivables

2,101

2,131

Inventories

7,278

7,020

Prepaid and other current assets

729

697

Total current assets

14,206

15,765

Property, plant and equipment, net

24,767

25,829

Operating lease assets

6,769

6,840

Intangibles, net

851

836

Goodwill

2,624

2,674

Other assets

1,075

1,304

Total Assets

$ 50,292

$ 53,248

LIABILITIES AND SHAREOWNERS' EQUITY

Current Liabilities

Current portion of long-term debt including obligations under

finance leases

$ 1,264

$ 807

Current portion of operating lease liabilities

668

Accounts payable

11,278

10,562

Accrued salaries and wages

1,183

1,209

Other current liabilities

3,577

3,379

Total current liabilities

17,970

16,625

Long-term debt including obligations under finance leases

15,731

17,138

Noncurrent operating lease liabilities

6,529

6,595

Deferred income taxes

1,143

1,401

Pension and postretirement benefit obligations

414

381

Other long-term liabilities

2,027

2,200

Total Liabilities

43,814

44,340

Shareowners' equity

6,478

8,908

Total Liabilities and Shareowners' Equity

$ 50,292

$ 53,248

Total common shares outstanding at end of period

613

661

Total diluted shares year-to-date

615

664

Table 3.

THE KROGER CO.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

YEAR-TO-DATE

2026

2025

CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings including noncontrolling interests

$ 904

$ 868

Adjustments to reconcile net earnings including

noncontrolling interests to net cash provided by operating activities:

Depreciation and amortization

989

1,051

Asset impairment and store closure charges

108

Operating lease asset amortization

179

184

LIFO charge

Share-based employee compensation

Deferred income taxes

(16 )

Loss on investments

Other

(4 )

(37 )

Changes in operating assets and liabilities:

Store deposits in-transit

133

Receivables

(74 )

Inventories

(418 )

(23 )

Prepaid and other current assets

(93 )

(52 )

Accounts payable

563

288

Accrued expenses

(319 )

(243 )

Income taxes receivable and payable

183

Operating lease liabilities

(209 )

(134 )

Other

(139 )

(163 )

Net cash provided by operating activities

1,774

2,149

CASH FLOWS FROM INVESTING ACTIVITIES:

Payments for property and equipment, including payments for lease buyouts

(1,293 )

(1,044 )

Other

Net cash used by investing activities

(1,255 )

(1,039 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments on long-term debt including obligations under finance leases

(559 )

(52 )

Dividends paid

(215 )

(211 )

Proceeds from issuance of capital stock

145

Treasury stock purchases

(213 )

(181 )

Other

(23 )

(32 )

Net cash used by financing activities

(980 )

(331 )

NET (DECREASE) INCREASE IN CASH AND TEMPORARY

CASH INVESTMENTS

(461 )

779

CASH AND TEMPORARY CASH INVESTMENTS:

BEGINNING OF YEAR

3,334

3,959

END OF YEAR

$ 2,873

$ 4,738

Reconciliation of capital investments:

Payments for property and equipment, including payments for lease buyouts

$ (1,293 )

$ (1,044 )

Payments for lease buyouts

Changes in construction-in-progress payables

(187 )

(150 )

Total capital investments, excluding lease buyouts

$ (1,450 )

$ (1,183 )

Disclosure of cash flow information:

Cash paid during the year for net interest

$ 263

$ 269

Cash paid during the year for income taxes

$ 39

$ 203

Table 4. Supplemental Sales Information

(in millions, except percentages)

(unaudited)

Items

identified below should not be considered as alternatives to sales or any other GAAP measure of performance. Identical sales is an industry-specific

measure, and it is important to review it in conjunction with Kroger's financial results reported in accordance with GAAP. Other companies

in our industry may calculate identical sales differently than Kroger does, limiting the comparability of the measure.

Kroger

defines identical sales, excluding fuel, as sales to retail customers, including sales from all departments at identical supermarket

locations, jewelry and ship-to-home solutions. Kroger defines a supermarket as identical when it has been in operation without

expansion or relocation for five full quarters. We include Kroger Delivery sales as identical if the delivery occurs in an

existing Kroger Supermarket geography or when the location has been in operation for five full quarters.

IDENTICAL

SALES

EXCLUDING ADJUSTMENT ITEMS

FIRST QUARTER (a)

FIRST QUARTER

2026

2025

2026

2025

EXCLUDING FUEL

$ 39,802

$ 39,417

$ 40,136

$ 39,675

EXCLUDING FUEL

1.0 %

3.2 %

1.2 %

3.0 %

(a) Identical

sales, excluding fuel, were adjusted to exclude stores involved in the labor disputes in Colorado in the first quarter of 2025. Identical

sales, excluding fuel, were excluded for the first four weeks of the first quarters of 2026 and 2025 for stores involved in this labor

dispute.

Table 5. Reconciliation of Net Total Debt and

Net Earnings Attributable to The Kroger Co. to Adjusted EBITDA

(in millions, except for ratio)

(unaudited)

The

items identified below should not be considered an alternative to any GAAP measure of performance or access to liquidity. Net total

debt to adjusted EBITDA is an important measure used by management to evaluate the Company's access to liquidity. The items

below should be reviewed in conjunction with Kroger's financial results reported in accordance with GAAP.

The

following table provides a reconciliation of net total debt.

May 23,

May 24,

2026

2025

Change

Current portion of long-term debt including obligations under finance leases

$ 1,264

$ 807

$ 457

Long-term debt including obligations under finance leases

15,731

17,138

(1,407 )

Total debt

16,995

17,945

(950 )

Less: Temporary cash investments

2,655

4,398

(1,743 )

Net total debt

$ 14,340

$ 13,547

$ 793

The

following table provides a reconciliation from net earnings attributable to The Kroger Co. to adjusted EBITDA, as defined in the Company's

credit agreement, on a rolling four quarter basis.

ROLLING FOUR QUARTERS ENDED

May 23,

May 24,

2026

2025

Net earnings attributable to The Kroger Co.

$ 1,053

$ 2,584

LIFO charge

169

Depreciation and amortization

3,270

3,319

Net interest expense

649

526

Income tax expense

214

670

Adjustment for loss on investments

183

Adjustment for severance charge and related benefits

Adjustment for impairment of intangible assets

Adjustment for labor dispute charges

Adjustment for store closures

100

Adjustment for executive stock compensation for a former executive

(21 )

Adjustment for merger-related costs (a)

509

Adjustment for merger-related litigation and settlement charges

171

Adjustment for property losses

Adjustment for opioid settlement charges and vendor reserves

(28 )

(5 )

Adjustment for gain on sale of Kroger Specialty Pharmacy

(79 )

Adjustment for fulfillment network impairment and related charges

2,497

Adjustment for transformation costs (b)

Other

(8 )

(11 )

Adjusted EBITDA

$ 8,183

$ 8,015

Net total debt to adjusted EBITDA ratio

1.75

1.69

(a) Merger-related

costs primarily include third-party professional fees and credit facility fees associated with the terminated merger with Albertsons

Companies, Inc.

(b) Transformation

costs primarily include costs related to third-party professional consulting fees associated with business transformation and cost saving

initiatives.

Table 6. Net Earnings Per Diluted Share Excluding the Adjustment Items

(in millions, except per share amounts)

(unaudited)

The

purpose of this table is to better illustrate comparable operating results from our ongoing business, after removing the effects on net

earnings per diluted common share for certain items described below. Adjusted net earnings and adjusted net earnings per diluted

share are useful metrics to investors and analysts because they present more accurately year-over-year comparisons for net earnings and

net earnings per diluted share because adjusted items are not the result of normal operations. Items identified in this table

should not be considered alternatives to net earnings attributable to The Kroger Co. or any other GAAP measure of performance. These

items should not be reviewed in isolation or considered substitutes for the Company's financial results as reported in accordance with

GAAP. Due to the nature of these items, as further described below, it is important to identify these items and to review

them in conjunction with the Company's financial results reported in accordance with GAAP.

The

following table summarizes items that affected the Company's financial results during the periods presented.

FIRST

QUARTER

2026

2025

Net earnings attributable

to The Kroger Co.

$ 903

$ 866

Adjustment for loss on investments

(a)(b)

Adjustment for labor dispute

charges (a)(c)

Adjustment for store closures

(a)(d)

Adjustment for executive stock

compensation for a former executive (a)(e)

(16 )

Adjustment for merger-related

litigation costs (a)(f)

Adjustment for opioid settlement

charges and vendor reserves (a)(g)

Adjustment for transformation

costs (a)(h)

Executive

stock compensation for a former executive income tax adjustment

(7 )

2026 and

2025 Adjustment Items

130

Net

earnings attributable to The Kroger Co. excluding the adjustment items above

$ 980

$ 996

Net

earnings attributable to The Kroger Co. per diluted common share

$ 1.46

$ 1.29

Adjustment for loss on investments

(i)

0.01

0.02

Adjustment for labor dispute

charges (i)

0.05

Adjustment for store closures

(i)

0.12

Adjustment for executive stock

compensation for a former executive (i)

(0.03 )

Adjustment for merger-related

litigation costs (i)

0.03

0.02

Adjustment for opioid settlement

charges and vendor reserves (i)

0.03

Adjustment for transformation

costs (i)

0.08

Executive

stock compensation for a former executive income tax adjustment (i)

(0.01 )

2026 and

2025 Adjustment Items

0.12

0.20

Net

earnings attributable to The Kroger Co. per diluted common share excluding the adjustment items above

$ 1.58

$ 1.49

Average

number of common shares used in diluted calculation

615

664

Table 6. Net Earnings Per Diluted Share Excluding the Adjustment Items (continued)

(in millions, except per share amounts)

(unaudited)

(a)

The amounts presented represent the after-tax effect of each adjustment.

(b)

The pre-tax adjustments for loss on investments were $14 and $19 in the first quarters of 2026 and 2025, respectively.

(c)

The pre-tax adjustments to Sales, COGS and OG&A expenses for labor dispute charges were $44.

(d)

The pre-tax adjustment to OG&A expenses for store closures was $100.

(e)

The pre-tax adjustment to OG&A expenses for executive stock compensation for a former executive was $(21).

(f)

The pre-tax adjustments to OG&A expenses for merger-related litigation costs were $25 and $15 in the first quarters of 2026 and 2025.

(g)

The pre-tax adjustment to OG&A expenses for opioid settlement charges and vendor reserves was $22.

(h)

The pre-tax adjustment to OG&A expenses for transformation costs was $62. Transformation costs primarily include costs related to third party professional consulting fees associated with business transformation and cost saving initiatives.

(i)

The amounts presented represent the net earnings (loss) per diluted common share effect of each adjustment.

Note:

2026 First Quarter Adjustment Items include adjustments for the loss on investments, merger-related litigation costs and transformation costs.

2025 First Quarter Adjustment Items include adjustments for the loss on investments, labor dispute charges, store closures, executive stock compensation for a former executive, merger-related litigation costs, opioid settlement charges and vendor reserves and executive stock compensation for a former executive income tax.

Table 7. Operating Profit Excluding the Adjustment Items

(in millions)

(unaudited)

The

purpose of this table is to better illustrate comparable operating results from our ongoing business, after removing the effects on operating

profit for certain items described below. Adjusted FIFO operating profit is a useful metric to investors and analysts because

it presents more accurately year-over-year comparisons for operating profit because adjusted items are not the result of normal operations. Items

identified in this table should not be considered alternatives to operating profit or any other GAAP measure of performance. These

items should not be reviewed in isolation or considered substitutes for the Company's financial results as reported in accordance with

GAAP. Due to the nature of these items, as further described below, it is important to identify these items and to review

them in conjunction with the Company's financial results reported in accordance with GAAP.

The

following table summarizes items that affected the Company's financial results during the periods presented.

FIRST

QUARTER

2026

2025

Operating profit

$ 1,407

$ 1,322

LIFO charge

FIFO operating profit

1,459

1,362

Adjustment for labor dispute

charges

Adjustment for store closures

100

Adjustment for executive stock

compensation for a former executive

(21 )

Adjustment for merger-related

litigation costs

Adjustment for opioid settlement

charges and vendor reserves

Adjustment for transformation

costs (a)

Other

(2 )

(4 )

2026 and

2025 Adjustment items

156

Adjusted

FIFO operating profit excluding the adjustment items above

$ 1,544

$ 1,518

(a) Transformation

costs primarily include costs related to third-party professional consulting fees associated with business transformation and cost saving

initiatives.

Table 8. Gross Margin

(in millions, except percentages)

(unaudited)

the Consolidated Statements of Operations within Table 1, the Company separately presents rent and depreciation and amortization to evaluate

operational effectiveness. The table below calculates gross margin in accordance with Generally Accepted Accounting Principles ("GAAP")

by including a portion of rent and depreciation and amortization related to the Company's manufacturing and warehousing and transportation

activities.

The

following table provides the calculation of gross profit and gross margin in accordance with GAAP.

FIRST QUARTER

2026

2025

Sales

$ 46,121

$ 45,118

Merchandise costs, including advertising, warehousing and

transportation and LIFO charge, excluding rent and depreciation and amortization

35,493

34,551

Rent

Depreciation and amortization

139

193

Gross profit

$ 10,473

$ 10,356

Gross margin

22.7 %

23.0 %

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