Kroger : First Quarter 2024 Presentation

Kroger Q1 2024 Earnings Release

June 20, 2024

Safe Harbor

This presentation includes certain statements that constitute "forward-looking statements" about Kroger's financial position and expected performance, including our proposed transaction with Albertsons Companies. These statements are based on management's assumptions and beliefs in light of currently available information. Such statements are indicated by words or phrases such as "delivering," "guidance," "model," "strategy," "target," "thesis," "will," and other similar statements. 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. 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. This presentation includes certain non-GAAP financial measures. Please refer to the supplemental information presented in the tables for reconciliations of the non-GAAP financial measures used in this presentation to the most comparable GAAP financial measure and related disclosure. This presentation also includes certain forward-lookingnon-GAAP financial measures, which management believes to be useful to investors and

analysts. Kroger is unable to provide a full reconciliation of the non-GAAP measures used in our guidance, including, but not limited to, adjusted FIFO operating profit to operating profit and adjusted free cash flow, without unreasonable effort because it is not possible to predict with a reasonable degree of certainty the information necessary to calculate such measures on a GAAP basis. It is not possible to estimate with a reasonable degree of certainty certain of our adjustment items because such information is dependent on future events that may be outside of our control. The unavailable information could have a significant impact on our GAAP financial results.

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Q1 2024 Results

+0.5%	$1,294M	$1.29
ID Sales(1)	GAAP Operating Profit	GAAP EPS

+8%	$1,499M	$	1.43
Digital Sales
Delivery and Pickup combined	Adj. FIFO Operating Profit		Adj. EPS
for double-digit growth		5% decline

(1) Without fuel

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2024 Full-Year Guidance* - Reaffirmed

Adjusted Metric	FY24 Guidance
Identical Sales without fuel (%)*	0.25%	- 1.75%
Operating Profit ($B)*	$4.6	- $4.8
EPS ($)*	$4.30	- $4.50
Free Cash Flow ($B)**	$2.5 - 2.7
Cap Ex ($B)	$3.4	- $3.6
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 2024 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 2024 GAAP financial results.

** Adjusted free cash flow excludes planned payments related to the restructuring of multi-employer pension plans, payments related to opioid settlements and merger-related expenses.	4
**** 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, which cannot be predicted.

Q1 2024 Highlights

Leading with Fresh, Accelerating with Digital

Progress on our go-to-market strategy

Fresh

Launched a new brand, Field & Vine, which offers high quality and regionally grown berries

Achieved a new record for quarterly floral sales in Kroger history led by strong Valentine's Day and Mother's Day sales

Our Brands

Introduced 346 new Our Brands items

Completed brand redesigns in Abound and Pet Pride, and rolled out new Simple Truth packaging

Personalization

Grew digitally engaged households by 9%, increasing customer loyalty and promoting growth in alternative profit businesses like Kroger Precision Marketing

Delivered more personalized value to customers with an 18% increase in digital coupon downloads

Seamless

Increased delivery sales by 17% over last year led by Customer Fulfillment Centers

Strong execution in Pickup led to new record pickup fill rate, as well as improvement in wait times

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Strengthening our Value Creation Model

Delivering Sustainable Total Shareholder Return of 8 - 11%*

Grocery

Strong store execution and exceptional value led to growth in total households, loyal households, and customer visits

Health & Wellness

Solid sales growth and improved share of vaccinations

Fuel

Customers redeemed 8% more fuel rewards compared to the same quarter last year, driving more customer loyalty

Cents per gallon fuel margin declined low- single digits compared to last year

	Revenue
	+
Alternative Profits	Traffic

Strong operating profit performance with growth led by KPM

Expanded new Kroger Precision

Marketing capabilities to advertisers on

Meta's platforms

Strong Grocery,

Fuel and Health

• Wellness Business

Data

+

Traffic

Fast Growing

Alternative Profit

Businesses

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*Total shareholder return assumes no change in Kroger's PE Ratio.

Associate Experience

• Supporting Associates: Awarded the 2024 Platinum Bell Seal for Workplace Mental Health by Mental Health America
• Leadership Recognition: Recognized as one of the All-Time Top Corporations for Women Business Enterprises by the WBENC
• Diverse and Inclusive Workplace: Named as a Best Workplace for Diverse Professionals by Mogul

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Live Our Purpose

Featured on the 2024 Axios Harris Poll 100, an annual ranking of the most visible and trusted companies in America

Sponsored the 2024 National STEM Festival through

Kroger's Zero Hunger | Zero Waste Foundation

Celebrated Earth Month with a contribution to the World Wildlife Fund and introduction of a new reusable bag campaign

Recognized by Newsweek as one of "America's Greatest Workplaces for Diversity" for 2024

Received a 2024 Early Talent Award from

Handshake for our commitment to creating meaningful and engaging work experiences for early talent and Gen Z

Launched new senior-focused primary

care in eight clinics in Atlanta

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Investment Thesis

Strong Business with	Proven Value	Strong Balance Sheet &
Exciting Growth Opportunities	Creation Model	Resilient Free Cash Flow
• Conveniently located +2,700 stores	• Net Earnings Growth, 3-5%	• Strong Free Cash Flow Yield
• First Party Data on 62M Households	• ID Sales Growth (ex. Fuel), 2-	• Investment Grade Debt Rating
• ~$30B Our Brands Business	4%	• Current Net Debt to Adjusted
• Margin Improvements (net of
• Significant Digital Business,	EBITDA 1.25x
investments), 1-2%
$12B	• Cost Savings, $1B Annually
	• High Growth, Margin
	Accretive Alternative Profits
	• Disciplined Capital Investments
	• Cash Payout 5-6% (Dividends &
	Share Repurchases(1))

	Accelerated Go-To-Market Strategy	• Combined TSR above Kroger's	•	Accelerated Free Cash Flow Yield
		Fresher products, faster	standalone TSR Model of 8 - 11%	•	Investment Grade Debt Rating
	•	in first four years post-close
	• Strong Balance Sheet Positioned
+	•	Best-in-class personalized experience
•	High Growth, Margin		for Future Growth
•	Broader selection of Our Brands		Accretive Alternative Profits
		products
	•	Enhanced Seamless experience
		Combined company financial expectations to be updated upon closing

1. Kroger has paused its share repurchase program to prioritize de-leveraging following the proposed merger with Albertsons. During this period, value will be created for shareholders through dividends and the effect of reduced net debt.

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Appendix

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