On this page of StockholderLetter.com we present the latest annual shareholder letter from KROGER CO — ticker symbol KR. Reading current and past KR letters to shareholders can bring important insights into the investment thesis.

 •  5/15/2024 Letter Continued (Full PDF)
 •  5/11/2023 KR Stockholder Letter
 •  More "Department Stores" Category Stockholder Letters
 •  KR Benford's Law Stock Score = 95

KR Shareholder/Stockholder Letter Transcript:

2023 PROXY STATEMENT AND 2022 ANNUAL REPORT
Notice of 2024 Annual Meeting of Shareholders
2024 Proxy Statement
and
2023 Annual Report on Form 10-K


Dear Fellow Shareholders,
I am incredibly inspired by what Kroger and our associates accomplished in 2023. During a time of ongoing
economic uncertainty, our associates delivered more value and more access to fresh food for millions of people
across America. When our customers needed us most, we are there with the affordable meals their families want and
love.
After four decades in the retail industry, I can confidently say few things remain constant. My colleagues often hear
me remark that a few of those things are people   s need to eat, our commitment to serving our customers and retail   s
ever-evolving nature.
I have taken a lot of time to reflect this past year. And on the heels of a global pandemic and the challenged
operating environment that followed, it   s increasingly clear I need to add Kroger   s character as a company to that
list of constants.
Kroger   s fundamental business model     to lower prices and make more fresh food accessible to more families     has
not changed. Our commitment to creating a best-in-class working environment for our associates and investing in
their long-term success has not changed. Our deep ties with local communities that inspire us to think differently
about how to feed every family in need has not changed.
For more than 140 years, Kroger has been there for our customers, our associates and our communities     and when
each of these stakeholders is served well, our shareholders also benefit. We continue to demonstrate that we have the
right operating model, the curiosity to adapt to a changing environment and the fortitude to solve difficult problems.
Kroger   s foundation is stable and strong, and we are well-positioned to continue growing, bringing value to
customers, creating exciting career opportunities for associates, providing much-needed food for our communities
and rewarding our shareholders for many years to come.
Being a leader in the retail industry, offering affordable groceries to more customers, industry-leading benefits to
more associates and life-changing investments to more communities isn   t easy. I firmly believe Kroger, supported
by our amazing associates, can     and will     do it.
2023 in Review
Customers experienced continued economic uncertainty throughout last year. Facing a combination of reducing
SNAP benefits, increasing interest rates and decreasing savings, we made the right choices to help families stretch
their dollars. We believe everyone deserves access to fresh, healthy food, with zero compromise on convenience and
selection, no matter where they live and what their budget is.
As our results demonstrate, our Leading with Fresh, Accelerating with Digital strategy and focus areas of Fresh, Our
Brands, Personalization and Seamless provides us the flexibility we need to operate in a challenged business
environment while serving our customers and associates.
During the year, we:
    Achieved positive identical sales growth of 0.9% without fuel, and an underlying identical sales growth
excluding the effects of the Express Scripts termination, and without fuel, of 2.3%;
    Delivered $5 billion of adjusted FIFO operating profit;
    Grew digital business to $12 billion in annual sales; and
    Increased average hourly wages to nearly $19 or nearly $25 with comprehensive benefits, which is a 33%
increase in rate in the last five years.
And we continue to deliver for our shareholders. On a three-year basis, Kroger   s adjusted net earnings per diluted
share has grown at a compounded annual growth rate of 9.5%, which supported a total shareholder return of 42.5%
during the same period. In comparison, the S&P 500 TSR was 39.9% over the same three-year period.
I   d like to share more about how we improved across our business in 2023 and the ways we will continue to grow in
the future.

Leading with Fresh
Fresh products remain at the center of our customers    plates. Whether shoppers are making a nutritious salad filled
with seasonal ingredients, flipping homemade burgers at a backyard cookout or indulging in our signature Murray   s
Cheese with a glass of wine, fresh food makes every meal better. And we are fulfilling our commitment to bring the
freshest items to our customers, no matter how they shop.
With more than 2,100 End-to-End Fresh-certified stores, our customers    produce has more days of freshness in their
homes. This means shoppers can enjoy produce at its peak for longer, which leads to less food waste and healthier
meals. The stores that implemented End-to-End Fresh increased sales in the produce department and across the
entire store. We are delivering on our commitment to provide fresher foods, and our customers are noticing and
rewarding us with their loyalty.
Beyond our produce aisles, we have a renewed focus on fresh flavors and convenient meals. Our customers are more
curious about food than ever before, which makes our work a lot more fun. In 2023, Kroger launched Mercado, a
new Hispanic-inspired brand, under the Our Brands product roster. Boasting more than 50 products, this line is the
perfect example of our innovative teams bringing exciting flavors to our customers at an approachable price point.
Our Brands will launch more than 800 new products in 2024, providing more opportunities for customers to explore
our outstanding portfolio of beloved brands.
With busy schedules pushing families to do more with less time, customers are demanding more convenience meals.
Whether it   s a quick dinner for the whole family after school or a couple looking to substitute overpriced takeout
with a simple alternative, Kroger is finding more ways to capture our fair share of convenience meals typically
dominated by restaurants.
And we cannot conclude a conversation about fresh without noting the growth and opportunity Kroger Health offers
to improve our customers    lives. Every day, we see customers struggling with diseases that could be prevented or
slowed by minor changes in their diets. By encouraging customers and patients to embrace a Food as Medicine
mindset, thinking differently about the food they eat, we hope to realize our goal to help everyone live healthy and
thriving lives.
Accelerating with Digital
Customers continue to shop with Kroger across all our channels     from in-store and Pickup to Delivery. We provide
our customers the products they want, wherever they want them. We find that when our customers can shop with us
in a way that fits their schedule, they spend more of their total food budget with Kroger and are more satisfied with
our products.
Kroger will continue to invest in our digital experience because it is an important part of our plan to continue
growing. In fact, we expect another year of double-digit sales growth in our digital business. We are particularly
focused on our Kroger Delivery network where we continue to do the hard work to enhance the customer experience
and improve operating margins to close the gap with traditional brick-and-mortar stores.
As our digital business grows, we are also investing in stores. In 2024, we will build more new stores and kick off
more renovation projects than we have in the last five years. We believe our combination of brick-and-mortar stores
and fulfillment centers is the best way to bring more fresh food to more of America.
Whether customers shop in our stores or digitally, they are saving more through our personalized shopping
experience. We know our customers better than anyone. We understand their shopping patterns, know which
products their families love and can even predict new items they may enjoy. Our personalized promotions mean the
right customer is served the right offer at the right time. Last year alone, this work led to an 18% increase in digitally
engaged households.
The more our customers use our digital products, the more impactful our alternative profit streams can be. Our
customers benefit by stretching their budgets further, and CPGs benefit by confidently sharing their products with
interested shoppers. This model is succeeding, and it will fuel our growth well into the future.
Investing in Our Associates
Kroger   s associates are the heartbeat of our stores, our distribution and fulfillment centers, manufacturing plants and
our offices. They serve our customers by making memorable moments even more special with the right meal, bottle

of wine or bouquet of flowers. They serve each other by creating technology solutions that embrace simplification
and ensure their fellow associates have zero compromise in their work experience. They serve our communities by
sharing surplus food with food banks that feed families in need every day. I am so inspired by and appreciative of
each and every associate who creates a full, fresh and friendly experience, for every customer, every day.
Kroger is a place where associates can start their career, grow skills that will serve them for a lifetime or embrace a
new beginning; and we are proud to be one of the largest unionized workforces in America. Many of our store
managers join Kroger as hourly associates. We continue to invest in our associates    wages and comprehensive
benefits. Today, Kroger   s average hourly rate is nearly $19 or nearly $25 with comprehensive benefits. This
represents a 33% increase in rate in the last five years.
Alongside historic investments in wages and benefits, we uplift our associates as whole people. We are committed to
growing tomorrow   s leaders through industry-leading programs, including our education benefit, which offers
associates up to $21,000 toward furthering their education. To date, this program supported the continuing education
of almost 7,000 associates, 94% of whom are hourly. We provide affordable, accessible healthcare as well as free
financial coaching for all associates. Our leaders listen deeply to their teams as we continue working towards our
goal of being an employer of choice.
Investing in Our Communities
As a founding member of Feeding America, Kroger is committed to ensuring every family has access to the fresh
food they need to thrive. In 2017, we launched our Zero Hunger | Zero Waste impact plan, with the bold vision of
communities free from hunger and a company with no waste. While we have a long way to go on this journey, I am
incredibly proud of the progress our associates have made.
In 2023, we achieved three billion meals donated to families across the U.S.     nearly two years ahead of our
expectations for this milestone. And last year, we increased our commitment to donate 10 billion meals by 2030,
following our merger with Albertsons Cos. Our surplus food program is one of the ways we are able to fuel this
achievement. Once again, our stores achieved 100% participation, donating surplus food to community food banks
across the country. Full participation in any program is a challenging milestone to achieve. And these are the kinds
of results we look forward to continuing as our operations teams find more ways they can amplify our Zero Hunger |
Zero Waste work.
Any important work will be difficult and take a long time to achieve. I am excited to see the progress our teams are
making, the relationships we are building and the change it will create for our people and the planet.
Update on our proposed merger with Albertsons Companies
As I shared in our fourth quarter earnings     Kroger has a clear track record on mergers, bringing lower prices, more
associate investment, improved customer experiences and deeper community connections. A company   s character is
reflected in the actions it takes when no one is looking, and Kroger has consistently demonstrated it follows through
on its commitments.
Our proposed merger with Albertsons Cos. will secure the future of good-paying union jobs. We added more than
100,000 union jobs the last 12 years     while the grocery industry as a whole lost hundreds of thousands of union
jobs. We are making historic investments to continuously improve our associates    wages and comprehensive
benefits.
The retail industry is more competitive than ever     customers can choose to purchase groceries and eat meals from
the likes of Kroger, Walmart, Amazon (including Whole Foods), Costco, Aldi, dollar stores and restaurants. The
competitive alternatives are endless. Even after our merger closes, we will still have to earn our customers    business
every meal, every day.
Later this summer, we look forward to defending our proposed merger in litigation because we know it will result in
the best outcomes for America   s families: lower prices, more choices, and a more secure future for unions.
Looking to the Future
Building on 2023, I look forward to everything we will accomplish together this year.



 5/15/2024 Letter Continued (Full PDF)