KROGER CO Fair Value Disclosure

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GAAP establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of the fair value hierarchy defined in the standards are as follows:

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

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

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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.

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For items carried at (or adjusted to) fair value in the consolidated financial statements, the following tables summarize the fair value of these instruments at January 31, 2026 and February 1, 2025:

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January 31, 2026 Fair Value Measurements Using

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February 1, 2025 Fair Value Measurements Using

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The Company values interest rate hedges using observable forward yield curves. These forward yield curves are classified as Level 2 inputs.

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Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analysis of goodwill, other intangible assets, long-lived assets and in the valuation of store lease exit costs. The Company reviews goodwill and indefinite-lived intangible assets for impairment annually, during the fourth quarter of each fiscal year, and as circumstances indicate the possibility of impairment. See Note 2 for further discussion related to the Company’s carrying value of goodwill. As of January 31, 2026, the Company classified a certain subsidiary as held for sale.  This subsidiary is reported at the lower of its carrying value or fair value less cost to sell, which is determined using Level 3 inputs. In 2025, assets held for sale with a carrying amount of $275 were written down to their fair value of $225, resulting in impairment of intangible assets of $50, $34 net of tax.  In 2025, long-lived assets with a carrying amount of $212 were written down to their fair value of $75, resulting in an impairment charge of $137, which includes store closure costs of $100, $77 net of tax, related to the planned closing of approximately 60 stores. Additionally, the Company recorded charges of $2,497, $1,908 net of tax, related to our 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 19 for additional details).  In 2024, long-lived assets with a carrying amount of $229 were written down to their fair value of $131, resulting in an impairment charge of $98, which includes $25, $19 net of tax, for property losses.  Long-lived assets and store lease exit costs were measured at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. See Note 1 for further discussion of the Company’s policies for impairments of long-lived assets and valuation of store lease exit costs.

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Fair Value of Other Financial Instruments

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Current and Long-term Debt

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The fair value of the Company’s long-term debt, including current maturities, was estimated using Level 2 inputs based on the 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 respective year-ends. At January 31, 2026, the fair value of total debt excluding obligations under finance leases was $14,975 compared to a carrying value of $15,875. At February 1, 2025, the fair value of total debt excluding obligations under finance leases was $14,648 compared to a carrying value of $15,909.

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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

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The carrying amounts of these items approximated fair value due to their short-term nature.

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Other Assets

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The fair value of certain financial instruments, measured using Level 1 inputs, was $142 and $183 as of January 31, 2026 and February 1, 2025, respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. The unrealized loss for these Level 1 investments was approximately $41 and $116 for 2025 and 2024, respectively, and is included in “(Loss) gain on investments” in the Company’s Consolidated Statements of Operations.

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In 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) gain on investments” in the Company’s Consolidated Statements of Operations.

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The Company held other equity investments without a readily determinable fair value. These investments are measured initially at cost and remeasured for observable price changes to fair value through net earnings. The value of these investments was $105 and $96 as of January 31, 2026 and February 1, 2025, respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. There were no material observable price changes or impairments for these investments without a readily determinable fair value during 2025 or 2024, and as such, they are excluded from the fair value measurements table above for January 31, 2026 and February 1, 2025.

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The following table presents the Company’s remaining other assets as of January 31, 2026 and February 1, 2025:

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