KROGER CO Segments Disclosure
16. SEGMENT REPORTING
The Company operates supermarkets, multi-department stores and fulfillment centers throughout the United States. The Company’s retail operations, which represent substantially all of the Company’s consolidated sales, are its only reportable segment. The retail operations’ segment revenues are predominately earned as consumer products are sold to customers in our stores, fuel centers and via the Company’s eCommerce business. The Company aggregates its operating divisions into one reportable segment due to the operating divisions having similar economic characteristics with similar long-term financial performance. In addition, the Company’s operating divisions offer customers similar products, have similar distribution methods, operate in similar regulatory environments, purchase the majority of the merchandise for retail sale from similar (and in many cases identical) vendors on a coordinated basis from a centralized location, serve similar types of customers, and are allocated capital from a centralized location. Operating divisions are organized primarily on a geographical basis so the operating division management team can be responsive to local needs of the operating division and can execute company strategic plans and initiatives throughout the locations in their operating division. This geographical separation is the primary differentiation between these retail operating divisions. The geographical basis of organization reflects how the business is managed and how the Company’s principal executive officer, who acts as the Company’s chief operating decision maker (“CODM”), assesses performance internally. All of the Company’s operations are domestic.
The accounting policies of the retail operations segment are the same as those described in the summary of significant accounting policies in Note 1. The Company’s CODM assesses performance and allocates resources for the retail operations segment using segment FIFO earnings before net interest expense, income tax expense and depreciation and amortization (“EBITDA”). The Company defines FIFO EBITDA as EBITDA excluding the LIFO charge. The Company’s CODM also uses segment FIFO EBITDA to measure the operational effectiveness of the Company’s financial model, compare the performance of core operating results between periods, against budget and against competitors and evaluate whether to invest capital in the retail operations segment or in other parts of the Company, such as for share repurchases or dividend payments. The Company’s CODM is not provided asset information by reportable segment as asset information is provided to the CODM on a consolidated basis.
The following table presents the Company’s retail operations segment revenue, measure of segment profit or loss, significant segment expenses and reconciliation of retail operations segment FIFO EBITDA to consolidated net earnings before income tax expense for the fiscal years ended January 31, 2026, February 1, 2025 and February 3, 2024:
2025 | 2024(1) | 2023(1) | |||||||
| (52 weeks) | | (52 weeks) | | (53 weeks) | ||||
Retail operations segment sales | $ | 147,642 | $ | 147,123 | $ | 150,039 | |||
Retail operations segment expenses: | |||||||||
Merchandise costs, including advertising, warehousing, and transportation, excluding the LIFO charge | 113,083 | 113,625 | 116,562 | ||||||
Operating, general, and administrative | 28,308 | 25,431 | 26,252 | ||||||
Rent | 872 | 877 | 891 | ||||||
Retail operations segment FIFO EBITDA | $ | 5,379 | $ | 7,190 | $ | 6,334 | |||
Reconciliation of net earnings before income tax expense: | |||||||||
Retail operations segment FIFO EBITDA | $ | 5,379 | $ | 7,190 | $ | 6,334 | |||
Depreciation and amortization | (3,332) | (3,246) | (3,125) | ||||||
LIFO charge | (157) | (95) | (113) | ||||||
Net interest expense | (639) | (450) | (441) | ||||||
Non-service component of company-sponsored pension plan (expense) benefits | (10) | 12 | 30 | ||||||
(Loss) gain on investments | (41) | (148) | 151 | ||||||
Gain on the sale of business | — | 79 | — | ||||||
Consolidated net earnings before income tax expense | $ | 1,200 | $ | 3,342 | $ | 2,836 | |||
| (1) | The presentation of segment revenues and significant segment expenses for 2024 and 2023 has been recast to conform to the current year presentation and reflects operating segment information reviewed by the Company’s current CODM. |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 31, 2026 | Showing above |
| 2025 | Apr 1, 2025 | |
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.