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Barclays Capital Retail & RestaurantsConference
April 26, 2011
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1
This presentation includes forward-looking statements which are
subject to risks and uncertainties. Actual results might differ
materially from those projected in the forward-looking statements.
Additional information concerning factors that could cause actual
results to materially differ from those in the forward-looking
statements is contained in our Securities and Exchange
Commission filings.
Forward-Looking Statements
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Significant scale with +2,400 stores in 31 states driving $80+billion annual revenues
#1 or #2 market share in 38 of our 42 major markets
Proprietary consumer insights driving strong customer loyalty
Outstanding positive identical store sales momentum
Consistent record of rewarding shareholders through sharerepurchases and dividends
Highly experienced and proven leadership team
Strong balance sheet with significant financial flexibility
Best-In-Class Retailer
2
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National Presence Across Banners And Formats
3
Supermarkets
Convenience Jewelry Personal FinanceManufacturingPharmacy Prepaid Wireless
http://www.jaycfoods.com/8/2/2019 barclays-apr11
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4
38 markets With #1 or #2 Share
Note: Figures in brackets represent number of supermarkets per state.
Nearly 85% of the households in the markets where Kroger operates have shopped at aKroger store during the most recent fiscal year
Unparalleled Reach With Leadership In Key Markets
AK(11)
WA
(126)
OR
(55)
MT
(4)
CA
(375)
NV
(55)
UT
(48)
ID
(14)
WY
(9)
AZ
(126)
NM
(27)
TX
(201)
ND
SD
MN
MI
(134)
IL
(61)
OK
OH
(212)
PA
NY
KY
(109)
VA
(62)
TN
(121)
MO
(18)
LA
(9)
IA
IN
(145)
WI
KS
(67)
AR
(35)
NC
(18)
SC
(11)
GA
(175)
WV
(46)
CT
MS
(34)AL
(10)
VT
NH
MA
RI
NJ
DEMD
ME
NE
(12)
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Strengthening Our Competitive Position In Todays
Environment
5
Challenging macro environmentcontinuing to affect consumerbehavior
Increasing importance of privatelabel sales for US food retailers
Re-emergence of inflation followinga deflationary period
Industry Trend Kroger Positioning
Krogers consumer insights andcompetitive pricing have increasedloyal households and driven marketshare gains
Krogers industry leading threetiered private label programdifferentiates Kroger from peersand increases customer loyalty
Krogers ability to pass on productcost inflation has been a modesttailwind for top-line performance Moderate inflation is generally
positive for Krogers business
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Source: Nielsen Homescan Fiscal Year Sales Trends January 29, 2011Note: Figures may not add to 100% due to rounding
19.1%
30.6%23.5%
10.9%
4.3%
1.7%10.1%
FY2007
Kroger Other Food Retailers Mass Warehouse Drug Dollar Other
20.6%
29.6%22.4%
11.2%
4.3%
1.9%
9.9%
FY 2010
(+150bps)
(-100bps)(-110bps)
(+40bps)
(0bps)
(+20bps)
(-20bps)
6
Growing Share In A Highly Competitive Sector
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Invest in ShoppingExperience
Improve Connectionwith Customers
Strong ID SalesGrowth
Operating CostLeverage
7
Customer 1st: A Cycle Of Value Creation
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Drives loyal household growth 90% of transactions involve loyalty
card 50% of households in the United
States carry a Kroger card 85% of penetration in Kroger
markets
Global leader in data management,customer analysis and insight-ledplanning Partnership since 2003
Provides significant competitiveadvantage Ability to segment customer
base and design customizedofferings
Ability to target promotionalspending towards mostprofitable customers
Relationship and insightscontinue to evolve
Industry Leading Loyalty Program Provides Unique
Customer Insights
Kroger Plus Card dunnhumby Relationship
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Offers our pricesensitivecustomers achoice of basic
products, pricedto fit their budget
Offers practical,economicalsolutions for
everyday needs
Represents themajority of Krogerbranded goods
Great quality ourcustomers expectwith wide breadthof products tomeet their needs
Premium qualitybrand, made fromonly the finest
ingredients
Offers more than1,000 productsranging fromgourmet tomainstream
Compelling Tiered Private Label Strategy Is A
Significant Driver Of Value Creation
Value Banner Brands Private Selection
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Source: Private Label Manufacturing Association 2Q10 data as reported in Barclays Capital U.S. Supermarket Industry Review Fall 2010 and Company Reports
10
Differentiating Kroger From Our Competitors
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
Supermarket Industry Kroger
Unit Share Dollar Share
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0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Q4-
03
Q1-
04
Q2-
04
Q3-
04
Q4-
04
Q1-
05
Q2-
05
Q3-
05
Q4-
05
Q1-
06
Q2-
06
Q3-
06
Q4-
06
Q1-
07
Q2-
07
Q3-
07
Q4-
07
Q1-
08
Q2-
08
Q3-
08
Q4-
08
Q1-
09
Q2-
09
Q3-
09
Q4-
09
Q1-10
Q2-10
Q3-10
Q4-10
11
29 Consecutive Quarters Of Positive ID Sales Growth
Kroger ID Supermarket Sales Growth (ex fuel)
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Expand earnings through steady increases in identical sales
together with modest growth in operating margin (ex fuel)
Target annual EPS growth averaging 6% to 8% over a rolling
three- to five-year time horizon Including dividend, target a total shareholder return of ~8% to
10%
Generate an average annual return for shareholders that matches
or exceeds the S&P 500 index with less volatility
1212
Our Growth Strategy
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$ 1.31
$ 1.76
FY2005 FY2010
$60.6
$82.2
FY2005 FY2010
13
5 Year Sales Growth ($bn) 5 Year EPS Growth ($)
Strong Financial Performance Through Downturn
1. Represents Diluted EPS excluding extraordinary items
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2.3 x
1.9 x
FY2000 FY2010
$8.3
$7.3
FY2000 FY2010
Krogers Strong Investment Grade Credit Rating Provides Significant Financial Flexibility
10 Year Net Total Debt
Reduction ($bn) 10 Year Deleveraging 10 Year Share Count Reduction (m)
14
Attractive Cash Generation And Capital Structure
1. Defined as Net Total Debt/EBITDA
846
638
FY2000 FY2010
Weighted Avg Shares O/S (Diluted)
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12.6% 17.1%17.9% 21.2% 22.2%
56.8%
120.4%
50.3%
19.4%
48.3%
FY2006 FY2007 FY2008 FY2009 FY2010
Total: $773
Total: $1,623
Total: $864
Total: $456
Total: $795
15Note: Kroger initiated dividend policy in May 2006. Net income excludes extraordinary items
Consistent Record Of Rewarding Shareholders
Through Share Repurchases And Dividends
Yearly Cash Deployment as a % of Net Income ($m)
Dividends Repurchase
Total Payout To Shareholders Has Averaged ~70% Of Net Income Over Past 5 Years
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1616
Fiscal 2011 Annual Guidance
ID supermarket sales growth (ex fuel): 3% to 4%
EPS: $1.80 to $1.92
Q2 & Q3 growth rates below the annual growth rate
Q2 growth rate the lowest of the year
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Significant scale with +2,400 stores in 31 states driving $80+billion annual revenues
#1 or #2 market share in 38 of our 42 major markets
Proprietary consumer insights driving strong customer loyalty Outstanding positive identical store sales momentum
Consistent record of rewarding shareholders through sharerepurchases and dividends
Highly experienced and proven leadership team
Strong balance sheet with significant financial flexibility
Best-In-Class Retailer
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Forward-Looking Statements
The accompanying slides contain certain forward-looking statements about the future performance of the Company. These
statements are based on managements assumptions and beliefs in light of the information currently available to it. These
forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially. Our
ability to achieve identical supermarket sales and earnings growth and earnings per share goals, the timing that those earnings
occur within the year, our ability to deliver shareholder return of 8-10% and to match or exceed that of the S&P 500, and our
ability to continue to deliver shareholder value through dividends and share repurchases, may be affected by: labor disputes,
particularly as the Company seeks to manage health care and pension costs; industry consolidation; pricing and promotional
activities of existing and new competitors, including non-traditional competitors, and the aggressiveness of that competition; our
response to these actions; unexpected changes in product costs; the state of the economy, including interest rates and the
inflationary and deflationary trends in certain commodities; the extent to which our customers exercise caution in their
purchasing behavior in response to economic conditions; the number of shares outstanding; the success of our future growth
plans; goodwill impairment; volatility in our fuel margins; and our ability to generate sales at desirable margins, as well as the
success of our programs designed to increase our identical sales without fuel. In addition, any delays in opening new stores, or
changes in the economic climate could cause us to fall short of our sales and earnings targets. Our ability to increase identical
supermarket sales also could be adversely affected by increased competition and sales shifts to other stores that we operate, aswell as increases in sales of our corporate brand products. Earnings and sales also may be affected by adverse weather
conditions, particularly to the extent that hurricanes, tornadoes, floods, and other conditions disrupt our operations or those of
our suppliers; create shortages in the availability or increases in the cost of products that we sell in our stores or materials and
ingredients we use in our manufacturing facilities; or raise the cost of supplying energy to our various operations. Our results
also will be affected by the inconsistent pace of the economic recovery, consumer confidence, and changes in inflation and
deflation in product and operating costs. Please refer to Krogers reports and filings with the Securities and Exchange
Commission for a further discussion of these risks and uncertainties.
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