Kroger (KR) Updates on Labor Guidance Ahead of Investor Conference

Identical supermarket sales growth (excluding fuel sales)

4.0% to 5.0%

Net earnings per diluted share

We expect net earnings to be $1.92 to $1.98 per diluted share, which exceeds our long-term net earnings per diluted share growth rate guidance of 8-11%. We expect the third quarter to be at the high end of the 8-11% range and the fourth quarter to be below the range.

Non-fuel FIFO operating margin

We expect full-year non-fuel FIFO operating margin to exceed our goal to slightly expand on a rolling four quarters basis.

Capital investments

We expect capital investments, excluding mergers, acquisitions and purchases of leased facilities, to be at the high end of the $3.0 to $3.3 billion range. These capital investments include approximately 75 to 85 major projects covering new stores, expansions and relocations, 180 to 200 major remodels, and other investments including minor remodels and technology and infrastructure to support our Customer 1st business strategy.

Supermarket square footage growth

Approximately 2.0% to 2.5% before mergers, acquisitions and operational closings

Return on invested capital

We expect our 2015 year-end ROIC to increase slightly compared to the fiscal 2014 result.

Expected tax rate

We expect the 2015 tax rate to be approximately 35%, excluding the resolution of certain tax items and potential changes to tax legislation.

Product Cost Inflation/LIFO

In 2015, we anticipate product cost inflation of 1.0% to 2.0%, excluding fuel, and an annualized LIFO charge of approximately $90 million.

Pension Contributions/Expenses

Company-sponsored pension plans

We expect 2015 expense to be approximately $105 million. In 2015, we expect to make cash contributions of approximately $5 million.

Multi-employer plans

In 2015, we expect to contribute approximately $315 million to multi-employer pension funds, $60 million of which was accrued for at the end of 2014.

Labor

In 2015, we will negotiate agreements with UFCW for store associates in Denver and Portland. Negotiations this year will be challenging as we must have competitive cost structures in each market while meeting our associates’ needs for solid wages and good quality, affordable health care and retirement benefits. Also, continued long-term financial viability of our current Taft-Hartley pension plan participation is important to address.