Kroger 2010 Annual Report Download - page 3

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FE L L O W SH A R E H O L D E R S :
In 2010, the Kroger team continued to grow our business and reward our Shareholders in a difficult
economic and operating environment. We also further strengthened our position as the leading traditional
grocery retailer in the U.S. Kroger’s competitive strengths include:
•฀Significant฀ scale. Today we operate more than 2,400 retail grocery stores and multi-department
stores in 31 states, plus over 1,000 supermarket fuel locations and more than 700 convenience stores.
Total sales in 2010 were a record-breaking $82.2 billion;
•฀Strong฀and฀growing฀market฀share. Kroger holds the #1 or #2 share in 38 of our 42 major markets;
•฀Offering a personalized฀approach to each Customer, based on the proprietary consumer insights
we gain from our partnership with dunnhumbyUSA. This unique advantage helped Kroger grow both
our number of loyal households and total households that shop with us;
•฀Industry-leading฀identical฀supermarket฀sales฀growth. While many major grocery competitors
experienced negative identical-sales trends in 2010 and recent years, Kroger has delivered positive
identical sales, excluding fuel, for 29 consecutive quarters;
•฀A consistent฀record฀of฀rewarding฀Shareholders through dividends and share repurchases; and
•฀A strong balance sheet with฀significant฀financial฀flexibility.
2010 Highlights
Kroger’s Customer 1st strategy focuses on people, prices, service, selection, and shopping experience.
The 338,000 Associates who bring this strategy to life prove every day that this combination is winning
with Customers. Total 2010 sales increased 7.1 percent to $82.2 billion, and net earnings were $1.12 billion,
or $1.74 per diluted share. This compares with 2009 total sales of $76.7 billion and reported net earnings of
$70.0 million, or $0.11 per diluted share in 2009. Excluding the effect of the non-cash impairment charges
taken in the third quarter of 2009, net earnings in the prior year would have been $1.12 billion, or $1.71 per
diluted share.
Significant scale.
One measure of the success of Kroger’s Customer 1st strategy is our unparalleled reach within the
regions in which we operate. Approximately one-half of all U.S. households have a Kroger loyalty card.
Looking specifically at the markets where Kroger operates, nearly 85 percent of households hold a Kroger
loyalty card and have shopped with us during the last year. Each and every one of our cardholders benefits
from Kroger’s unique combination of value, selection, service, and convenience just by being a Kroger
shopper.
We believe in giving our Customers choices. Therefore, Kroger offers both a full complement of
national brands and the most robust store-brand portfolio in the industry. Strong growth in Kroger’s
Corporate Brand products continued across all three categories in 2010: Private Selection, our premium
brands; Banner Brands like Kroger, Ralphs and King Soopers, which represent the majority of our own
Corporate Brands; and Value brand items, aimed at our most price-sensitive Customers. Kroger’s 40
manufacturing plants supplied about 40 percent of the Corporate Brand units sold. During 2010, these
Corporate Brands accounted for approximately one-third of Kroger’s total grocery unit sales.