Kroger 2011 Annual Report Download - page 6

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4
Finally, Kroger continues to make significant strides as an environmentally-sustainable retailer. Our
sustainability efforts reduce Kroger’s impact on the environment and reduce business operating costs. I’m
pleased to report that Kroger has:
•฀ Reduced energy consumption by 30 percent since 2000. That’s enough electricity to power every
single-family home in Fort Worth, Texas for one year.
•฀ Reduced landfill waste to zero at half of our 39 manufacturing facilities. Our manufacturing
plants reduced the amount of waste sent to landfill by 22 million pounds.
•฀ Improved fleet efficiency by 15.5 percent since 2008. We continue to improve the efficiency of
transporting food to our stores by loading trucks to capacity, increasing miles per gallon and reducing
how often we drive empty trailers.
•฀ Saved nearly one billion bags from being used through more efficient bagging techniques, educating
Customers and making available a variety of reusable bags.
•฀ Progressed toward our sustainable seafood goals in partnership with the World Wildlife Fund.
More information on this commitment and other initiatives is available at sustainability.kroger.com.
A Record of Rewarding Shareholders
Kroger has a strong track record of rewarding Shareholders. In fiscal 2011, Kroger returned more than
$1.8 billion to shareholders through share repurchases and cash dividends. Total payout to Shareholders
has averaged over 90 percent of Kroger’s adjusted net income over the past five years.
In fiscal 2011 Kroger repurchased $1.4 billion of our Common Shares. Since January 2000, Kroger
has returned $8.0 billion to Shareholders through share repurchases. At the end of fiscal 2011,
approximately $475 million remained under the $1 billion share repurchase program authorized by the board
of directors in September of fiscal 2011.
We also paid dividends of $257 million in fiscal 2011, increasing the dividends paid to Shareholders in
each of the years since we resumed paying a dividend in 2006. Since 2006, Kroger has paid more than
$1.25 billion in dividends to Shareholders. We have been able to accomplish this while maintaining our
investment-grade credit rating and improving our debt leverage ratio and annual interest expense.
We target – and consistently deliver – annual earnings per share growth averaging 6 percent to 8 percent,
plus a dividend of 1.5 percent to 2 percent, for a total Shareholder return of approximately 8 percent to
10 percent. We expect this total Shareholder return to compare favorably to the S&P 500 over each rolling
three-to-five year time horizon. For fiscal 2012, we expect annual earnings per share growth to exceed our
business model.
* * *
Optimism for the Future
Looking ahead, we expect the overall retail environment to improve slightly in 2012. All of the data
we are seeing suggests the overall economy and Customer sentiment are improving. Both give us reason to
be optimistic about the year ahead. Of course, these times are not without challenges. We will continue to
carefully monitor the pace of economic recovery, higher gas prices and the slowing of the rate of inflation.
We remain confident that our Customer 1st strategy continues to be the right one—and our outstanding results
bear this out.
While certain factors will influence all retailers, we believe Kroger’s success will continue to come from
making tactical adjustments as needed throughout the year, just as we did throughout 2011—and staying true
to our Customer 1st strategy, which leads us to listen, engage and innovate in ever more powerful ways.
On behalf of the entire Kroger team, thank you for your continued trust and support.
David B. Dillon
Chairman of the Board and
Chief Executive Officer