Kroger 2015 Annual Report Download - page 80

A-6
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. Our operating divisions reflect the manner in which the business is managed and how our Chief
Executive Officer, who acts as our chief operating decision maker, assesses performance internally.
All of our operations are domestic. Revenues, profits and losses and total assets are shown in our
Consolidated Financial Statements set forth beginning on page A-29 below.
MERCHANDISING AND MANUFACTURING
Corporate brand products play an important role in our merchandising strategy. Our supermarkets,
on average, stock over 14,000 private label items. Our corporate brand products are primarily produced
and sold in three “tiers.” Private Selection® is the premium quality brand designed to be a unique item
in a category or to meet or beat the “gourmet” or “upscale” brands. The “banner brand” (Kroger®,
Ralphs®, Fred Meyer®, King Soopers®, etc.), which represents the majority of our private label items,
is designed to satisfy customers with quality products. Before we will carry a “banner brand” product we
must be satisfied that the product quality meets our customers’ expectations in taste and efficacy, and
we guarantee it. P$$T…®, Check This Out… and Heritage Farm™ are the three value brands, designed
to deliver good quality at a very affordable price. In addition, we continue to grow our other brands,
including Simple Truth® and Simple Truth Organic®. Both Simple Truth and Simple Truth Organic are
Free From 101 artificial preservatives and ingredients that customers have told us they do not want in
their food, and the Simple Truth Organic products are USDA certified organic.
Approximately 40% of the corporate brand units sold in our supermarkets are produced in our
food production plants; the remaining corporate brand items are produced to our strict specifications by
outside manufacturers. We perform a “make or buy” analysis on corporate brand products and decisions
are based upon a comparison of market-based transfer prices versus open market purchases. As of
January 30, 2016, we operated 38 food production plants. These plants consisted of 17 dairies, ten deli
or bakery plants, five grocery product plants, two beverage plants, two meat plants and two cheese
plants.
SEASONALITY
The majority of our revenues are generally not seasonal in nature. However, revenues tend to be
higher during the major holidays throughout the year.
EXECUTIVE OFFICERS OF THE REGISTRANT
The disclosure regarding executive officers is set forth in Item 10 of the Company’s Annual Report
on Form 10-K for fiscal year 2015 under the heading “Executive Officers of the Company,” and is
incorporated herein by reference.
COMPETITIVE ENVIRONMENT
For the disclosure related to our competitive environment, see Item 1A of the Company’s Annual
Report on Form 10-K for fiscal year 2015 under the heading “Competitive Environment.”