Kroger 2014 Annual Report Download - page 93

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•฀ Our฀ ability฀ to฀ achieve฀ sales,฀ earnings฀ and฀ cash฀ flow฀ goals฀ may฀ be฀ affected฀ by:฀ labor฀ negotiations฀ or฀
disputes; changes in the types and numbers of businesses that compete with us; pricing and promotional
activities of existing and new competitors, including non-traditional competitors, and the aggressiveness
of that competition; our response to these actions; the state of the economy, including interest rates,
the inflationary and deflationary trends in certain commodities, and the unemployment rate; the effect
that fuel costs have on consumer spending; volatility of fuel margins; changes in government-funded
benefit programs; manufacturing commodity costs; diesel fuel costs related to our logistics operations;
trends in consumer spending; the extent to which our customers exercise caution in their purchasing in
response to economic conditions; the inconsistent pace of the economic recovery; changes in inflation
or deflation in product and operating costs; stock repurchases; our ability to retain pharmacy sales from
third party payors; consolidation in the health care industry, including pharmacy benefit managers;
our ability to negotiate modifications to multi-employer pension plans; natural disasters or adverse
weather conditions; the potential costs and risks associated with potential cyber-attacks or data security
breaches; the success of our future growth plans; and the successful integration of Harris Teeter. Our
ability to achieve sales and earnings goals may also be affected by our ability to manage the factors
identified above.
•฀ Our฀capital฀investments฀could฀differ฀from฀our฀estimate฀if฀we฀are฀unsuccessful฀in฀acquiring฀suitable฀sites฀
for new stores, if development costs vary from those budgeted, if our logistics and technology or store
projects are not completed on budget or within the time frame projected, or if economic conditions fail
to improve, or worsen.
•฀ During฀the฀first฀three฀quarters฀of฀each฀fiscal฀year,฀our฀LIFO฀charge฀and฀the฀recognition฀of฀LIFO฀expense฀
is affected primarily by estimated year-end changes in product costs. Our fiscal year LIFO charge is
affected primarily by changes in product costs at year-end.
•฀ If฀actual฀results฀differ฀significantly฀from฀anticipated฀future฀results฀for฀certain฀reporting฀units฀including฀
variable interest entities, an impairment loss for any excess of the carrying value of the reporting units’
goodwill over the implied fair value would have to be recognized.
•฀ Our฀effective฀tax฀rate฀may฀differ฀from฀the฀expected฀rate฀due฀to฀changes฀in฀laws,฀the฀status฀of฀pending฀
items with various taxing authorities, and the deductibility of certain expenses.
•฀ Changes฀in฀our฀product฀mix฀may฀negatively฀affect฀certain฀financial฀indicators.฀For฀example,฀we฀continue฀
to add supermarket fuel centers to our store base. Since gasoline generates low profit margins, we
expect to see our FIFO gross profit margins decline as gasoline sales increase.
We cannot fully foresee the effects of changes in economic conditions on Kroger’s business. We have
assumed economic and competitive situations will not change significantly in 2015.
Other factors and assumptions not identified above could also cause actual results to differ materially
from those set forth in the forward-looking information. Accordingly, actual events and results may vary
significantly from those included in, contemplated or implied by forward-looking statements made by us
or our representatives. We undertake no obligation to update the forward-looking information contained in
this filing.