Kroger Company (the) · NYSE:KR
Kroger Company (the) — Merger or Acquisition (October 2022)
26 slides from Kroger Company (the)'s merger presentation, Oct 14, 2022
Slide 1: October 14, 2022
OCTOBER 14, 2022 1
Slide 2: Safe Harbor
2 Safe Harbor This presentation contains certain statements that constitute “ forward - looking statements ” within the meaning of federal securities laws, including statements regarding the effects of the proposed transaction. These statements are based on the assumptions and beliefs of Kr oge r an
Slide 3: Agenda
3 Agenda 1 Transaction Overview Accelerating Kroger’s Go - to - Market Strategy 2 3 Strengthening Kroger ’ s Value Creation Model Financial Details 4 3
Slide 4: A Compelling Combination for All Stakeholders
4 A Compelling Combination for All Stakeholders Customers Associates • Enables combined company to serve A merica with fresher food, faster • Creates broader selection of Our Brands products to offer customers higher quality and better value • Offers customers best - in - class personalized experien
Slide 5: Continuing Track Record of Investing in Customers, Communities and Associates
5 Continuing Track Record of Investing in Customers, Communities and Associates ( 1 ) Expects to reinvest cost savings from synergies to reduce prices for customers Post closing, Kroger will invest approximately… 5 $ 500 M to lower prices ( 1) $1.3B into Albertsons stores to enhance customer experie
Slide 6: Transaction Overview
6 Transaction Overview Note: Pro forma results as presented in this slide represent the combined Kroger and Albertsons FY 2021 results and are not intended to represent pro forma financials under Section 11 of Regulation S - X under the Securities Exchange Act of 1934 , as amended. See Appendix for
Slide 7: Albertsons at a Glance + Trusted Iconic Banners With Track Record of Operating Excellence
7 Albertsons at a Glance 20 + Trusted Iconic Banners With Track Record of Operating Excellence 2,273 store locations 1,720 in - store pharmacies ~$72B sales in FY 2021 31M registered loyalty members 402 fuel centers ~$15B Own Brands Portfolio +263% two - year digital sales growth in FY 2021 ~290K as
Slide 8: Complementary National Footprint with Iconic and Trusted Supermarket Banners
8 Complementary National Footprint with Iconic and Trusted Supermarket Banners STORES STORES
Slide 9: Accelerates Go-to-Market Strategy Through Complementary Priorities, Assets, and Expertise
9 Accelerates Go - to - Market Strategy Through Complementary Priorities, Assets, and Expertise Enables Kroger to serve more of America with fresher food, faster Offers unmatched personalized experience, offering more relevant recommendations and promotions to save customers time and money Delivers
Slide 10: Fresh: Faster and Fresher Than Ever
10 Fresh : Faster and Fresher Than Ever Supplier Sourced products at peak of flavor & quality Reduced transit time Optimal assortment, price & promotion Simplified tasks & training; Improved scheduling Fresh for Everyone marketing, personalization & loyalty Distribution Center Customers Merchandisin
Slide 11: Our Brands: Expanding Portfolio to Deliver Greater Value and Quality
11 Our Brands : Expanding Portfolio to Deliver Greater Value and Quality (1) Reflects FY 2021A sales for Kroger and Albertsons. Combined capabilities will accelerate growth and profitability ~$ 43 B Our Brands Portfolio (1) Combined portfolio of ~34,000 total private label products One of the Larges
Slide 12: Personalization: Data, Personalization and Loyalty Program Benefit Customers
12 + Personalization : Data, Personalization and Loyalty Program Benefit Customers • ~85 million households • One of the most comprehensive first - party data repositories in the food and retail space • Compelling retail loyalty program • More relevant recommendations and promotions across price poi
Slide 13: Expanded Omnichannel Customer Experience
13 Expanded Omnichannel Customer Experience x Improve customer experience and freshness with expanded network x Expand capacity and shorten lead times for added convenience x Increase utilization of automated fulfillment network through large, medium and small FCs x Improve overall efficiency and lo
Slide 14: Associates Enable our Success
14 Wages Advancement Benefits Well - Being Simplify Work Training RETENTION & ENGAGEMENT Associates Enable our Success Investing in associates since 2018, Kroger has invested an incremental $1.2B in compensation and benefits Cultivating an exciting culture embracing diversity, equity and inclusion B
Slide 15: Sustainability is a Longstanding Priority
15 Sustainability is a Longstanding Priority Together, we will drive continued progress toward our shared ESG initiatives People Systems Planet x Complementary ESG strategies to advance shared mission to support communities x Focus on responsible corporate stewardship, workforce diversity, equity an
Slide 16: Expanded Network Enables Accelerated Profitable Growth and Value Creation
16 Expanded Network Enables Accelerated Profitable Growth and Value Creation + 2,700 Stores +2,200 pharmacies +1,600 fuel centers ~$ 28 B Our Brands Portfolio 9 th largest U.S. CPG brand portfolio F our distinct billion - dollar plus brands ~$ 34 B Fresh Sales 15.6 % growth o ver 2019 4 , 996 (1 ) S
Slide 17: Strengthens Our Value Creation Flywheel
17 Strengthens Our Value Creation Flywheel DATA & TRAFFIC TRAFFIC & REVENUE Strong Supermarket, Fuel & Pharmacy Business Fast Growing Alternative Profit Businesses
Slide 18: Expanded National Reach Accelerates Alternative Profit Businesses
18 Expanded National Reach Accelerates Alternative Profit Businesses 18 a POWERED BY: Kroger Today +$ 1 B Annual Alternative Profits 60 M Households 96 % of transactions tethered to a loyalty card ~$ 1.5 B Annual Alternative Profits Opportunity ~ 85M Households + + + x Providing most relevant data a
Slide 19: Significant Synergy Opportunities
19 Significant Synergy Opportunities Sourcing & Goods Not For Resale Supply Chain & Manufacturing Technology General & Administrative Costs ~$1B estimated annual run - rate synergies net of divestitures within first four years post - close ~ 50 % achieved within first two years post - close
Slide 20: Compelling Value Creation Opportunity
20 Compelling Value Creation Opportunity Note: Pro forma results as presented in this slide represent the combined Kroger and Albertsons FY 2021 results and are not i nte nded to represent pro forma financials under Section 11 of Regulation S - X under the Securities Exchange Act of 1934, as amended
Slide 21: Financing and Capital Allocation
21 Financing and Capital Allocation • Kroger has $ 17.4 B bridge commitment from Citi and Wells Fargo • Will fund transaction through cash and proceeds from new debt financing • Plan to hedge interest rate risk on new debt issuance • Existing Albertsons bonds will roll into pro forma capital structu
Slide 22: Investment Thesis
22 Investment Thesis (1) Pro forma results as presented represent the combined Kroger and Albertsons FY 2021 results and are not intended to repr ese nt pro forma financials under Section 11 of Regulation S - X under the Securities Exchange Act of 1934, as amended. Accelerated Go - To - Market Strat
Slide 23: A Compelling Combination for All Stakeholders
23 A Compelling Combination for All Stakeholders Customers Associates • Enables combined company to serve America with fresher food, faster • Creates broader selection of Our Brands products to offer customers higher quality and better value • Offers customers best - in - class personalized experien
Slide 24: Q&A Session
Q&A Session wy Kroger | 4M
Slide 25: Appendix
25 Appendix
Slide 26: Albertsons Non-GAAP Reconciliation ($ mm) FY 2021
26 Albertsons ($ mm) FY 2021 Net Income $1,620 (Gain) loss on interest rate and commodity hedges, net (23) Facility closures and transformation (3) 57 Acquisition and integration costs (4) 9 Equity-based compensation expense 101 Gain on property dispositions and impairment losses, net (15) LIFO expe