THE KROGER CO.

2011 Fact Book

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 ABOUT THE KROGER FACT BOOK
This Fact Book provides certain financial and operating information about The
Kroger Co. and its consolidated subsidiaries. It is intended to provide general
information about Kroger and therefore does not include the Company's
consolidated financial statements and notes. On January 22,2003, the SEC
issued release No. 33-8176 that set forth new requirements relating to the
disclosure of non-GAAP financial measures, as defined in the release. The
release allows for presentation of certain non-GAAP financial measures
provided that the measures are reconciled to the most directly comparable
GAAP financial measure. Any non-GAAP financial measure discussed in this
Fact Book complies with this requirement. More detailed financial information
can be found in Kroger's filings with the SEC.

Kroger believes that the information contained in this Fact Book is correct in
all material respects as of the date set forth below or such earlier date as
indicated. However, such information is subject to change. Unless otherwise
noted, reference to "years" is to Kroger's fiscal years.

May 2012
I. Preface & Overview Page 1
• About the Kroger Fact Book • Sustainability
• Shareholder Information • Corporate Overview
• Financial Highlights
II. Retail Operations Page 7
• Supermarkets • Convenience Stores
.... Store Formats • Jewelry Stores
.... Geography & Markets
.... ACQuisition Strate~w
III. Sales Drivers Page 22
• Corporate Brands • Retail Fuel Operations
.... Kroger Manufacturing • Loyalty Data & Customer Insight
• Pharmacy • Kroger Personal Finance
• Natural & Organic Foods
IV. Technology & Logistics Page 39
V. Financial Information Page 43
• Customer 1St Strategy • Financial Strategy
• Market Share • Performance Graph
• Identical & Comparable Sales • Financial & Operating Statistics

The Kroger Co. Page 1

 SHAREHOLDER INFORMATION

CORPORATE OFFICE
(513) 762-4000
1014 Vine Street
www.kroger.com or
Cincinnati, OH 45202
www.thekroaerco.com
Shareholder Services (513) 762-4808
Investor Relations & Financial (513) 762-4366
Materials Requests e-mail: [email protected]

Through 6/30/12: STOCK TRANSFER AGENT & REGISTRAR

BNY Mellon Shareowner Services (866) 405-6566 [toll free]
P.O. Box 358015 e-mail: [email protected]
Pittsburgh, PA 15252-8015 www.bnymellon.com/shareowner
Effective 7/1/12: STOCK TRANSFER AGENT & REGISTRAR
Wells Fargo Shareowner Services (800) 468-9716 [toll free]
P.O. Box 64874 e-mail: [email protected]
St. Paul, MN 55164-0874 www.shareowneronline.com

2012 FISCAL CALENDAR

First Quarter January 29 - May 19
Second Quarter May 20 - August 11
Third Quarter August 12 - November 3
Fourth Quarter November 4 - February 2, 2013

Number of Employees 339,000

Shareholders of Record as of March 23, 2012 34,573
Common Diluted Shares Outstanding (FY 2011) 593,227,890*
Common Diluted Shares Outstanding (FY 2010) 638,304,483*
Exchanges NYSE
Ticker KR
* Represents a weighted average outstanding amount during the fiscal year.
HIGH, LOW & CLOSING STOCK PRICE BY QUARTER
Fiscal 2011 Fiscal 2010
Quarter High Low Close High Low Close
1st $25.48 $21.29 $24.97 $23.76 $20.95 $21.26
na
2 $25.85 $21.52 $22.73 $22.50 $19.08 $22.00
ra
3 $23.78 $21.14 $22.81 $23.47 $19.67 $23.11
th
4 $24.83 $21.68 $24.30 $24.14 $20.53 $21.29
The Kroger Co. Page 2
 FINANCIAL HIGHLIGHTS
(in millions, except per share data, as reported)
Calendar Year Ended December 31, 2011 2010 Change
Closing market price per share $24.22 $22.36 8.3%

Fiscal Year End 2011 2010 Change

Closing market price per share $24.30 $21.29 14.1%

Fiscal Year 2011 2010 Change

Total sales $90,374 $82,049 10.1%
Operating profit (GAAP) $1,278 $2,182 N/A
Operating profit (excluding one-time)* $2,231 $2,200 1.4%)
Net earnings attributable to The
Kroger Co. per diluted common share $1.01 $1.74 N/A
(GAAP)
Net earnings attributable to The
Kroger Co. per diluted common share $2.00 $1.76 13.6%
(excluding one-time)*
Average number of common shares <7.1%>
593 638
used in diluted calculation
Dividends declared per common share $0.44 $0.40 10.00/0
Net cash provided by operating
activities (GAAP)
$2,658 $3,366 N/A
Net cash provided by operating
$3,280 $3,378 N/A
activities (excluding one-time)*
Total debt, including obligations under
$8,164 $7,892 3.4%
capital leases
Total capital expenditures, excluding 3.2%
$1,958 $1,897
acquisitions

Note: Percent change calculations are based on the rounded numbers as

presented.
* 2011 GAAP results included a one-time pension consolidation charge.
2010 GAAP results included a one-time goodwill impairment.

The Kroger Co. Page 3

 SUSTAINABILITY

Kroger continues to make significant strides as an environmentally-

sustainable retailer. Our efforts reduce Kroger's impact on the environment
and reduce business operating costs. We are pleased to report that Kroger
has:

• Reduced energy consumption by 31 % since 2000, progressing

toward our goal of a 35% reduction by 2013.

• Diverted 90% or more waste from landfills at half our 39

manufacturing plants. We continue to pursue alternative solutions to
avoid unnecessary landfilling.

• Improved fleet efficiency by 25.5 % since 2008, progressing toward

our goal of 40% by 2014. 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.

To learn more about Kroger's environmental and social initiatives, visit our
sustainabiJity website at www.kroger.com/sustainabilitv.

s stai ab- ity

Improving today to protect tomorrow. -~

The Kroger Co. Page 4

 CORPORATE OVERVIEW

OPERATIONS

Headquartered in Cincinnati, Ohio, The Kroger Co. is one of the largest

retailers in the United States based on annual sales, holding the #23 ranking
on the Fortune 100 list published in May, 2011. Kroger was founded in 1883
and incorporated in 1902.
At the end of fiscal 2011 , Kroger operated (either directly or through its
subsidiaries) 2,435 supermarkets, 1,090 of which had fuel centers.
Approximately 450/0 of these supermarkets were operated in Company-owned
facilities, including some Company-owned buildings on leased land. See
Section II of this Fact Book for more information about our supermarket
operations, and Section III for more information about our supermarket fuel
centers.
In addition to supermarkets, Kroger operates (either directly or through its
subsidiaries) 791 convenience stores and 348 fine jewelry stores.
Subsidiaries operated 708 of the convenience stores, while 83 were operated
through franchise agreements. Approximately 51 % of the convenience
stores operated by subsidiaries were operated in Company-owned facilities.
Additional information about our convenience stores and jewelry stores is
contained in Section II of this Fact Book.
The Company also manufactures and processes some of the food for sale in
its supermarkets. As of January 28, 2012, the Company operated 39
manufacturing plants. See Section III of this Fact Book for more information
about our manufacturing operations and private label products.
All of the Company's operations are domestic.
The Kroger Co. # of Stores % of Revenue
Supermarkets 2,435 94%
Convenience Stores 791 5%
Jewelry Stores (A) 348 0.5%
Other (8) n/a 0.50/0
Total 3,574 100%
(A) Includes 159 locations operated inside our supermarkets and 189 in shopping malls.
(8) Primarily represents sales by Kroger's manufacturing plants to outside customers.

The Kroger Co. Page 5

ASSOCIATES

The Company employs approximately 339,000 full-time and part-time

associates. A majority of the Company's store employees are covered by
collective bargaining agreements negotiated with local unions affiliated with
one of several different international unions. There are approximately 300
such agreements, usually with terms of three to five years.

The Kroger Co. Page 6

 SUPERMARKETS

STORE FORMATS

Kroger's wide variety of store formats is among our key strengths that set
us apart from competitors. We believe that our customer base is becoming
increasingly diverse - not only in terms of ethnicity, but also in terms of
income levels, household mix, and purchasing patterns. We are
addressing customer diversity through our multiple formats and product
selection. Our broad array of formats positions Kroger to take advantage of
growth trends in retailing. Expanding our formats and their elements also
allows us to further leverage Kroger's existing distribution and
manufacturing facilities.

At year-end 2011, Kroger operated 2,435 supermarkets classified under

the four primary formats listed in the table below.

Store Formats # of Stores 0/0 of Store Base

Combination Food & Drug Stores 2,094 860/0
Multi-Department Stores 126 5%
Marketplace Stores 70 3%
Price Impact Warehouse Stores 145 60/0
Total Supermarkets 2,435 1000/0

The Kroger Co. Page 7

Combination Food & Drug Stores
Banners
• Baker's II Jay C Food Stores • QFC
• City Market • King Soopers • Ralphs
• Dillons • Kroger • Scott's
• Fry's • Owen's • Smith's
• Gerbes • Pay Less Super Markets

The combination store (combo) is Kroger's primary format. This format

typically draws customers from a 2.0 - 2.5 mile radius and offers them the
advantage of "one-stop shopping" in convenient locations. Combo stores
are designed to be a flexible format with a product selection tailored to
meet the specific needs of the neighborhood's demographics. Combo
stores feature a complete supermarket and pharmacy - most include
service bakeries, delis, seafood, meat, and floral shops; expanded general
merchandise; natural food and organic selections; pet centers, and high-
quality fresh items such as seafood and organic produce. Many include a
supermarket fuel center. Combination stores that were opened during the
last three years average 63,000 square feet and required an average
investment of $14 million, including real estate. Individual locations may
vary widely from the average, depending upon the geography of the store.
Our combo stores have proven successful in competing against all formats,
including supercenters.
In certain markets, we have also introduced our "Fresh Fare" approach to
our combo stores. In these select locations, the emphasis is on high
quality perishables and top-notch customer service. At the end of 2011, we
characterized 75 of our combo stores as "Fresh Fare" locations.

The Kroger Co. Page 8

Multi-Department Stores

Our multi-department stores operate under the "Fred Meyer" banner in the
Pacific Northwest and Alaska. Averaging over 165,000 square feet, most
Fred Meyer stores are significantly larger than our combo stores. The
average investment to build a multi-department store is $34 million,
including real estate.

Fred Meyer is unique. No other store in the world is exactly like this format.
It is not a big box store, hypermarket, supercenter, warehouse store,
discounter, or department store. It is a collection of several specialty stores
under one roof:
../ Food: Grocery, Natural Choices, F.G. Meyer Meat Market, Fish Market,
Produce Market, Deli, Bakery, Wine, and Drug Store.
../ Apparel: Men's, Women's, Juniors, Young Men's, Shoes, Children's.
../ Home: Home and Kitchen, Bed and Bath, Furniture, Hardware and
Paint, Garden Variety, Sporting Goods, Automotive, and Toys.
Several locations offer fine jewelry and fuel. Customers tell us that Fred
Meyer stores are different from other formats because they are full of
variety and are more convenient.
Fred Meyer stores are further differentiated from many competitors by a
famous brand strategy, including: adidas®, Apple®, Ashley®, Bose®,
Canon®, Carhartt®, Columbia Sportswear®, Dockers®, Jockey®, KitchenAid®,
Krups®, Levi's®, Nike®, Nikon®, Panasonic®, Skechers®, Sony®, and Under
Armour ®.
The Kroger Co. Page 9
Marketplace Stores
Banners
- Dillons Marketplace , - Kroger Marketplace
- Fry's Marketplace Smith's Marketplace

Fred Meyer's general merchandise expertise has been a key factor in the
success of our marketplace store format. The continued rollout of our
marketplace strategy would not be possible without the general
merchandise expertise of our great team at Fred Meyer that knows which
categories and products to procure, and how to sell those products.
Marketplace stores are generally smaller than our multi-department stores.
The primary distinction between the two formats is that our marketplace
stores do not include apparel departments. They do offer full-service
grocery and pharmacy departments as well as an expanded general
merchandise area that includes outdoor living products, electronics, home
goods, and toys. Marketplace stores opened during the last few years
range in size from 100,000 to 130,000 square feet and required an average
investment of $20 million, including real estate.
At the end of 2011, we operated 24 Marketplace stores in Arizona, 15 in
Ohio, six in Utah, six in Kentucky, four in Kansas, seven in Texas, three in
Tennessee, three in Colorado, one in Indiana and one in Arkansas.

The Kroger Co. Page 10

Price Impact Warehouse Stores
Banners
I
-.-F=-o-o-d-4-L-e-ss---------=-="-------I'-'---.'--=F~o-o-ds-C-o-.-----------I

Our price impact warehouse stores offer a "no frills, low cost" shopping
experience that features everyday low prices plus promotions for a wide
selection of grocery, health and beauty care items. Quality meat, seafood,
poultry, dairy, baked goods, and fresh produce items provide a competitive
advantage against club store and supercenter operators. Most locations
contain a fresh bakery and service deli. Some feature Mexican-style
"carniceria" service meat departments. Our price impact warehouse stores
average more than 57,000 square feet and require an average investment
of $15 million.
This exciting format allows us to
deepen our customer reach as a
price merchant in several trade
areas. We operate 145 price
impact warehouse stores under
the Food 4 Less banner in
southern California, Nevada,
Illinois, and Indiana and under
the Foods Co. banner in central
and northern California.

The Kroger Co. Page 11

GEOGRAPHY & MARKETS

At the end of fiscal 2011, The Kroger Co. (either directly or through its
subsidiaries) operated 2,435 supermarkets in 31 states under two dozen
banners. These banners include "Kroger" and others listed below. Kroger
has grown through organic growth and acquisition and believes strongly in
maintaining local banners where appropriate.
Y/E Y/E
State Banners
2011 2010
. . Q~lif9.!.Qt~ __.E..Qog 4.J::~ss, F.9 0ds CQ~I Ralp-hs __. ._ _ _ _ . ~64 374
_9h .9_ i __.__ ._JSt9.g~.rl ~.rQg~t.M.~.r!5~!e!~~-~ __ _ _.__.~J.Q. . _......... 212
_!~~~.~ __.. . . JSrQ.g.~r.!~r9g~r ..M.~.rk~_!p!~~~._.. ........_ _. ......................._. ._?QQ... ._.J.~~
. . . G.~.9.rg.i.~ _ KrQg~r _.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _..............._ _ _ .1. 72 174
Indi na Food 4 Less, Jay C, Kroger, Kroger Marketplace, 143 144
~ S2V:!f;n'~~~yLe~~!.§~ott'~ _ __..__. .__
Colo.r~9_._ . _ . _City Mark~hKing SOQe~rs, Kroger ~arketp-Iace 139 137
. . ~i.~_h!g.~.Q.__ '5!.9fl_~!... _ _ _. __ _ _ _ _ _____. 132 134
_Ari~on.~ __.__ frY'~.I.F.rt~M~rk~!pJ~ce.J.._~r!:I.!!.h:~ . __ ._ _ ~__J?_~ 1?~
.I~Qness~~.__ J5rQ~!.lJ$!Qg~rM~.r:.~~!2.I~ce .._.__________....124 121
.YY.~~hi'.:!g.!o~_J::r~~ M~~rI9FC ._1?? _J..?4-
Kent Ll9.ky _ __ . _KrQg~rl_~r9.g~rM~rK~!p!.~.~~ _ __ 19~__JJ1
Kan~~~._ l.?UJ.QQ.~! g.ilJ.9.Q~.M~rk~!pl~~~.. 6EJ f-......... 67
.Y.i..rgi~i~......... JSro..g~t_.. .__................_. "-.?1. 62
.Qt~gg.'.:! . . Ft~9_M~y~tLgFG____. ._. . . _ __~§_ _ ~~ _
. ._. __. . __ .
_IJIJQ.Q!~ . ._ .£Q2d 4 L~~~, Kroger _._. . __ ._ _. __ ~._ ---~1. __ .
- Nevada
-.._ . - - Food
_ -4 -Less,
_ Smith's----..--..- . - - . - - - - . - - - - -.-_54- 54 +--~-t

_~!~.h__ __ -9!yM~r~~!L. . ~mi!h'~L.§~ith's_M~rk~~p.lace _.. . . 50 . . _.. ?Q

West Virg~i~_. JSrQ.9.er ..__ _ . _ .._..-.._--4.~f--- 46 _
_Mi~~!~~L_. __ .!<roger__ . _..........__ .___.._.__ __ __ . . ~~. ~~.
Atk~~~~~ __.. 'St9g~t,_KrQg~r.M~r~~!el~5:;~ __ ""_._",,._.._____,,_.,, __. ....~4..""_,, ~4,,
.. ~.~~ M~.'.5i~.Q . _._ gi!y !Y1.~tk~heti.~~R.i.!~' §I!'..i!h.'~........ . 26 ?l._
.!Y1i~.~QYL___ .. l.?j1IQQ~!G~r~~~!!5rQg~r..............._... 1 7 J~

~~E~=:~=:iD~=IF.~~~M~~~Gsmit~'s-:·_- _.__--=.: ~=:==== _"._--=j:4...:. __._~

Nebraska.__.. Baker's, Food. 4. Les~____ _ . __ ._.."J_t._ . __ J,,~
Alaska __ Fred M~.Y~!___ . . _. _ _11 11
South CarQli~...Krog~t.. ._. _ _.__. . _._1J 11

~~~~~~~_=:=lr~~~a.ik~i,:t<lr~R~C?.9.p~f~; . .~Q:liih:~:=_~=: ~~_:.~. ~.:.=== ==~.~1 ~_-==?}

Lo uisi~.Q.~........._ .._ _~r.9..g.~r _......._ _ .. "_ , ._._ ~ ,§..
Montana Smith's 4 4
TOTAL 2,435 2,460

Operating Divisions

Kroger's operating structure is a balance between our corporate office in

Cincinnati, Ohio and our 18 supermarket operating divisions. This balance
keeps merchandising decisions closest to the customer while achieving

The Kroger Co. Page 12

synergies in backstage operations in order to maximize operating
efficiencies and minimize operating costs.
In areas that directly affect the customer, Kroger's decentralized structure
places substantial authority for merchandising and operating decisions in
our supermarket divisions. Divisional managers are able to respond
quickly to changes in competition and customer preferences within each
local market.
For backstage processes that offer economies of scale or are invisible to
the customer (such as procurement, accounting, treasury operations, etc.),
Kroger leverages its size and centralizes those functions to create value for
customers and better returns for shareholders.
Kroger's 18 supermarket operating divisions are:
Division Headquarters # Stores
-'3.~Jp.b.~... " " " " " . . . . _~9~A~g~I.~~.!.. gt.\............. __?4.9
_~rQg~rA~I~.Q~~ _.______._. ._.__ .A~J~~~~! . ~A................ _. 213
. . ~rQg.~r.§9Y.~b.~.~~~ _ __ . ,. . ,. l:'9~.~!Q.~, TX _ _ ._ _ ?Q~_ .
JS!:Qg~rM.iq.:§Qy.!.b... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ._ ... _~9.y..i~yi.IJ~.!.. . ~y............................................... .._.............._._ ._. .._ J~?._
.J5rQg~rg.~~~~~1 JQqi~Q~PQli~,J~.........._r- J?~
. . . E999 4 ~.~.~.~ __ __.. _!-os Ang~I~~.! . gA................................_.............._ _._ . _._1.4.?..
. . K~~.g.§.Qgp~r~/g.i~y.M.~~k~! Deny.~.~'.g.Q __._. . . . __.. ..14.3
Smith's __._ _ __. ..§.~.!~ ~.~.k~ . gi~yL.~.I. ...................._ J..33
. . ~rQg~~M..i9.b.ig.~ . ~ ........._.. ".. ..NQyi.! M.! _._._ _._,,_........... 130
E~~q. M.~Y~E§~2T~~ Portland, O.B................" _.___. 131
. . . ~rQg.~~ ..M!g:t.\~I~Q.~.i9.. .. _..... ..R9~~Q.k~! .Yt\......................................................._....................................... .........................._ " 124
. _KrC?g~rggly.~~y.~..._._._ . _._._ _ g91y.r.Q~.y.~,.QtL...J?4.".
_.E.'.Y:~....... Phoenix,_~..J.?L
.~r9g~.r. g!Qgi.QQ.~!i...._ _ _ _ ~g.i~9.iQ. Q.~~i., QH.._. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........_._ 1g~ .
. ~rQg~.r. P~.I~~ _.__._ _.. . . . . . .........................._ ~~Pb..i.~., IN _ _.. . . . . . . . . . . . . . . . . . . . . . _. 1..1.6
PiJ.19Q.§~Qr~~._ _ "_ ___H.y.~9.b..iQ~2Q,~§..._ r- ?.~ .
Q.y..~.!.i!y E92q_g~~~~r.~ (Q.Eg) §~~~!I~L . '!Y..A............... . r........ 68
Jay C Seymour, IN 31
TOTAL 2,435

Major Markets

At year-end 2011, Kroger operated stores in 42 major markets. A major

market is one in which Kroger operates nine or more stores. Kroger holds
the #1 or #2 market share position in 38 of those major markets.
Thirty-four of Kroger's 42 major markets are located among the nation's top
100 Metropolitan Statistical Areas (MSAs) ranked by population.

The Kroger Co. Page 13

 Major Markets (9 or More Stores}
Market # Stores Division #1 or #2 Major Competitors (A)
1 Los Angeles CA 235 Ralphs/Food 4 Less Yes Trader Joe's Vons
2 Atlanta GA 129 Atlanta Yes Publix WalmartSC
3 Houston TX 99 Southwest Yes HEB Walmart SC
4 PhoenixAZ 93 Fry's Yes WalmartSC Safeway
5 SeattleWA 89 Fred Meyer/QFC Yes Safeway Costco
6 Detroit MI 88 Michigan Yes Meijer CVS
7 Cincinnati OH 74 Cincinnati Yes Walmart SC Meijer
8 Denver CO 74 King Soopers Yes Walmart SC Safeway
9 Columbus OH 60 Columbus Yes Walmart SC Giant Eagle
10 Riverside CA 54 Ralphs/Food 4 Less Yes Stater Bros. Albertsons
11 Dallas TX 54 Southwest Yes WalmartSC Tom Thumb
12 Nashville TN 47 Mid-South Yes WalmartSC Publix
13 Louisville KY 46 Mid-South/Jay C Yes WalmartSC Meijer
14 Las Vegas NV 45 Smith's/Food 4 Less Yes WalmartSC Albertsons
15 Indianapolis IN 45 Central Yes WalmartSC Marsh
16 Portland OR 42 Fred Meyer/QFC Yes Safeway Winco
17 Memphis TN 42 Delta Yes Walmart SC Walgreens
18 San Diego CA 36 Ralphs/Food 4 Less Yes Vons Albertsons
19 Fort Worth TX 29 Southwest Yes Walmart SC Albertsons
20 Wichita KS 26 Dillon Stores Yes Walmart SC Sam's Club
21 Salt Lake City UT 26 Smith's Yes Walmart SC Harmons
22 Dayton OH 22 Cincinnati Yes WalmartSC Meijer
23 Little Rock AR 21 Delta Yes WalmartSC Walgreens
24 Toledo OH 19 Columbus Yes Meijer Walmart SC
25 Tucson AZ 19 Fry's Yes Safeway WalmartSC
26 Lexington KY 18 Mid-South Yes WalmartSC Meijer
27 Albuquerque NM 16 Smith's Yes WalmartSC Albertsons
28 Chicago IL 16 Food 4 Less No Jewel Walmart SC
29 Richmond VA 15 Mid-Atlantic No Food Lion Walmart SC
30 Jackson MS 14 Delta Yes Walmart SC Walgreens
31 Knoxville TN 14 Atlanta Yes WalmartSC Food City
32 Roanoke VA 14 Mid-Atlantic Yes WalmartSC Food Lion
33 Fort Wayne IN 13 Central Yes WalmartSC Meijer
34 FlintMI 12 Michigan Yes Meijer WalmartSC
35 Charleston WV 12 Mid-Atlantic Yes WalmartSC Foodland
36 Oxnard CA 11 Ralphs/Food 4 Less Yes Vons Trader Joe's
37 Colorado Springs CO 11 King Soopers Yes WalmartSC Safeway
38 Peoria IL 11 Central Yes Walmart SC Schnuck's
39 Omaha NE 10 Dillon Stores No Hy-Vee Walmart SC
40 Raleigh NC 10 Mid-Atlantic No Walmart SC Food Lion
41 Savannah GA 9 Atlanta Yes WalmartSC Publix
42 Ogden UT 9 Smith's Yes WalmartSC Harmons
TOTAL 1,729 38

(A) Underline denotes supercenter.

The Kroger Co. Page 14

 Secondary Markets (3 - 8 Stores}
Market # Stores Division #1or#2
1 Augusta GA 8 Atlanta Yes
2 Boulder CO 8 King Soopers Yes
3 Anchoraqe AK 7 Fred Meyer Yes
4 Ann Arbor MI 7 Michigan Yes
5 Hampton Roads VA 7 Mid-Atlantic No
6 LansinQ MI 7 MichiQan Yes
7 Macon GA 7 Atlanta Yes
8 Topeka KS 7 Dillon Stores Yes
9 WheelinQWV 7 Columbus Yes
10 Fort Collins CO 7 King Soopers Yes
11 Boise City 10 6 Fred Meyer No
12 Durham NC 6 Mid-Atlantic No
13 Grand Junction CO 6 King Soopers Yes
14 Huntington WV 6 Mid-Atlantic Yes
15 Lynchburg VA 6 Mid-Atlantic No
16 Provo UT 6 Smith's No
17 Huntsville AL 6 Atlanta Yes
18 Saginaw MI 5 Michigan Yes
19 San Francisco CA 5 Food 4 Less No
20 Springfield OH 5 Cincinnati Yes
21 Weirton OH 5 Columbus Yes
22 Greeley CO 5 King Soopers Yes
23 Blacksburg VA 4 Mid-Atlantic Yes
24 Bloomington IN 4 Central Yes
25 Clarksville TN - Hopkinsville KY 4 Mid-South Yes
26 Columbia SC 4 Atlanta No
27 Decatur IL 4 Central Yes
28 Eugene OR 4 Fred Meyer No
29 Jackson TN 4 Delta Yes
30 Lafayette IN 4 Central Yes
31 Myrtle Beach SC 4 Atlanta No
32 Parkersburg WV 4 Mid-Atlantic Yes
33 Prescott AZ 4 Fry's Yes
34 Sacramento CA 4 Food 4 Less No
35 Shreveport LA 4 Southwest No
36 South Bend IN 4 Central No
37 SpokaneWA 4 Fred Meyer No
38 Springfield MO 4 Dillon Stores No
39 Terre Haute IN 4 Central Yes
40 Elkhart IN 3 Central No
41 Lake Charles LA 3 Southwest Yes
42 Lawrence KS 3 Dillon Stores Yes
43 Anderson IN 3 Central Yes
44 Bloomington IL 3 Central No
45 Charlottesville VA 3 Mid-Atlantic Yes
46 Columbia MO 3 Dillon Stores No
47 Manhattan KS 3 Dillon Stores Yes
48 Mansfield OH 3 Columbus Yes
49 Monroe MI 3 Michigan Yes
50 Morgantown WV 3 Mid-Atlantic Yes
51 Owensboro KY 3 Mid-South Yes
TOTAL 243 - . .... _.•.. 34

The Kroger Co. Page 15

 Kroger Operating Divisions (Year-End 2011}
Total
KROGER DIVISIONSI
# Stores Square Feet Combo Multi-Dept Marketplace Price Impact
Major MSAs
(millions)
ATLANTA 213 12.7 212 - 1 -
Atlanta 129
Knoxville 14
Savannah 9
CENTRAL 139 7.4 138 - 1 -
Indianapolis 45
FortWavne 13
Peoria 11
CINCINNATI 109 7.4 98 - 11 -
Cincinnati 74
Davton 22
COLUMBUS 124 7.7 117 - 7 .
Columbus 60
Toledo 19
DELTA 116 5.9 115 - 1 -
Memphis 42
Little Rock 21
Jackson 14
DILLON STORES 88 4.6 83 - 4 1
Wichita 26
Omaha 10
FOOD 4 LESS 145 8.3 - - - 145
Los AnCleles 55
Riverside 25
ChicaClo 16
Las Vegas 14
San Diego 11
FRED MEYER 131 20.0 5 126 - -
Portland 36
Seattle 34
FRY'S 121 8.7 97 - 24 -
Phoenix 93
Tucson 19

The Kroger Co. Page 16

 Kroger Operating Divisions (Year-End 20111
Total
KROGER DIVISIONSI
# Stores Square Feet Combo Multi-Dept Marketplace Price Impact
Major MSAs
(millions)
JAYC 31 0.8 31 - - -
Louisville 6
KING SOOPERS
Denver
143
74
8.6 140 - 3 -
Colorado SprinQs 11
MICHIGAN 130 7.1 130 - - -
Detroit 88
Flint 12
MID-ATLANTIC 124 6.3 124 - - -
Richmond 15
Roanoke 14
Charleston WV 12
Raleigh 10
MID-SOUTH 163 9.2 158 - 5 -
Nashville 47
Louisville 40
Lexington 18
QFC
Seattle
68
55
2.4 68 - - -
Portland 6
RALPHS 249 10.8 249 - - -
Los Angeles 180
Riverside 29
San Diego 25
Oxnard 10
SMITH'S 133 8.0 126 - 6 1
Las Vegas 31
Salt Lake City 26
Albuquerque 16
OQden 9
SOUTHWEST 208 12.4 201 - 7 .
Houston 99
Dallas 54
Fort Worth 29
TOTAL 2,435 148.3 2,092 126 70 147

The Kroger Co. Page 17

 ACQUISITION STRATEGY

As the supermarket industry continues to consolidate, Kroger reviews

potential acquisition candidates and carefully analyzes their potential to
enhance shareholder value.
Kroger's acquisition strategy focuses primarily on existing markets. Such
"in-market" acquisitions have lower risk and generally produce a higher
incremental return because they require little investment in overhead,
advertising, and distribution.
# Stores Banner
Acquisitions Date Location
CA) Change?
Buehler Food Markets April 2006 1 Louisville KY Yes
Scott's Food & Pharmacy April 2007 18 Fort Wayne IN No
Farmer Jack June 2007 20 Detroit MI Yes
[Individual stores] 2007 2 [Various] Yes
[Individual stores] 2008 9 [Various] Yes
Topeka &
AWG January 2010 7 Yes
Wichita, KS
Brookshires March 2010 2 Jaskson, MS Yes
Albertsons June 2010 1 Ft. Worth, TX Yes
[Individual store] April 2011 1 Bloomfield, IN Yes
Schnuck's (supermarket) September 2011 8 Memphis, TN Yes
Schnuck's (c-stores) September 2011 7 Memphis, TN Yes
(A) Represents stores acquired. Kroger may not operate all.

The Kroger Co. Page 18

 CONVENIENCE STORES

OVERVIEW

Kroger operates five convenience store divisions under the following

banners: Kwik Shop, Loaf 'N Jug, Quik Stop, Tom Thumb, and Turkey Hill
Minit Markets. At year-end 2011, Kroger's 791 convenience stores
spanned 19 states. Subsidiaries operated 708 of the convenience stores;
83 were operated through franchise agreements. In 2011, the convenience
stores accounted for 5% of Kroger's total sales. The c-stores benefit from
synergies with the Kroger supermarkets by offering a limited selection of
private label products.
GROWTH

During 2011, we opened 15 convenience stores, acquired 9, and closed 8.

The new stores range from 1,408 square feet to 4,512 square feet in size,
typically located on parcels of one to two acres. The new stores generally
have a large gasoline offering with four to eight gasoline dispensers,
covered by a large, well-lit canopy. The majority of our gasoline facilities
offer pay-at-the-pump convenience for our customers. Over 780 of our
convenience stores are tied into the Company's successful loyalty card
program.
MARKETS

Kroger's convenience stores continue to refine store formats and product

selection in major bridged markets including Columbus, Ohio, Wichita,
Kansas, Colorado Springs, Colorado, and Memphis, Tennessee.
ASSET BASE

The majority of the locations occupy high-traffic corner sites. Of the 791
stores, 724 sell gasoline. During 2011, 126 stores received interior
remodels and 14 received gasoline remodels.

The Kroger Co. Page 19

 STORE PROFILE

Average store size at year-end was 2,820 square feet. Average weekly
customer count is approximately 5,300. The typical convenience store
stocks approximately 3,000 items, with more than 70% of non-gasoline
sales coming in five categories: soft drinks, beer, snacks, candy, and
tobacco products. Food service is an emerging category that accounted for
approximately 12% of non-gasoline sales for the 2011 FY. Gasoline sales
represented approximately 750/0 of the Company's total convenience store
sales in 2011.

# Stores SQuare Feet (000)

C-Store Division States 2009 2010 2011 2009 2010 2011
Kwik Shop IA KS NE 124 124 125 356 371 366
Loaf IN Jug CO MT ND NE NM OK SD WY 175 174 174 522 519 511
Quik Stop CANV 106 106 103 256 256 248
Tom Thumb AL FL 116 116 121 344 344 353
Turkev Hill Minit Markets IN OH PA 255 264 268 700 736 756
TOTAL 776* 784* 791* 2,178* 2,226* 2,234*

*Note: This total does not include two "Smith's Express" locations in Utah. The locations are
classified as convenience stores because they are larger than a typical supermarket fuel
center.

The Kroger Co. Page 20

 JEWELRY STORES

With 348 fine jewelry stores in

33 states at the end of 2011 ,
The Kroger Co. ranked as the
third largest fine jewelry retailer
in the nation based on store
count. There are 159 jewelry
locations inside our
supermarkets (primarily in the
Fred Meyer multi-department
stores) and 189 in shopping
malls. During 2011, the jewelry
stores produced 0.5% of
Kroger's total sales.
STATE # STORES STATE # STORES STATE # STORES
Alabama 1 Indiana 6 North Carolina 1
Alaska 12 Iowa 2 Ohio 11
Arizona 5 Kansas 3 Oregon 53
Arkansas 1 Kentucky 6 Pennsylvania 33
California 14 Maryland 13 Tennessee 9
Colorado 4 Michigan 12 Texas 7
Connecticut 5 Minnesota 1 Utah 11
Delaware 2 Missouri 1 Virginia 1
Florida 13 Nevada 2 Washington 64
Idaho 11 New Jersey 16 West Virginia 2
Illinois 3 New York 19 Wisconsin 4

Fred Meyer Jewelers came to Kroger as part of its successful merger with
Fred Meyer, Inc. in 1999. The business is fully aligned with Kroger's
Customer 15t strategy and positions itself as a "best in class" mainstream
jeweler. The jewelry locations operate primarily under the banners of Fred
Meyer Jewelers and Littman Jewelers. Typical product assortments
include bridal; diamond fashion, color and gold; and timepieces. Stores
also offer expert jewelry and watch repair services on premises.
In addition to store locations, Fred Meyer Jewelers welcomes customers
online at fredmeyerjewelers.com and littmanjewelers.com.

...
__.. ~ .:-
'--"' .. ..........-\..",.
.'":
'--
;;;. - =1LL. _=..
,/ ~ L..- 11-
:: "-. .-
~

"For All Those Speciill TImes"

""'r- - II'""~ \. I I
.:' J../ -"
j 2. J;: _ =. -: '"

The Kroger Co. Page 21

 CORPORATE BRANDS

Corporate Brand products playa central role in Kroger's Customer 1st

strategy and provide a key competitive advantage to Kroger. We are using
our own brands to build and solidify customer loyalty. Our vision:
"Build lifetime loyal customers with our exclusive, preferred brands."
Corporate Brands, such as Private Selection®, our Banner Brands and
Comforts for Baby® are Kroger's ultimate loyalty program because
customers can buy these brands only in our stores. In addition, we
manufacture 40%> of our Corporate Brand products, which gives us margin
and speed-to-market advantage.
Our supermarket divisions typically stock approximately 11,000 corporate
brand items per store. During the fourth quarter of fiscal 2011, 270/0 of
Kroger's grocery sales came from our own brands, and grocery unit sales
of Kroger brands were 35%>. High-velocity, lower retail items - such as
bread, canned tuna and canned vegetables - explain a substantial portion
of the difference between these two figures.
In addition to the grocery category, Kroger carries a wide selection of our
own brand products in other departments throughout our stores. We
continue to expand and refine our offering in meat, seafood, deli, floral,
produce, health & beauty care and general merchandise in support of our
Corporate Brand vision.
Product Quality

Consumer research, select ingredients and our rigorous development

process deliver the quality behind Kroger's own brands. This is an
important part of the everyday value that is found in all of our products.
This consistent focus on quality provides the foundation of our strong
corporate brands program.
Our own brand strategy focuses on providing choices to our customers
through a three-tier offering of price points and product experiences (good,
better and best):
1. Private Selection® is our "best" quality brand, made from only the
finest ingredients from the genuine source or maker. This brand
delivers products that are artisan inspired and includes gourmet
pizzas, ice cream, deli meats and cheeses. We offer more than
1,000 unique Private Selection® items.
The Kroger Co. Page 22
2. Our "Banner Brand" (Kroger, Ralphs, King Soopers, etc.), which
represents the "better" tier and the majority of our own brand sales, is
designed to be the great quality our customers and their families
expect, with a wide breadth of products to meet their many needs. As
with all of our own brands, quality is the key ingredient. Before Kroger
will carry a Banner Brand product, the quality must be tested with
customers to ensure overall liking and product quality versus
competitive alternatives.
3. Our Value ™ brand, our "good" tier, aims to offer our price sensitive
customers a choice of basic products that are priced to fit their budget.
The Value ™ brand offers practical, economical solutions for everyday
needs.
Kroger's three-tier corporate brands strategy generates strong profit
margins. Our "good, better, best" approach enables us to serve a very
broad and diverse customer base. In 2011, Kroger again generated sales
growth across all three tiers of our corporate brands portfolio.
Meeting Customer Needs
Understanding our customers and responding to their needs through
product innovation is a key part of our own brand strategy.
2011 was the second year for our Banner Brand transformation and our
customers' favorite brand grew over 80/0. We continued positioning our
Banner Brand as a mainstream quality brand. We updated both product
and packaging across the majority of our food offerings. Our brand look
brings consistency across products and categories, including seasonal
items, so our customers can easily find the brand they choose most often in
our stores.

The Kroger Co. Page 23

We drove innovation in Greek Yogurt, leveraging our Manufacturing
competitive advantage, Vitamin Enhanced Water and Salty Snacks to
mention just a few exciting new Banner Brand items.
Our Private Selection® renovation accelerated in 2011, delivering a stronger
brand offering for our customers desiring premium products, delivering a
nearly 50/0 sales increase. Our Private Selection® offering was expanded
into gourmet premium appetizers and desserts, to name just a few new
items. We featured our frozen line in a BzzAgent word of mouth campaign,
in partnership with dunnhumby and received excellent feedback on the
quality of the products.
Bzz Agent "Bzz Kit"

In an effort to continue to meet the diverse needs of our customers, Kroger

launched Simple Truth ™ and Simple Truth Organic ™ brands in November
of 2011. Our new brands make organic and natural products easy and
affordable to help our customers simply live better. Customers will find the
new brands in milk and eggs as well as expanding into other categories
over the next year.

The Kroger Co. Page 24

In 2011, Big ~ received a boost from five new items, with strong Hispanic
appeal, and the addition of a display/shopper ready pallet for our 2 Liter
bottles, to better meet customers' needs for all family refreshment.

Finally, in 2011 we launched a website to support our Comforts for Baby®

brand. It was the first bilingual corporate brand website with brand and
educational content. We featured Comforts for Baby® in an on-line
Facebook event and had request for 11,000 Comforts for Baby® Sample
Kits in less than 24 hours, receiving over 35,000 new Facebook "likes" for
Comforts for Baby®.
Website Home Page

a.cGllwpoMM*l
I
I

_~~i~~ I Facebook Promotion

Comforl. for Ioby ~mple Comforl.

,,*,,'~.

__."'_ FREE
Comforts Sample KI,

Mobile Application

••
Our Corporate Brands have earned preference from our shoppers, with
99.9% of all loyal shoppers purchasing at least one of our brands every 12
weeks. While 2011 was strong, the future continues to hold even more
potential, as our brand renovations are completed and our customers
continue to try our own brands, coming back to our stores for our exclusive,
preferred brands.
The Kroger Co. Page 25
KROGER MANUFACTURING

Approximately 40% of the corporate brand units sold in our stores are
produced in Kroger's 39 manufacturing plants; the remaining corporate
brand items are produced to the Company's strict specifications by outside
manufacturers. The Company performs a "make or buy" analysis on
corporate brand products and decisions are made based upon a
comparison of market-based transfer prices adjusted for plant profit versus
open market purchases. Kroger's manufacturing plants produce breads,
dairy products, meat and thousands of other grocery items. By
manufacturing our own products, we lower our costs and pass on savings
to our customers.
Kroger's 15 dairies and two ice cream plants operate at nearly full capacity
and produce all varieties of fluid milk, orange juice, cultured products such
as yogurt and cottage cheese, ice cream, novelty treats and non-
carbonated beverages. In all of our markets, Banner Brand milk is the
"national brand" for most customers. Kroger also operates two cheese
plants, which produce a variety of natural and processed cheeses for our
supermarkets.
Kroger's two meat plants produce a variety of packaged meats, retail
meats, sausages, and home meal replacements.
Seven Kroger bakeries supply cakes, donuts, cookies, bagels, muffins,
crackers, snacks, and rolls to Kroger retail stores and outside customers.
Two frozen dough plants in Bowling Green, Kentucky, and Salt Lake City,
Utah, supply frozen cakes and dough to our retail stores. KB Specialty
Foods, a deli plant, manufactures a wide variety of deli salads, puddings,
desserts, glazes, icings, etc.
Grocery products, beverages, and water are produced in the Company's
five grocery and three beverage plants. Corporate brand grocery items
include pet foods, sugar-based products like drink mixes, hot cereal, coffee,
spices, salad dressings, and peanut butter. Beverages include Kroger's
Big K® corporate brand soft drink line.
The quality of product carrying our Banner Brands is monitored by Kroger's
in-house quality assurance group.

The Kroger Co. Page 26

 Kroger Manufacturing Plants
QhiQ
~ 1 - - - - - - ( -Columbus Bakery
-Crossroad Falms Dairy
~ -Tamarack Farms Dairy
-Indianapolis Bakery -Michigan Dairy -Springdale Ice Cream & Beverage
-Pace Dairy
Qmo.n -State Avenue
-K B Specialty Foods
-Clackamas Bakery
-Swan Island Dairy

~
-Compton Creamery
-Riverside Creamery
r~.
r-K-en-lU'-::c::Jl.:y--_"-:...,--'

-La Habra Bakery ~~~r4 -Winchester Farms Dairy

-Country Oven Bakery
-Vernon Meat
- Kenlake Foods

l.!Wl
-Layton Dough
-Layton Dairy
-Jackson Ice Cream
-King SoopersMeat
&:il.IuIA
-King SoopersBakery
-Tolleson Dairy
-King Soopers Dairy Georgia
-Centennial Farms Dairy
!wi
-Amenca's Beverage Co. - Tara Foods
-Vandervoort Dairy

DAIRY GROCERY
Centennial Farms Dairy America's Beverage
Compton Creamery Bluefield Beverage
Crossroad Farms Dairy Delight Products
Heritage Farms Dairy Kenlake Foods
Jackson Dairy Pontiac Foods
Jackson Ice Cream Springdale Ice Cream & Beverage
King Soopers Dairy State Avenue
Layton Dairy Tara Foods
Michigan Dairy
Pace Dairy MEAT
Pace Dairy of Indiana King Soopers Meat
Riverside Creamery Vernon Meat
Swan Island Dairy
Tamarack Farms Dairy BAKERY
Tolleson Dairy Anderson Bakery
Turkey Hill Dairy Clackamas Bakery
Vandervoort Dairy Columbus Bakery
Westover Dairy Country Oven Bakery
Winchester Farms Dairy Dillons Bakery
Indianapolis Bakery
KB Specialty Foods
King Soopers Bakery
La Habra Bakery
Layton Dough

The Kroger Co, Page 27

 Corporate Brand Categories Produced at Our Manufacturing Facilities

DAIRY DELI PET FOOD

• Ice Cream • Bread & Rolls • Dry Dog Food
• Ice Cream Cakes • Spreads/Dips • Dry Cat Food
• Milk • Icings/Glazes
• Yogurt • Danish GROCERY
• Cottage Cheese • Salads • Peanut Butter
• Processed Cheese • Dessert Salads • Salad Dressing
• Natural Cheese • Seafood Salads • Red Sauces
• Sour Cream • Salsa • Steak Sauces
• Frozen Novelties • Cakes • Worcestershire Sauce
• Orange Juice • Pies • Soy Sauce
• Fruit Juices/Drinks • Cupcakes • Lemon Juice
• Citrus Punch • Cookies • Vinegars
• Bottled Water • Bagels • Coffee
• Muffins • Powdered Drinks
BAKERY • Salted Nuts
• Breads BEVERAGE • Baking Nuts
• Buns • Soft Drinks (A) • Hot Cereal
• Rolls • Spring Water • Jelly
• English Muffins • Purified Water • Preserves
• Bagels • Syrups
• Donuts MEAT • Broth
• Cookies • Packaged Meats • Spices
• Crackers • Retail Meats • Extracts
• Cheese Curls • Sausages • Food Coloring
• Corn Snacks
• Tortilla Chips
• Popcorn
• Flour Tortillas
(A) Carbonated and Non-Carbonated

The Kroger Co. Page 28

 PHARMACY

Kroger is the fifth-largest pharmacy operator in the United States in number

of locations, operating retail pharmacies in over 1,948 of our food stores.
During fiscal 2011, Kroger pharmacists filled over 146 million prescriptions
at a retail value of approximately $7.3 billion.

Kroger Pharmacy Growth

$7.4 , - - - - - - - - - - - - - - - - - - - - - - - - - - - - - , 2,000

$7.2
\I)
\I)
c: QI
.2 $7.0
1,800 .~
iii
0(/).
$6.8
...Eto
.-c:
\I)
$6.6
1,600
.J:
Q.
'0
QI
$6.4
to #:
V)
$6.2

$6.0 1,400
2006 2007 2008 2009 2010 2011

_ Pharmacy Sales ---# Pharmacies

Kroger Pharmacy Growth

3,000 , - - - - - - - - - - - - - - - - - - - - - - - - - - - . - 80.5%
QI
80.0% ~

~ 2,000 +----1
79.5% =
...
QI

o 79.0% ~
;; III-
to 1,500 78.5% 0
u
.9
#: 1,000
78.0%

77.5% ~
...~
to

500 u
77.0% Q:i
Q.
o ~....1.....4- 76.5%
2006 2007 2008 2009 2010 2011

_ # Pharmacies # Stores ~% of Stores With a Pharmacy

The Kroger Co. Page 29

Pharmacy continues to be an important part of
Kroger's convenient "one-stop shopping"
strategy, and we are focusing on improving our
customers' pharmacy experience. Kroger
customers can now have their maintenance
prescriptions refilled automatically by signing
taxt you 'Well caI~ email or
up for our new AutoRefill service. Customers' /.
when t.hey're ready"
-Bft\,"Y1bmttocs:

prescriptions are filled when due. When

prescriptions are ready, customers are sent a
message via text, email or voice mail. When
customers sign up for AutoRefill, they may also sign up for instant
messaging. This is a free service that allows our pharmacists to efficiently
communicate with our customers about the status of their prescriptions
In addition to convenience, our pharmacies strive to provide good value to
customers. Our $4 generic pricing program includes over 300 drugs priced
at just $4 for a typical 30-day supply. Drugs for heart, blood pressure,
diabetes, infection, arthritis, cholesterol, and many other ailments are
included. We also offer gO-day supplies of many of these prescriptions for
$10, and we have increased the number of women's health medications
that we offer at discounted prices. Customers can access our drug list by
visiting our stores, at www.kroger.com. or by calling (877) 4RX-L1ST.

Hundreds of save even

more on

generic a go-day
supplvl

prescriptions 30-day 1 I I •
'1~"'l'."'1'\l.:a:J,\'lI\ '1U"Jo')"'i""\»$~t!rf>n.'l'H""iJA~ll-""" ~~r.!l;.~.''''~."'I;.\)m'io t~IQ~~~" ~ ~~'{.~t'~~'-'u" )~.'N'l"'"n.."'. 1h,>1C5;:.'lfl!HW'), .~'lI.~nYloY'.s1S
,)<1ttM..... ·,..... ~ !',J_"Jtl\'t'li;'''''''';;'tfIl'Uc """~YIJ't\.''';;~'''~•.J~)~1~~\l1#<>'tfs'''\?\: ...~ ~ .......... y. . . (,,~t...~...mY.),: Mt:It)o,~ ',n<.S-l.] *1,· .. ·>_·l~.~A.......';".. ~~'lf\ • •• lJ,Sf ........ ll\~tI!c: Ph
6tt>s1-W\·!'(:t""I'C»:kt'~,..IQ'..If\l"i·flO~~1h.'l'3""~~·.·(l~H,~~~}..t~1..4.,,;r·,,\~)a"'~;,,,,,,,,,,,,,,04."'\;'~~ ''';"",_,,\,-:,\p.;, 1"'.1,-'''I~,)''~1NIl!~.tt ;".n\l"(OiP'.n,,"l~l1I>(
lV;:I\"~"",o.gNt·llll~ .~""""""~jS'~"l' T';.loti''''''" O>t:1T"""I)Il1.,"Q,~~-.lf-P"",,"~;j~"Y'ln·"'.~}mh<;Pt;I"~"'~ 1.\ ....... .N,lt>:ur....~,,).J ..g.•• ~,~
armacy

The Kroger Co. Page 30

THE LITTLE CLINIC

Kroger operates walk-in medical clinics in

stores across the country through our
wholly-owned subsidiary, The Little
CliniC®. The Little Clinic locations offer
quality health care and well ness solutions
that are both convenient and affordable
for customers. The Little Clinic locations
are staffed with licensed and Board
Certified Advanced Registered Nurse
Practitioners (ARNPs) and Certified
Physician Assistants. They are authorized to diagnose, treat, and write
prescriptions for common illnesses such as flu, bronchitis, respiratory, sinus
and ear infections, as well as for minor injuries. The clinics also provide
services such as physicals, back-to-school and sports exams, screenings
and a number of vaccinations. At year-end 2011, The Little Clinic operated
80 walk-in medical clinics inside Kroger's family of stores. For 2011, the first
full year of Kroger ownership, The Little Clinic total patient visits grew 47%.

80 Clinics Operating in 6 States...

QbIQ
Cincinnati - 11
CoIumbus- 7

Colorado
Denver - 14
... •••••
10

,I .

NV - ••
Kentucky
....... louisville -11
UT '. LexIngton - S

AdmDI
Phoenix- 10

Tenneuee ~
...."
'

KnOXYIlle- 2 ~ ,.
Memphla-5 Atlanta- 2
NUhv1l1e -13

The Kroger Co. Page 31

For its commitment to quality care and patient safety, The Little Clinic has
received accreditation by The Joint Commission. The gold standard in the
healthcare industry, The Joint Commission Mission is, "To continuously
improve health care for the public, in collaboration with other stakeholders,
by evaluating health care organizations and inspiring them to excel in
providing safe and effective care of the highest quality and value." The
Little Clinic is one of only two convenient care operators that have received
this distinction.

".,.

= Convenient Neighborhood Medical Care

,J
-

The Kroger Co. Page 32

 NATURAL AND ORGANIC FOODS

Consumer interest in healthier lifestyles and better nutrition has grown over
the past several years. In response to this interest, Kroger customers can
find a variety of natural and organic products throughout our stores, from
our produce and meat departments to our grocery and HBC aisles. Kroger
caters to the natural and organic customer in varying department formats
based on a particular store's size and customer segmentation:
• "Nature's Markets" are located in most Kroger-bannered stores, as well as in Fry's
and Dillons;
• Nutrition Centers are located in many Fred Meyer stores;
• Full-service vitamin shops are located in nine King Soopers stores and one Kroger-
bannered store;
• Ralphs, King Soopers, Smith's, QFC, and City Market use a variety of formats,
including both segregated and integrated sets.

Our stores typically offer over 3,000 SKUs of all-natural and organic foods,
including cereals, fitness bars, frozen foods, juice, milk, and vitamins. The
offering varies based on square footage dedicated to Natural Foods, which
can expand to over 1,400 square feet in some stores.
In addition to over 2,800 SKUs of branded product, Kroger offers over 150
items under our Naturally Preferred® and Simple Truth ™ brand. Naturally
Preferred® and Simple Truth ™ products are made from the finest quality,
natural ingredients, but they are not always organic. Complementing our
Naturally Preferred® brand is the expanded organic product offering sold
under our exclusive Private Selection® Organic brand. Our stores offer
more than 290 Private Selection® Organic items covering everyday staples
like butter, cereal, salads, ketchup, and snacks. Every Private Selection®
Organic product contains at least 950/0 organic ingredients and is USDA
certified, assuring our customers that these products are grown and
processed without preservatives, artificial colors or artificial flavors. We
continue to add new items to this proprietary product line to make organics
accessible and affordable for everyone.

Nature's r4arket
The Kroger Co. Page 33
 RETAIL FUEL OPERATIONS

Kroger believes that gasoline is a natural addition to our "one-stop"

shopping strategy because it offers our customers tremendous
convenience and value. Fuel centers also allow Kroger to build on our
decades of experience in selling gasoline at our convenience stores.
Despite low margins, fuel centers can deliver a high return on investment
because of their extraordinary inventory turns and positive effect on overall
store sales.
The typical supermarket fuel center consists of three to nine multi-product
dispensers covered by a well-lit canopy, and an 8' x 12' kiosk from which
cigarettes, soft drinks, snacks, candy and miscellaneous automotive-
related products are sold.
At year-end 2011, Kroger's retail fuel operations included 1,090
supermarket fuel centers in 30 states and 724 convenience stores that sell
fuel. (We operate 791 convenience stores in total. See the "Convenience
Stores" section on Page 20 of this Fact Book.)
Financial Impact

Sales
Fuel sales affect certain financial indicators. They comprise a portion of the
Company's total food store sales results.

$85.0

$80.0 / -
/ $13.0
$75.0 -
---- $9.1
-
----
III
$70.0
r-r-

$6.7
1------- ~
...-----
c
.2 $65.0

= $60.0
I- -
$71.1
$55.0 $65.5 $67.7 r--------

$50.0
I c----

$45.0
FY 2009 FY 2010 FY 2011

Total Food Store Fuel Sales Total Food Store Sales Without Fuel

The Kroger Co. Page 34

Fuel sales also affect identical and comparable supermarket sales:
Identical Supermarket Sales FY 2009 FY 2010 FY 2011
Including Supermarket Fuel Centers 0.6% 5.7% 9.2%
Excluding Supermarket Fuel Centers 2.1% 2.8% 4.9%
Difference (basis points) <150 bp> 290 bp 430 bp

FIFO Gross Margin (Note A)

Our FIFO gross margin rates, as a percentage of sales, were 21.13% in
2011, 22.31 % in 2010 and 23.25% in 2009. Our retail fuel sales reduce our
FIFO gross margin rate due to the very low FIFO gross margin on retail fuel
sales as compared to non-fuel sales. Excluding the effect of retail fuel
operations, our FIFO gross margin rates decreased 33 basis points in 2011
and 35 basis points in 2010. FIFO gross margin in 2011, compared to
2010, decreased primarily from continued investments in lower prices for
our customers, the effect of inflation and higher transportation expenses,
partially offset by improvements in shrink, advertising, and warehousing
expenses, as a percen t age 0 f sa Ies. -

<Decrease> in FIFO Gross Margin Rate FY 2009 FY 2010 FY 2011

GAAP Basis <13 bp> <94 bp> <118 bp>
Excluding Retail Fuel Operations <55 bp> <35 bp> <33 bp>
Note A: FIFO gross margin is an important measure used by management to evaluate merchandising
and operational effectiveness. We calculate First-In, First-Out ("FIFO'? gross margin as sales minus
merchandise costs, including advertising, warehousing and transportation, but excluding the Last-In,
First-Out ("LIFO'? charge. Merchandise costs exclude depreciation and rent expense.

Operating, General, and Administrative Expenses (Note B)

Growth in retail fuel sales lowers Kroger's operating, general, and
administrative ("OG&A") rate due to the very low OG&A rate on retail fuel
sales as compared to non-fuel sales. Our OG&A expenses in 2011
included $953 million for the UFCW pension plan consolidation charge.
Without the UFCW pension plan consolidation charge, OG&A expenses, as
a percentage of sales excluding fuel, decreased 25 basis points in 2011,
compared to 2010. The 2011 decrease, compared to 2010, resulted
primarily from increased supermarket identical sales growth productivity
improvements and strong cost controls at the store level, offset partially by
increased credit and debit card fees, incentive compensation and health
care costs.

The Kroger Co. Page 35

 Increase I <Decrease> in OG&A Rate FY 2009 FY 2010 FY 2011
GAAP Basis 37 bp <66 bp> 13 bp
Excluding Retail Fuel Operations (Note C) 2 bp <14 bp> <25 bp>
Note B: Operating, general, and administrative expenses consist primarily of employee-related costs
such as wages, health care benefit costs and retirement plan costs, utilities, and credit card fees. Rent
expense, depreciation and amortization expense, and interest expense are not included in OG&A.
Note C: Also excludes the following: southern California asset impairment charges in 2009, UFCW
pension plan consolidation charges in 2011.

Kroger's retail fuel business can increase the volatility of our quarterly
financial results because it is common for us to experience quarter-to-
quarter gross margin fluctuations in the fuel business. This is a function of
our significant fuel volumes and the volatility of wholesale fuel prices.
During a period of rising wholesale fuel costs, our gross margins typically
contract. During a period of declining wholesale fuel costs, our gross
margins typically expand. This is why we believe it is important to consider
a longer view when analyzing fuel margins to account for these
fluctuations.

Fuel Margins (Cents Per Gallon) Q1 Q2 Q3 Q4 YR

FY 2011 12.4¢ 17.4¢ 13.7¢ 12.4¢ 13.9¢
FY 2010 11.7¢ 14.3¢ 12.7¢ 10.2¢ 12.2¢
Difference 0.7¢ 3.1¢ 1.0¢ 2.2¢ 1.7¢

Note that Kroger's fuel margins exclude credit card fees. We include credit
card fees in OG&A expense.

The Kroger Co. Page 36

 LOYALTV DATA & CUSTOMER INSIGHT

Kroger's growth strategy is squarely focused on consistently meeting the

needs of our customers. Our successful customer loyalty programs are
one mechanism we are using to deliver value. Over several years, we
have accumulated a substantial volume of consumer data through our
loyalty cards. This data provides us with valuable insight into our
customers' shopping behaviors.
The key to unlocking that insight and creating value for our customers and
our Company has been a partnership we formed in May 2003 with a firm
called dunnhumby. London-based dunnhumby is a global leader in the
fields of data management, customer analysis, and insight-led planning.
This partnership (dunnhumbyUSA) is a unique competitive advantage for
Kroger. It allows us to segment our customer base and design customized
offerings for the individual needs of each segment. It also gives us the
tools to target our promotional dollars and pricing investments toward our
most profitable customers.
dunnhumbyUSA continues to grow and evolve. Each year this partnership
helps us analyze our business in ways we may not have considered before.
In addition to helping Kroger build customer loyalty and brand value,
dunnhumbyUSA serves other manufacturing and non-grocery retail clients
through offices in Atlanta, Chicago, Cincinnati, Minneapolis, New York and
Portland.

The Kroger Co. Page 37

 KROGER PERSONAL FINANCE

Another unique competitive advantage for Kroger is Kroger Personal

Finance® ("KPF"). KPF believes that loyalty is earned by respecting the
individual and their unique financial goals: we'll meet people where they are
and provide them with simple, innovative and transparent money
management solutions.

Our solutions are designed to fit customers'

individual needs. The 1-2-3 REWARDS® Visa®
Card and reloadable Visa® Prepaid Debit Card
reward customers with every purchase made.
Extra points are earned on in-store and Corporate
Brand purchases and cardholders receive an
additional 5¢ off per gallon at our Fuel Centers.

KPF's wide selection of gift card

partners and double fuel points
with every purchase allow
customers to pick up cards to their
favorite restaurant, clothing store
or airline in one convenient
location.

Money Services allow customers

to cash checks, pay bills and
transfer money in our stores.
Money Services provide customers
with friendly service to meet their
money needs.

The Kroger Co. Page 38

 TECHNOLOGY & LOGISTICS

Technology and Logistics are very important parts of

our business. Kroger invests significant capital and
expense dollars to ensure that our information
systems and logistics network are operating as
efficiently and cost-effectively as possible. We also
know that such investments are critical in serving our
customers better.

Investments during the past few years have included:

• 1,025,135 downloads of the Kroger • Point of Sale credit card signature
mobile application for iPhone® and capture
TM • Electronic shelf labels
Android
• State-of-the-art, industry-leading
• Refreshed legacy merchandising
automation and warehouse
systems and item data
management systems
• Expanded handheld and mobile
• Enterprise Labor Scheduling Solution
technologies
• Southern California Transportation
• Expanded onboard computers in the
Network
transportation fleet
• Point of Sale hardware refresh
• Fuel-efficient tractor trailer designs
• Improving quality of perishable offerings
• Green technology initiatives focused on
to our customers
equipment reductions and data center
• Operational improvements to improve
improvements to reduce power
store efficiencies
consumption and environmental impacts
• Expanded fuel loyalty features
• Product Life-Cycle Management for .. Improvements to store front end
Manufacturing
customer experience
• New electronic coupons and loyalty
• Improvements to financial processing
features at www.Kroger.com systems

Collectively, our technology and logistics investments are producing after

tax returns above Kroger's goal of 11.3%, after-tax, for capital projects. In
addition, all of these efforts are tied to the Four Keys and the Customer 1st
Strategy.

The Kroger Co. Page 39

TECHNOLOGY
Kroger continues to use technology to a strategic advantage. The strong
infrastructure investments made in recent years have provided excellent
stability and reliability. This foundation has allowed Kroger to centralize
processing and reduce costs. Kroger has also been able to use technology
to improve the customer experience by reducing wait times and improving
coupon processing. In the coming years Kroger will continue to utilize its
technology to promote the Four Keys.
Research and Development

Kroger continues to internally develop new and innovative business

solutions utilizing our Research and Development department. Recently
implemented solutions include Advantage Checkout® (aka Scan Tunnel)
and Scan, Bag and Go TM. Advantage Checkout is the system that fully
automates item scanning at checkout and with Scan, Bag and Go shoppers
carry a hand-held scanner and scan their items while they shop.

LOGISTICS
Kroger's logistics network includes 34
distribution centers ("DCs"). An important part
of our Customer 1st Strategy involves investing
in our logistics infrastructure to improve
operational efficiency, lower costs, and upgrade
product freshness, quality, and safety. Over
the past several years, Kroger has made
significant investments in leading edge
distribution technology - including warehouse,
transportation, and advanced automation
systems. Our DCs contain state-of-the-art
product handling systems, refrigeration, temperature and lighting controls.
These technologies have allowed us to significantly reduce our energy use
in the DCs, saving costs and reducing Kroger's carbon footprint.
Kroger employs a rigorous program of lean process engineering to
continuously improve the efficiency of the supply chain. The program
examines each step - from suppliers to the stores - streamlining
processes, driving out waste, and reducing costs to enable continued
investment in our Customer 1st Strategy.

The Kroger Co. Page 40

Some of Kroger's distribution centers and store delivery fleets have been
outsourced to third-party logistics providers, giving our company access to
evolving approaches in distribution and more flexibility to implement them.

Ongoing optimization analysis reduces the capital needed to maintain and

modernize the network, reduces working capital, and lowers product
acquisition costs since larger quantity purchases are possible.

Three-Tier Distribution Network

Kroger services its stores through a nationwide three-tier distribution

system. The first tier consists of local dry grocery, perishables, and freezer
facilities that service stores - generally within a 200-mile radius - with quick
turn and perishable products. These distribution centers also often serve
as our company's cross-dock centers for palletized merchandise that is
going directly to a retail store.
The second tier consists of regional centers that service retail stores-
within a roughly 350-mile radius - for slower turn pharmaceuticals, HBC
items, and dry grocery merchandise. These regional centers allow Kroger
to purchase in larger quantities at the lowest possible price bracket. The
product is piece-picked, sleeve-picked, or case-picked depending on value
and movement, and shipped directly to stores multiple times each week.
The third tier ships seasonal, promotional and other general merchandise
products from suppliers around the world to stores in an even larger
geography than the regional centers.
This tiered network system is supported with new technology for improved
operations and more cost-effective store delivery. We are continuing to
develop "Demand Forecasting" technology utilizing certain store-specific
and market data to enhance our company's store ordering system
capabilities. This capability enhancement is based on Kroger's data
warehouse, expanded corporate computing infrastructure, and current
software systems. Voice-pick technology employed in our DCs uses
wireless communication and voice instructions for picking product. Our
real-time warehouse management system improves both the speed and
accuracy of product receipt, assembly and shipping. The network is linked
with a freight management system to eliminate "empty" trucking miles and
reduce freight expense through coordination with our suppliers and fleet
operators. Advanced automation technology is being implemented for

The Kroger Co. Page 41

select case and piece picking operations, which dramatically improves
store service, reduces costs, and enhances associate safety.

Transportation Management

Our store delivery fleet of 2,700 tractors and 10,000 trailers make almost
3,100 truckload deliveries every day. In 2011, that translated to traveling
almost 297 million miles to our stores and facilities. Of our fleet, Kroger
owns approximately 80% of the 10,000 trailers and 55% of the 2,700
tractors used for deliveries.
With rising fuel and operational costs, Kroger leverages its investments in
network-based transportation management systems to improve utilization
of its store delivery and inbound fleets. Additionally in 2011, our tractors
were equipped with the latest on-board computer technology providing real-
time visibility of store deliveries in route which allows the driver to be more
effective and make the appropriate adjustments when necessary to protect
on-time deliveries. Fleet capacity management across all markets and
business units is being integrated into these tools to maximize coordination
and utilization. Some of our other efforts in this area include: improving
the aerodynamic design of tractors and trailers for better fuel economy;
utilizing the latest clean engine technology that also improves tractor fuel
efficiency, installing an automatic tire inflation system, expanding the usage
of multi-temperature trucks to transport frozen, refrigerated or dry goods in
one truck; improving the insulation of our refrigerated trucks; and
standardizing top speeds and idling protocols.

Improving the operational efficiency of

our fleet not only lowers our costs, it
also helps reduce Kroger's impact on
the environment. Please see our 2011
Sustainability Report for additional
information about our efforts and
achievements in this important area.

The Kroger Co. Page 42

________C_U_S_T_O_M_E_R_1_st_S_T_RA_T_E_G_Y l
Kroger stands apart from others in our industry because of our Customer
1st Strategy. The Kroger team has been executing this consistent strategy
for almost a decade. As a result of this approach, we have been growing
our business by increasing customer loyalty to Kroger's family of stores.
Listening to our customers is the foundation of this approach. Based on
customer feedback, we invest in four key areas of our business, so that our
customers say:
• Our people are great!
• I get the products I want, plus a little.
• The shopping experience makes me want to return.
• Our prices are good.
These investments can take several forms - including improved customer
service, better product quality and selection, enhancements to our shop-
ping environment, and lower prices. We seek to fund these investments
through operating cost reductions and productivity improvements in several
areas of our business.
Our long-term business model reflects our Customer 1st Strategy. We
believe it is the right approach to create sustainable shareholder value in a
highly competitive industry. Our objective is to increase annual earnings
per share through the combination of strong, sustainable identical sales
growth and slightly improved operating margins, both excluding our retail
fuel operations. Investments in the Four Keys of our Customer 1st Strategy
help us drive strong and sustainable identical sales growth.
A cornerstone of our business strategy is balance. We seek to consistently
deliver solid financial results in the near-term while making meaningful
investments for our future. We believe our Customer 1st Strategy can serve
customers, associates, and investors well in a variety of economic and
competitive conditions.

The Kroger Co. Page 43

 MARKET SHARE

Growing market share is an important part of Kroger's long-term strategy.

Market share is important to us because it allows Kroger to leverage the
fixed costs in our business over a wider revenue base. Our fundamental
operating philosophy is to maintain and increase market share because
there is a high correlation between market share and return on assets:
generally the higher Kroger's market share, the higher our return on assets.
We look at numerous resources to evaluate market share changes in our
industry. One of the most reliable and independent resources we regularly
review is Nielsen Homescan Data, which is generated by customers who
self-report their grocery purchases to The Nielsen Company, regardless of
retail channel or grocery outlet. Thus, this approach captures market share
changes for consumable products across multiple retail channels including
supercenters and other non-traditional retail formats.
Nielsen Homescan Data shows that Kroger's overall market share rose
approximately 50 basis points during fiscal 2011. This data also indicates
that our share increased in 13 of the 19 marketing areas outlined by the
Nielsen report and, declined slightly in six. Wal-Mart is a primary
competitor in 17 of these 19 marketing areas. In those 17 marketing areas,
Kroger's overall market share grew approximately 40 basis points.
According to our internal tracking of competitive store openings, Kroger
divisions compete with roughly 1,209 Wal-Mart supercenters, 3 fewer than
a year ago.
We plan to continue to grow our business by maintaining Kroger's existing
strong market share and continuing to build on additional opportunities for
sales growth.

The Kroger Co. Page 44

 IDENTICAL & COMPARABLE SUPERMARKET SALES

Identical supermarket sales are a key measure of health in the retail food
industry. Kroger defines a supermarket as "identical" when it has been
open without expansion or relocation for five full quarters. Other
companies in our industry may calculate identical sales differently than
Kroger does, limiting the comparability of this measure.
Gasoline sales at our supermarket fuel centers have a measurable impact
on our identical supermarket sales results. Therefore, the second chart
depicts identical supermarket sales trends excluding supermarket fuel
sales.
INCLUDING FUEL

12.0%
• Identical sales
10.0% • Estimated inflation
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%

EXCLUDING FUEL
7.0%
6.0% • Identical sales

5.0% • Estimated inflation

4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%

The Kroger Co. Page 45

 FINANCIAL STRATEGY

Kroger's financial strength has long been a competitive advantage and is

even more so in the current economic environment. We believe it is
important to allocate the strong cash flow that our business generates to
invest in our store base and infrastructure, maintain Kroger's leverage
ratios, and provide a solid return for shareholders.
FINANCIAL GOALS & STRATEGY

1. Expand earnings through steady increases in identical sales together

with slight growth in operating margin (excluding fuel).
2. Financial strategy and use of cash flow:
a. Maintain a solid investment grade rating.
b. Smooth debt maturities.
c. Return value to shareholders via:
i. Target annual EPS growth averaging 6% to 80/0 per year.
ii. Including a dividend of 1.50/0 to 2%, target a total shareholder
return of 8% to 10%.
iii. Expect this total shareholder return to compare favorably to the
S&P 500 over a rolling three-to-five year time horizon.
3. Earn a return on assets that exceeds our cost of capital.
4. Execute a strong capital program to keep our store base current, grow
market share, continue format expansion in key markets, and ensure
Kroger is in a position to take advantage of industry consolidation.

CAPITAL EXPENDITURES
Total capital expenditures for 2011 were $1.9 billion, excluding acquisitions.
Approximately 47% of Kroger's 2011 capital dollars were used to build,
acquire, expand, or do major remodels of food stores. The balance was
allocated among minor remodels and the Company's other operating and
administrative segments, including convenience stores, jewelry stores, and
manufacturing facilities, as well as technology, logistics and distribution,
and other miscellaneous projects. In the pie chart and bar chart on the
following page, "Other" includes capital expenditures for the purchase of
leased facilities totaling $60 million compared to $38 million in 2010.

The Kroger Co. Page 46

 12011 Capital Investment Allocation I

II Major Supermarket (including real estate): 47.2%

Minor Supermarket: 21.3%

Supermarket Support (Technology & Logistics): 18.0%

- Other Retail (C-Stores & Jewelry, including real estate):

3.8%
• Other (Mfg, Lease Buyouts, Other): 9.7%

We allocate capital to projects that we expect to earn a rate of return in

excess of our internal hurdle rate of 11.30/0 after-tax. These projects
include new stores, major remodels and expansions of existing stores, as
well as distribution facilities, technology and manufacturing investments.

ICapital Investments I
• Major Supermarket Minor Supermarket Real Estate
Supermarket Support • Other Retail -Other

2011 -23% 26% 18%

2010 24% 19%

2009 26% 16% 1

We primarily target existing markets for new stores. In our experience,

such "in-market" growth generally produces higher returns, with a lower
level of risk, by leveraging fixed expenses such as warehousing,
transportation, advertising, and other overhead costs across an expanding
store base.

The Kroger Co. Page 47

Capital expenditures reflect our strategy of growth through expansion and
acquisition, as well as our emphasis on self-development and ownership of
real estate, and logistics and technology improvements. Since 1995,
Kroger has been aggressively purchasing the real estate associated with
our storing program. At year-end, approximately 45% of the Company's
2,435 supermarkets were owned by Kroger. Kroger estimates that it saves
approximately $1 per square foot per year when owning versus leasing
stores.
We believe that long-term shareholder value is determined, in part, by the
return on invested capital and therefore we use a disciplined approach to
evaluate every capital investment:
• Capital investments are assessed versus our after-tax hurdle rate with
consideration given to the risk of the specific investment.
• The projected incremental sales and EBITDA from each capital
expenditure are added to divisional and corporate bonus bases in order
to motivate the entire organization to achieve returns above our hurdle
rate.
• A quarterly re-analysis of each major project is conducted to ensure we
understand the return from major capital projects.
• Kroger continues to aggressively close underperforming stores. In fiscal
2011, we closed 55 stores - 41 of these were operational closures. The
term "operational closure" describes a store location that has been
closed without opening another store in the same vicinity to replace it.
The chart on the following page provides Kroger's real estate activity by
quarter for fiscal 2009, 2010, and 2011.

The Kroger Co. Page 48

 REAL ESTATE ACTIVITY BY QUARTER
FY 2009 Q1 Q2 Q3 Q4 YEAR
BeQinning # Stores 2,481 2,475 2,470 2,469 2,481
New 2 2 6 4 14
Acquired - New - - - 1 1
Acquired - Relocation - - - 1 1
Relocations 4 2 2 1 9
Total Stores Opened 6 4 8 7 25
Expansions 5 8 4 11 28
Total Store Projects 11 12 12 18 53
Operational Closures <8> <7> <7> <7> <29>
Ending # Stores 2,475 2,470 2,469 2,469 2,469
Remodels 37 46 42 37 162
Square Footage (millions) 146.7 146.9 147.4 147.8 147.8
% Increase 1.4% 1.2% 1.2% 0.8% 0.8%
Convenience Stores 764 768 773 776 776
Jewelry Stores 387 388 392 374 374
Fuel Centers 798 818 850 893 893
Pharmacies 1,967 1,964 1,969 1,967 1,967
FY 2010 Q1 Q2 Q3 Q4 YEAR
Beginning # Stores 2,469 2,472 2,470 2,463 2,469
New 6 - - 8 14
Acquired - New 3 1 - - 4
Acquired - Relocation - - - - -
Relocations 2 1 2 1 6
Total Stores Opened 11 2 2 9 24
Expansions 6 1 8 4 19
Total Store Projects 17 3 10 13 43
Operational Closures <6> <3> <7> <11> <27>
Ending # Stores 2,472 2,470 2,463 2,460 2,460
Remodels 35 25 35 31 126
Square FootaQe (millions) 148.4 148.4 148.3 148.6 148.6
% Increase 1.2% 1.1% 0.6% 0.6% 0.6%
Convenience Stores 777 782 782 784 784
Jewelry Stores 375 372 375 361 361
Fuel Centers 911 934 956 1014 1014
Pharmacies 1,963 1,968 1,969 1970 1970
FY 2011 Q1 Q2 Q3 Q4 YEAR
BeQinninQ # Stores 2,460 2,449 2,440 2,439 2,460
New 3 2 4 0 9
Acquired - New 1 0 6 0 7
Acquired - Relocation 0 0 2 0 2
Relocations 4 4 1 3 12
Total Stores Opened 8 6 13 3 30
Expansions 2 1 4 8 15
Total Store Proiects 10 7 17 11 45
Operational Closures <15> <11> <11> <4> <41>
Ending # Stores 2,449 2,440 2,439 2,435 2,435
Remodels 38 32 25 19 114
Square Footage (millions) 148.3 148.2 148.5 148.6 148.6
% Increase <0.1%> <0.1%> .1% 0% 0%
Convenience Stores 785 788 796 791 791
Jewelry Stores 359 361 363 348 348
Fuel Centers 1,030 1,046 1,067 1,090 1,090
Pharmacies 1,966 1,964 1,964 1,955 1,955

The Kroger Co. Page 49

DEBT OBLIGATIONS

At year-end 2011, Kroger had one credit facility:

• $2.0 billion Credit Agreement (with ability to increase by $500 million)
maturing in January 2017, unless earlier terminated by Kroger.
In addition to the Credit Agreement, Kroger maintained two uncommitted
money market lines totaling $75 million in the aggregate. As of January 28,
2012, the Company had $370 million of borrowings of commercial paper
and no borrowings under its Credit Agreement or money market lines. The
outstanding letters of credit that reduce funds available under Kroger's
credit agreement totaled $19 million as of January 28,2012.
The table on the following page details Kroger's debt obligations as of year-
end 2011.
Debt Rating
Kroger's debt rating remains important to us as we execute our Customer
1st strategy. Management believes maintaining a solid investment grade
rating provides the best cost of capital and the flexibility to execute our
growth strategy in a competitive and consolidating industry.

The Kroger Co. Page 50

 DEBT ISSUES MATURITY PRINCIPAL
(Year-End 2011) DATE ($ millions)
Senior Notes (A)
6.750/0 04/15/12 491
Senior Notes
6.200/0 06/15/12 346
Senior Notes
5.500/0 02/01/13 500
Senior Notes
5.000/0 04/15/13 400
Senior Notes
7.500/0 01/15/14 599
4.95% Senior Notes 01/15/15 300
3.90% Senior Notes 10/01/15 500
Senior Notes
2.200/0 01/15/17 450
Senior Notes
6.400/0 08/15/17 602
Senior Notes
7.000/0 05/01/18 200
Senior Notes
6.800/0 12/15/18 300
6.15% Senior Notes 01/15/20 749
Senior Notes
7.700/0 06/01/29 281
Senior Notes
8.000/0 09/15/29 250
Senior Notes
7.500/0 04/01/31 440
6.90% Senior Notes 04/15/38 373
Senior Notes
5.400/0 07/15/40 297
Subtotal Senior Notes & Debentures $7,078
Mortgages Through 2034 $65
Other $600
Total Debt $7,743
Capital Leases $398
Total Debt Including Capital Leases (B) $8,141

(A) These notes were repaid during First Quarter 2012.

(8) Before FAS No. 133 Adjustment.

The Kroger Co. Page 51

SHARE REPURCHASE

Board Repurchase Authorizations

We maintain share repurchase programs that comply with Securities
Exchange Act Rule 10b5-1 to allow for the orderly repurchase of our
common shares, from time to time, even though we may be aware of
material non-public information, as long as purchases are made in
accordance with the plan. The timing of repurchases varies according to
market conditions.
We made open market purchases totaling $1,420 million, $505 million, and
$156 million under Board-authorized repurchase programs during fiscal
2011, 2010, and 2009, respectively.
At the end of fiscal 2011 , approximately $475 million remained under the
$1 billion share repurchase program authorized by our Board in September
2011.
Stock Option Program
In addition to the Board-authorized repurchase programs, in December
1999, Kroger initiated a program to repurchase common shares to reduce
dilution resulting from our employee stock option plans. This program is
solely funded by proceeds from stock option exercises, and the related tax
benefit. We repurchased approximately $127 million, $40 million, and $62
million under the stock option program during 2011, 2010, and 2009,
respectively.
Our total share repurchases under the Stock Option Program and Board
Repurchase Authorizations are summarized in the following table:
$ millions FY 2009 FY 2010 FY 2011
Stock Option Program $63 $40 $127
Board Repurchase Authorization $156 $505 $1,420
TOTAL COST $219 $545 $1,547

The Kroger Co. Page 52

Total shares repurchased for the past three years under the Stock Option
Program and Board Repurchase Authorizations and the average cost per
share are summarized below:

Fiscal Year # Shares Cost Avg Cost Per Share

2009 10 million $218 million $21
2010 26 million $545 million $21
2011 67 million $1,547 million $23
TOTAL 103 million $2,311 million $23

Since January 2000, Kroger has invested nearly $8.0 billion to repurchase
363 million shares at an average cost of $21.94 per share through the end
of fiscal 2011.

DIVIDENDS

Kroger's quarterly dividend program was initiated by our Board of Directors

in March 2006. During 2011, the Company paid three quarterly dividends
of $0.105 and one quarterly dividend of $0.115. Kroger paid a total of $257
million, $250 million, and $238 million in cash dividends during 2011, 2010,
and 2009, respectively.
Kroger's Board of Directors reviews the dividend annually, with an objective
of increasing the amount of the dividend over time. Any changes in the
dividend amount are made after consideration of the needs of the business,
the interests of shareholders, cash flow trends, and other factors.

Date May 3.2012

Pay to the $$$.$$

Order of t:'!f'O!1R.... ~aldeM"lS
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 00/l8rs

For _

The Kroger Co. Page 53

 PERFORMANCE GRAPH

Set forth below is a line graph comparing the five-year cumulative total
shareholder return on Kroger's common shares, based on the market price
of the common shares and assuming reinvestment of dividends, with the
cumulative total return of companies in the Standard & Poor's 500 Stock
Index, and a peer group composed of food and drug companies.
Historically, our peer group has consisted of the major food store
companies. In recent years, there have been significant changes in the
industry, including consolidation and increased competition from
supercenters, drug chains, and discount stores. As a result, several years
ago we changed our peer group to include companies operating
supermarkets, supercenters and warehouse clubs in the United States as
well as the major drug chains with which Kroger competes. In 2008 we
changed our peer group (the "Peer Group") once again to add Tesco pic,
as it has become a competitor in the U.S. market.

COMPARISON OF CUMULATIVE FIVE-YEAR TOTAL RETURN*

160
140
1~
I Among The Kroger Co., the S&P 500, and Peer Group**

~
I
--:.=r-'"
•
100 -
i1--_"-=",,,,!!f_ me. --=r-=- ......._......-...... . . __-
--
~ _.i: ~ .... _
80 .......... ~ c - - ... - :.:;.a:.:.-~

60 ......... ....... -
40
20
O+--------r---------,r-------.----------r----~
2006 2007 2008 2009 2010 2011

[--e-- The Kroger Co. - - S&P 500 Index - . - Peer Group I

BASE INDEXED RETURNS

PERIOD Years Endinc :
2006 2007 2008 2009 2010 2011
THE KROGER CO. 100 101.59 89.10 86.28 87.25 101.44
S&P 500 INDEX 100 98.20 59.54 79.2r 96.86 102.02
PEER GROUP** 100 103.04 83.68 103.67 112.55 118.29
Note: The Company's fiscal year ends on the Saturday closest to January 31.

The Kroger Co. Page 54

* Total assumes $100 invested on February 3, 2007 in The Kroger Co., S&P 500 Index, and
the Peer Group, with reinvestment of dividends.

** The Peer Group consists of Costco Wholesale Corp., CVS Corp, Delhaize Group SA (ADR),
Great Atlantic & Pacific Tea Company, Inc., Koninklijke Ahold NV (ADR), Safeway, Inc.,
Supervalu Inc., Target Corp., Tesco pic, Wal-Mart Stores Inc., Walgreen Co., Whole Foods
Market Inc. and Winn-Dixie Stores, Inc.

Data supplied by Standard & Poor's.

The Kroger Co. Page 55

 FINANCIAL AND OPERATING STATISTICS
(in millions, except per share amounts)

Sales
2011 $27,461 $20,913 $20,594 $21,406 $90,374
2010 $24,738 $18,760 $18,667 $19,884 $82,049
2009 $22,755 $17,703 $17,637 $18,514 $76,609

Merchandise Costs (A)

2011 $21,624 $16,555 $16,358 $16,957 $71,494
2010 $19,155 $14,550 $14,550 $15,548 $63,803
2009 $17,236 $13,624 $13,640 $14,348 $58,848

Operating, General & Administrative (B)

2011 $4,335 $3,353 $3,318 $4,339 $15,345
2011 Adj. $4,335 $3,353 $3,318 $3,386 $14,392
2010 $4,191 $3,205 $3,195 $3,232 $13,823
2009 $4,031 $3,088 $3,141 $3,152 $13,411

Rent
2011 $192 $143 $141 $143 $619
2010 $191 $143 $148 $141 $623
2009 $191 $144 $146 $140 $621

Depreciation & Amortization

2011 $499 $374 $372 $393 $1,638
2010 $478 $368 $368 $386 $1,600
2009 $453 $348 $356 $368 $1,525

Goodwill Impairment Char ~e

2011 - - - - -
2010 - - - $18 $18
2009 - - $1,113 - $1,113

Operating Profit I (Loss) (B)

2011 $811 $488 $405 ($426) $1,278
2011 Adj. $811 $488 $405 $527 $2,231
2010 $723 $494 $406 $559 $2,182
2009 $844 $499 ($758) $506 $1,091

The Kroger Co. Page 56

 Q1 Q2 I Q3 I Q4 I Year I
(16 weeks) (12 weeks) I (12 weeks) I (12 weeks) I (52 weeks) I
Interest Expense
2011 $138 $97 $99 $101 $435
2010 $132 $102 $103 $111 $448
2009 $163 $115 $105 $119 $502

Earnings I (Loss) Before Income Tax Expense (B)

2011 $673 $391 $306 ($526) $843
2011 Adj. $673 $391 $306 $427 $1,796·
2010 $591 $392 $303 $448 $1,734
2009 $681 $384 ($863) $387 $589

Income Tax Expense (B)

2011 $252 $108 $108 ($220) $247
2011 Adj. $252 $108 $108 $142 $609
2010 $216 $124 $96 $165 $601
2009 $250 $133 $13 $136 $532

Net Earnings I (Loss) Including Noncontrolling Interests (B)

2011 $421 $283 $198 ($306) $596
2011 Adj. $421 $283 $198 $285 $1,187
2010 $375 $268 $207 $283 $1,133
2009 $431 $251 ($876) $251 $57

Net Earnings I (Loss) Attributable to Noncontrolling Interests

2011 ($11 ) $2 $2 $1 ($6)
2010 $1 $6 $5 $5 $17
2009 ($4) ($4) ($1) ($4) ($13)

Net Earnings I (Loss) Attributable to The Kroger Co. (B)

2011 $432 $281 $196 ($307) $602
2011 Adj. $432 $281 $196 $284 $1,193
2010 $374 $262 I $202 $278 $1,116
2009 $435 $255 ($875) $255 $70

Net Earnings I (Loss) Attributable to The Kroger Co. Per Diluted Common Share
2011 $0.70 $0.46 $0.33 ($0.54) $1.01
2011 Adj. $0.70 $0.46 $0.33 $0.50 $2.00
2010 $0.58 $0.41 $0.32 $0.44 $1.74
2009 $0.66 $0.39 ($1.35) $0.39 $0.11

The Kroger Co. Page 57

Average Number of Common Shares Used in Diluted Calculation
2011 612 600 586 565 593
2010 645 640 636 631 638
2009 651 651 646 648 650

(A) Includes advertising, warehousing, and transportation.

(8) 2011 Adj. represents amounts excluding impact of 1-time pension consolidation
charge in Q4 2011.

Note: Certain per share amounts may not sum accurately due to rounding.

The Kroger Co. Page 58