The Kroger Co.
Transcription
The Kroger Co.
The Kroger Co. 2,640 Supermarkets SUPERMARKETS STORE FORMATS Kroger’s philosophy is to operate several formats within the same market, making it convenient for a Customer to shop at any one of our stores at prices that Customers can trust for any type of trip, whether for dinner tonight or for all their shopping needs for the month, and to reward our Customers for doing this. 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 household mix, purchasing patterns, and shopping behaviors. We are addressing Customer diversity through our multiple formats and product selection. Expanding our formats and their elements also allows us to further leverage Kroger’s existing distribution and manufacturing facilities. At year-end 2013, Kroger operated 2,640 supermarkets classified under the four primary formats listed in the table below. Store Formats Combination Stores Multi-Department Stores Marketplace Stores Price Impact Stores Total Supermarkets The Kroger Co. # of Stores 2,256 127 86 171 2,640 % of Store Base 85% 5% 3% 7% 100% Page 8 Combination Store Baker’s City Market Dillons Food Stores Fry’s Food & Drug Gerbes Super Markets Banners Harris Teeter Jay C King Soopers Kroger Owen’s Pay Less Super Markets QFC Ralphs Scott’s Smith’s The combination store (combo) is Kroger’s primary format. The combo strategy is to offer Customers the advantages of one-stop shopping in convenient locations for a wide selection of consumables. Combo stores feature not only a complete supermarket, but most include pharmacies; service bakeries, delis, seafood, meat, and floral shops; expanded general merchandise; natural food and organic selections; pet centers; and highquality fresh items such as seafood and organic produce. Many include a supermarket fuel center. Combination stores that were opened during the last four years average 77,000 square feet and required an average investment of $16-18 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 and specialty food retailers. In certain markets, we have also introduced our “Fresh Fare” approach to our combo stores. These stores are similar to combo stores but operate in more upscale trade areas. The perishable department presentation, an elegant décor package, expanded wine selection, enhanced services, and overall product variety separate a Fresh Fare store from a traditional combination store. At the end of 2013, we characterized 77 of our combo stores as Fresh Fare locations. The Kroger Co. Page 9 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 $32 million, including real estate. Fred Meyer is unique – no other store is quite like it. Freddy’s® (as our Customers like to call us) is not a big box store, hypermarket, supercenter, warehouse store, discounter, or department store. Instead, it is a collection of several specialty stores seamlessly woven together under one roof: A great Food Store, with Fresh Produce, Meat & Seafood, Deli, Bakery, Wine, Cheese, Natural Choices™, Health & Beauty and Pharmacy. A complete Apparel Store for Women, Men, Kids, Juniors and Young Men, plus Shoes, Accessories and Cosmetics. A store for your Home – inside and out - featuring Home Décor, Housewares, Bed & Bath, Furniture, Hardware & Paint, Garden & Outdoor Living, Electronics, Sports & Auto and Toys. Most of the 127 Fred Meyer locations in Alaska, Idaho, Oregon and Washington also include a Fred Meyer Jewelers® (the nation’s 3rd largest fine jewelers based on store count), and 92 have Fred Meyer Fuel Centers. Fred Meyer stores are further differentiated from many competitors by our strong lineup of famous brands, including: adidas®, Apple®, Ashley®, Bose®, Calphalon®, Carhartt®, Champion®, Columbia Sportswear®, Converse®, Cuisinart®, Dockers®, Dyson®, Jockey®, Keurig®, KitchenAid®, Krups®, Levi’s®, Nike®, Quiksilver®, Samsung®, Skechers®, Sony®, Under Armour ®, Vans® and Vintage by Nine West®. Freddy’s® is the original – and still the best – One-Stop Shopping Store. Customers often tell us the convenience of finding so many great fresh tastes plus fashion, quality brands, low prices and fast, friendly service in one easy stop is what separates Fred Meyer from all those other stores! The Kroger Co. Page 10 Marketplace Stores Banners Dillons Marketplace Fry’s Marketplace King Soopers Marketplace Kroger 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, and offer full-service grocery, pharmacy and health & beauty care departments as well as an expanded perishable food offering and a general merchandise area that includes home goods, toys, and may include furniture or apparel. 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 $20-22 million, including real estate. At the end of 2013, we operated 86 Marketplace stores. The Kroger Co. Page 11 Price Impact Stores Food 4 Less Foods Co Banners Ruler Foods PriceRite Our price impact warehouse stores operate under the Food 4 Less®, Foods Co® , Ruler and PriceRite banners, offering a “no frills, low cost” warehouse format and featuring everyday low prices 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 “carnicería” 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 171 price impact stores under the Food 4 Less® banner in southern California, Nevada, Illinois, and Indiana, the Foods Co® banner in central and northern California, the PriceRite banner in New Mexico. Ruler Foods stores are operated by the Jay C® division. The average store size is 18,000 square feet and requires an average investment of $2.5 million. These stores offer basic grocery items featuring everyday low prices, with a high concentration of corporate brand products, in a low cost structure environment. The Kroger Co. Page 12 GEOGRAPHY & MARKETS At the end of fiscal 2013, The Kroger Co. (either directly or through its subsidiaries) operated 2,640 supermarkets in 34 states and the District of Columbia 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. State California Ohio Texas Georgia North Carolina Indiana Colorado Michigan Tennessee Arizona Washington Kentucky Virginia Kansas Illinois Oregon Nevada Utah West Virginia Arkansas Mississippi South Carolina New Mexico Missouri Idaho Alaska Nebraska Alabama Maryland Wyoming Louisiana Montana Delaware Washington, D.C. Florida TOTAL The Kroger Co. Banners Food 4 Less, Foods Co, Ralphs Kroger, Kroger Marketplace Kroger, Kroger Marketplace Kroger, Harris Teeter Kroger, Harris Teeter Food 4 Less, Jay C, Kroger, Kroger Marketplace, Owen’s, Pay Less Super Markets, Scott’s, Ruler Foods City Market, King Soopers, King Soopers Marketplace Kroger Kroger, Kroger Marketplace, Harris Teeter Fry’s Food & Drug, Fry’s Marketplace, Smith’s Fred Meyer, QFC Kroger, Kroger Marketplace Kroger, Harris Teeter Dillons Food Stores, Dillons Marketplace Food 4 Less, Kroger Fred Meyer, QFC Food 4 Less, Smith’s City Market, Smith’s, Smith’s Marketplace Kroger Kroger, Kroger Marketplace Kroger Kroger, Harris Teeter City Market, Price Rite, Smith’s Dillons Food Stores, Gerbes Super Markets, Kroger Fred Meyer, Smith’s Fred Meyer Baker’s, Food 4 Less Kroger Harris Teeter City Market, King Soopers, Smith’s Kroger Smith’s Harris Teeter Harris Teeter Harris Teeter Y/E 2013 345 213 202 171 158 Y/E 2012 356 212 203 171 14 148 145 139 129 127 123 120 110 102 66 59 56 53 50 44 34 34 30 26 15 15 11 11 11 10 9 8 4 3 3 1 2,640 139 131 122 123 122 110 61 66 55 56 54 50 45 34 35 10 26 15 15 11 11 11 N/A 9 8 4 N/A N/A N/A 2,424 Page 13 Operating Divisions Kroger’s operating structure is a balance between our corporate office in Cincinnati, Ohio and our 20 supermarket operating divisions. This balance keeps merchandising decisions closest to the Customer while achieving 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 20 supermarket operating divisions are: Division Ralphs Harris Teeter Kroger Southwest Kroger Atlanta Food 4 Less King Soopers/City Market Kroger Central Fred Meyer Stores Smith’s Kroger Michigan Kroger Columbus Kroger Mid-Atlantic Fry’s Kroger Delta Kroger Cincinnati Kroger Louisville Kroger Nashville Dillon Stores Quality Food Centers (QFC) Jay C TOTAL Headquarters Los Angeles, CA Charlotte, NC Houston, TX Atlanta, GA Los Angeles, CA Denver, CO Indianapolis, IN Portland, OR Salt Lake City, UT Novi, MI Columbus, OH Roanoke, VA Phoenix, AZ Memphis, TN Cincinnati, OH Louisville, KY Nashville, TN Hutchinson, KS Seattle, WA Seymour, IN # Stores 229 227 210 184 146 143 136 132 132 127 123 121 119 114 109 98 90 88 66 46 2,640 Major Markets Including Harris Teeter® markets, at year-end 2013 Kroger operated stores in 49 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 41 of those major markets. The Kroger Co. Page 14 Thirty-nine of Kroger’s 49 major markets are located among the nation’s top 100 Metropolitan Statistical Areas (MSAs) ranked by population. Major Markets (9 or More Stores) Market 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 Los Angeles CA Atlanta GA Houston TX Phoenix AZ Seattle WA Detroit MI Denver CO Cincinnati OH Columbus OH Dallas TX Charlotte NC Riverside CA Nashville TN Louisville KY Indianapolis IN Las Vegas Memphis TN Portland OR Raleigh NC San Diego CA Washington, DC Fort Worth TX Wichita KS Salt Lake City UT Dayton OH Little Rock AR Virginia Beach VA Toledo OH Tucson AZ Lexington KY Chicago IL Durham NC Richmond VA Albuquerque NM Roanoke VA Knoxville TN Charleston SC Jackson MS Fort Wayne IN Flint MI Charleston WV Greensboro-High Point Peoria IL Colorado Springs CO Oxnard CA Omaha NE Wilmington NC Savannah GA Ogden UT TOTAL The Kroger Co. # Stores 221 127 98 91 88 85 75 73 60 57 54 51 50 46 45 44 42 42 36 34 34 29 26 26 23 21 21 19 19 18 16 16 16 16 14 14 13 13 12 12 12 11 11 11 11 10 10 9 9 1,891 Division #1 or #2 Ralphs/Food 4 Less Atlanta Southwest Fry’s QFC/Fred Meyer Michigan King Soopers Cincinnati Columbus Southwest Harris Teeter Ralphs/Food 4 Less Nashville/Harris Teeter Louisville/Jay C Central Smith’s/Food 4 Less Delta Fred Meyer/QFC Harris Teeter/Mid-Atlantic Ralphs/Food 4 Less Harris Teeter Southwest Dillon Stores Smith’s Cincinnati Delta Harris Teeter/Mid-Atlantic Columbus Fry’s Louisville Food 4 Less Harris Teeter/Mid-Atlantic Mid-Atlantic Smith’s Mid-Atlantic Nashville Harris Teeter Delta Central Michigan Mid-Atlantic Harris Teeter Central King Soopers Ralphs/Food 4 Less Dillon Stores Harris Teeter Atlanta Smith’s Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes No Yes Yes Yes No Yes No Yes Yes Yes No Yes Yes Yes Yes No Yes Yes Yes No No Yes Yes 41 Major Competitors Trader Joes Publix HEB Walmart SC Safeway Meijer Walmart SC Walmart SC Giant Eagle Walmart SC Walmart SC Stater Bros. Walmart SC Walmart SC Walmart SC Walmart SC Walmart SC Safeway Food Lion Vons Giant Walmart SC Walmart SC Walmart SC Walmart SC Walmart SC FoodLion Walmart SC Safeway Walmart SC Jewel Food Lion Walmart SC Walmart SC Walmart SC Walmart SC Walmart SC Walmart SC Walmart SC Meijer Walmart SC Walmart SC Walmart SC Walmart SC Vons Hy-Vee Walmart SC Walmart SC Walmart SC Albertsons Walmart SC Walmart SC Safeway Costco CVS Safeway Meijer Walmart SC Tom Thumb Food Lion Albertsons Publix Walgreens Marsh Albertsons Walgreens Winco Walmart SC Albertsons Safeway Albertsons Sam’s Club Harmons Meijer Walgreens Walmart SC Meijer Walmart SC Save A Lot Walmart SC Walmart SC Food Lion Albertsons Food Lion Food City Publix Walgreens Meijer Walmart SC Rite Aid Food Lion Schnuck's Safeway Albertsons Walmart SC Food Lion Publix Winco Page 15 Secondary Markets (3 – 8 Stores) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 Market Augusta GA Boulder CO Decatur/Huntsville AL Winston Salem NC Macon GA Anchorage AK Ann Arbor MI Boise-Nampa ID Fort Collins-Loveland CO Lansing MI Topeka KS Charlottesville VA Evansville IN Huntington WV Lynchburg VA Provo-Orem UT Wheeling WV Grand Junction CO Greeley CO Saginaw MI San Francisco-Oakland CA Springfield OH Wierton WV Baltimore-Towson MD Blacksburg VA Bloomington IN Clarksville TN/Hopkinsville KY Decatur IL Eugene-Springfield OR Lafayette IN Lawrence KS Monroe MI Myrtle Beach SC Parkersburg WV Prescott AZ Sacramento-Arden CA Shreveport LA South Bend IN Springfield MO Terre Haute IN Anderson IN Bloomington IL Bowling Green KY Columbia MO Columbia SC Elkhart IN Greenville NC Jackson, TN Lake Charles LA Manhattan KS Mansfield OH Morgantown WV Owensboro KY Spokane WA TOTAL The Kroger Co. # Stores 8 8 8 8 7 7 7 7 7 7 7 6 6 6 6 6 6 5 5 5 5 5 5 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 3 3 3 3 3 3 3 3 3 3 3 3 3 3 257 Division Atlanta King Soopers Nashville Harris Teeter Atlanta Fred Meyer Michigan Fred Meyer King Soopers Michigan Dillon Stores Harris Teeter/Mid-Atlantic JayC Mid-Atlantic Mid-Atlantic Smith's Columbus King Soopers King Soopers Michigan Food 4 Less Cincinnati Columbus Harris Teeter Mid-Atlantic Central Nashville Central Fred Meyer Central Dillon Stores Michigan Atlanta Mid-Atlantic Fry's Food 4 Less Southwest Central Dillon Stores Central Central Central Nashville Dillon Stores Atlanta Central Harris Teeter Delta Southwest Dillon Stores Columbus Mid-Atlantic Louisville Fred Meyer #1 or #2 Yes Yes Yes No Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes No Yes Yes Yes Yes No Yes Yes Yes No Yes Yes No No No No Yes Yes Yes Yes No No No Yes Yes Yes Yes Yes Yes Yes No 40 Page 16 Kroger Operating Divisions (Year-End 2013) KROGER DIVISIONS/ Major MSAs # Stores ATLANTA Atlanta Savannah CENTRAL Indianapolis Fort Wayne Peoria CINCINNATI Cincinnati Dayton COLUMBUS Columbus Toledo DELTA Memphis Little Rock Jackson DILLON STORES Wichita Omaha FOOD 4 LESS Los Angeles Riverside Chicago Las Vegas San Diego FRED MEYER Portland Seattle FRY’S Phoenix Tucson HARRIS TEETER Charlotte Washington DC Raleigh-Cary Charleston SC Virginia Beach Greensboro-High Point Durham-Chapel Hill Wilmington 184 127 9 136 45 12 11 109 73 23 123 60 19 114 42 21 13 88 26 10 146 56 25 16 14 11 132 36 35 119 91 19 227 54 34 28 13 13 11 10 10 The Kroger Co. Total Square Feet (millions) 11.1 Combo Multi-Dept Marketplace Price Impact 183 - 1 - 7.4 134 - 2 - 7.7 96 - 13 - 7.7 116 - 7 - 6.1 111 - 3 - 4.7 82 - 5 1 8.3 - - - 146 20.4 5 127 - - 8.7 95 - 24 - 11.2 227 - - - Page 17 Kroger Operating Divisions (Year-End 2013) KROGER DIVISIONS/ Major MSAs # Stores JAY C Louisville KING SOOPERS Denver Colorado Springs LOUISVILLE Louisville Lexington MICHIGAN Detroit Flint MID-ATLANTIC Richmond Roanoke Charleston WV NASHVILLE Nashville Knoxville QFC Seattle Portland RALPHS Los Angeles Riverside San Diego Oxnard SMITH’S Las Vegas Salt Lake City Albuquerque Ogden SOUTHWEST Houston Dallas Fort Worth TOTAL 46 6 143 75 11 98 40 18 127 85 12 121 16 14 12 90 45 14 66 53 6 229 165 26 23 10 132 30 26 16 9 210 98 57 29 2,640 The Kroger Co. Total Square Feet (millions) 1.0 Combo Multi-Dept Marketplace Price Impact 23 - - 23 8.8 139 - 4 - 5.6 93 7.0 127 - - - 6.3 119 - 2 - 5.5 86 - 4 - 2.4 66 - - - 10.0 229 - - - 7.9 125 - 6 1 12.9 200 - 10 - 160.7 2,256 127 86 171 5 Page 18 MERGER & ACQUISITION STRATEGY As the supermarket industry continues to consolidate, Kroger reviews potential merger/acquisition candidates and carefully analyzes their potential to enhance shareholder value. Kroger’s merger/acquisition strategy focuses primarily on existing markets. Such “in-market” mergers/acquisitions have lower risk and generally produce a higher incremental return because they require little investment in overhead, advertising, and distribution. Mergers/Acquisitions Date Buehler Food Markets Scott’s Food & Pharmacy Farmer Jack Individual stores Individual stores April 2006 April 2007 June 2007 2007 2008 # Stores (A) 1 18 20 2 9 January 2010 7 March 2010 June 2010 April 2011 September 2011 September 2011 January 28, 2014 2 1 1 8 7 227 AWG Brookshires Albertsons Individual store Schnuck’s (supermarket) Schnuck’s (c-stores) Harris Teeter (A) Location Louisville KY Fort Wayne IN Detroit MI Various Various Topeka & Wichita, KS Jaskson, MS Ft. Worth, TX Bloomfield, IN Memphis, TN Memphis, TN Multiple Banner Change? Yes Underway Yes Yes Yes Yes Yes Yes Yes Yes Yes No Represents stores acquired. Kroger may not operate all. The Kroger Co. Page 19 CONVENIENCE STORES OVERVIEW Kroger operates five convenience store divisions (“C-Stores”) under the following banners: Kwik Shop®, Loaf ‘N Jug®, Quik Stop™, Tom Thumb™, and Turkey Hill® Minit Markets. At year-end 2013, Kroger’s 786 convenience stores spanned 19 states. Subsidiaries operated 703 of the convenience stores; 83 were operated through franchise agreements. In 2013, the convenience stores accounted for 5% of Kroger’s total sales. The CStores partner with the Supermarkets to enhance our Customer’s ability to earn and redeem fuel rewards. The C-Stores also offer Customers a variety of Kroger corporate brand products. GROWTH During 2013, we opened 4 convenience stores, relocated 5, and closed 4. The new stores range from 3,936 square feet to 7,745 square feet in size, typically located on parcels of one to two acres. The new stores generally have a large gasoline offering with six 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. Nearly all of our convenience stores offer 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 786 stores, 725 sell gasoline. During 2013, 75 stores received interior remodels and 49 received gasoline remodels. The Kroger Co. Page 20 STORE PROFILE Average store size at year-end was 2,887 square feet. Average weekly Customer count is approximately 6,177. The typical convenience store stocks approximately 2,800 items, with more than 74% 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 5% of non-gasoline sales for the 2013 FY. Gasoline sales represented approximately 75% of the Company’s total convenience store sales in 2013. # Stores Square Feet (000) C-Store Division States 2010 2011 2012 2013 2010 2011 2012 2013 Kwik Shop IA KS NE CO MT ND NE NM OK SD WY CA NV 124 125 125 126 371 366 377 387 174 174 169 170 519 511 503 511 106 103 103 102 256 248 248 242 AL FL MS TN 116 121 121 120 344 353 355 359 IN OH PA 264 268 268 268 736 756 760 770 784 791 786 786 2,226 2,234 2,243 2,269 Loaf ‘N Jug Quik Stop Tom Thumb Turkey Hill Minit Markets TOTAL The Kroger Co. Page 21 JEWELRY STORES With 320 fine jewelry stores in 30 states at the end of 2013, Kroger ranked as the third largest fine jewelry retailer in the nation based on store count. There are 176 jewelry locations inside our supermarkets (primarily in the Fred Meyer® multi-department stores) and 144 in shopping malls. During 2013, the jewelry stores produced 0.5% of Kroger’s total sales. STATE Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Idaho # STORES 1 11 2 3 9 4 5 2 11 12 STATE Illinois Indiana Georgia Kansas Kentucky Maryland Michigan Nevada New Jersey New York # STORES 3 6 1 4 8 12 11 1 14 15 STATE Ohio Oregon Pennsylvania Tennessee Texas Utah Virginia Washington West Virginia Wisconsin # STORES 13 52 27 6 10 11 1 59 2 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 1st strategy and positions itself as a “best in class” mainstream jeweler. The jewelry locations operate 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. The Kroger Co. Page 22