Inventories

6 Months Ended

Jun. 29, 2019

Inventory Disclosure [Abstract]

Inventories

INVENTORIES

The Company’s inventories, consisting mainly of food and food-related products, are primarily considered finished goods. Inventory costs include the purchase price of the product, freight costs to deliver it to the Company’s distribution facilities, and depreciation and labor related to processing facilities and equipment, and are net of certain cash or non-cash consideration received from vendors. The Company assesses the need for valuation allowances for slow-moving, excess and obsolete inventories by estimating the net recoverable value of such goods based upon inventory category, inventory age, specifically identified items, and overall economic conditions.

The Company records inventories at the lower of cost or market, using the last-in, first-out (“LIFO”) method. The base year values of beginning and ending inventories are determined using the inventory price index computation method. This “links” current costs to original costs in the base year when the Company adopted LIFO. At June 29, 2019 and December 29, 2018, LIFO reserves in the Company’s Consolidated Balance Sheets were $142 million and $130 million, respectively. As a result of changes in LIFO reserves, cost of goods sold increased $14 million and decreased $11 million for the 13 weeks ended June 29, 2019 and June 30, 2018, respectively, and increased $12 million and $8 million for the 26 weeks ended June 29, 2019 and June 30, 2018, respectively.