November 4, 2016
VIA EDGAR CORRESPONDENCE
William H. Thompson
Branch Chief
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, DC 20549
RE: The Kroger Co.
Form 10-K for the Fiscal Year Ended January 30, 2016, filed March 29, 2016, and
Form 8-K, filed June 16, 2016
File No. 1-303
Dear Mr. Thompson:
We submit this letter in response to the follow up comments from the Staff of the Division of Corporation Finance of the SEC, received by letter dated October 26, 2016, pertaining to the referenced Forms 10-K and 8-K. The Staff’s comments are reproduced below, followed by our responses.
Form 10-K for Fiscal Year Ended January 30, 2016
Notes to Consolidated Financial Statements
Note 1, Accounting Policies
Segments, page 46
1. We have reviewed your response to comment 1 as well as the additional information regarding your operating divisions provided supplementally on October 19, 2016. You indicate in your correspondence that operating divisions are organized around geographical areas. However, it appears C-Stores represent a separate operating division and, according to the Kroger fact book, C-Stores span 18 states. Likewise, it appears Fred Meyer Jewelers represents a separate operating division from the Fred Meyer stores operating division; yet Fred Meyer Jewelers tend to be housed within Fred Meyer store locations as well as shopping malls. It appears further elaboration in your proposed disclosures regarding the basis of organization of operating divisions/segments may be warranted. Please advise.
Kroger Response
We respectfully advise the Staff that our operating divisions are primarily organized around geographical areas, and on a limited basis, by store format. We do not believe the limited instances of operating divisions organized by store format are material for disclosure. C-Stores and Fred Meyer Jewelers are organized by store format and comprise approximately 3.9% and 0.3%, respectively, of our 2015 consolidated sales balance. We have evaluated our disclosures in light of the Staff’s comment and the requirements of ASC 280-10-50-21.a. In future Form 10-K filings, we will identify the basis of organization of our operating divisions, providing additional disclosure comparable to the following:
“Our operating divisions are organized primarily on a geographical basis so that the operating division management team can be responsive to local needs of the retail operating division and can execute company strategic plans and initiatives throughout the locations in their retail operating division. This geographical separation is the primary differentiation between these retail operating divisions.”
2. Please upload to EDGAR a copy of the tabular information regarding your operating divisions that you provided supplementally on October 19, 2016.
Kroger Response
We have included the tabular information regarding our operating divisions, which we provided supplementally on October 19, 2016, below and will upload to EDGAR via this response letter.
|
Operating Divisions |
|
Banner |
|
Operating Division President |
|
Executive Vice President |
|
Role |
|
Atlanta |
|
Kroger |
|
No(1) |
|
|
|
|
|
Central |
|
Kroger, Owen’s, Pay Less Super Markets |
|
No(1) |
|
|
|
|
|
Cincinnati |
|
Kroger |
|
No(1) |
|
|
|
|
|
Columbus |
|
Kroger |
|
No(1) |
|
|
|
|
|
C-Stores |
|
Kwik Shop, Loaf ‘N Jug, Quik Stop, Tom Thumb, Turkey Hill Minit Markets |
|
Yes |
|
J. Michael Scholtman |
|
Executive Vice President & Chief Financial Officer |
|
Dallas |
|
Kroger |
|
Yes |
|
Frederick J. Morganthall II |
|
Executive Vice President of Retail Operations |
|
Delta |
|
Kroger |
|
No(1) |
|
|
|
|
|
Dillon’s |
|
Dillon’s Food Stores, Gerbes Super Markets, Baker’s |
|
No(1) |
|
|
|
|
|
Food-4-Less |
|
Food 4 Less, Foods Co. |
|
Yes |
|
Frederick J. Morganthall II |
|
Executive Vice President of Retail Operations |
|
Fred Meyer |
|
Fred Meyer |
|
No(1) |
|
|
|
|
|
Fred Meyer Jewelers |
|
Fred Meyer Jewelers |
|
Yes |
|
J. Michael Scholtman |
|
Executive Vice President & Chief Financial Officer |
|
Fry’s |
|
Fry’s Food & Drug |
|
No(1) |
|
|
|
|
|
Harris Teeter |
|
Harris Teeter |
|
Yes |
|
Frederick J. Morganthall II |
|
Executive Vice President of Retail Operations |
|
Houston |
|
Kroger |
|
Yes |
|
Frederick J. Morganthall II |
|
Executive Vice President of Retail Operations |
|
Jay-C |
|
Jay C, Ruler Foods |
|
No(2) |
|
|
|
|
|
King Soopers |
|
King Soopers, City Market |
|
No(1) |
|
|
|
|
|
Louisville |
|
Kroger |
|
No(1) |
|
|
|
|
|
Michigan |
|
Kroger |
|
No(1) |
|
|
|
|
|
Mid-Atlantic |
|
Kroger |
|
No(1) |
|
|
|
|
|
Nashville |
|
Kroger |
|
No(1) |
|
|
|
|
|
Quality Food Center |
|
QFC |
|
No(1) |
|
|
|
|
|
Ralphs |
|
Ralphs |
|
No(1) |
|
|
|
|
|
Roundy’s |
|
Mariano’s, Pick ‘n Save, Copps, Metro Market |
|
Yes |
|
Frederick J. Morganthall II |
|
Executive Vice President of Retail Operations |
|
Smith’s |
|
Smith’s, Price Rite |
|
No(1) |
|
|
|
|
(1) - These divisions report to one of two Senior Vice Presidents. These Senior Vice Presidents report to Frederick J. Morganthall II (Executive Vice President of Retail Operations).
(2) - This division reports to a Vice President. The Vice President reports to W. Rodney McMullen (Chairman of the Board and Chief Executive Officer).
We acknowledge that:
· the company is responsible for the adequacy and accuracy of the disclosure in the filing;
· Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and
· the company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
If you have any questions or require any additional information regarding this matter, please contact me at (513) 762-4851.
|
|
Sincerely, |
|
|
|
|
|
/s/ Michael J. Schlotman |
cc: Robyn Manuel, Staff Accountant
W. Rodney McMullen
Christine S. Wheatley
M. Elizabeth Van Oflen
Dennis H. Hackett
Stacey M. Heiser