SEGMENT REPORTING

12 Months Ended

Feb. 01, 2025

SEGMENT REPORTING

SEGMENT REPORTING

16. SEGMENT REPORTING

The Company operates supermarkets, multi-department stores and fulfillment centers throughout the United States. The Company’s retail operations, which represent 98% of the Company’s consolidated sales, are its only reportable segment. The retail operations’ segment revenues are predominately earned as consumer products are sold to customers in our stores, fuel centers and via the Company’s online platforms. The Company aggregates its operating divisions into one reportable segment due to the operating divisions having similar economic characteristics with similar long-term financial performance. In addition, the Company’s operating divisions offer customers similar products, have similar distribution methods, operate in similar regulatory environments, purchase the majority of the merchandise for retail sale from similar (and in many cases identical) vendors on a coordinated basis from a centralized location, serve similar types of customers, and are allocated capital from a centralized location. Operating divisions are organized primarily on a geographical basis so the operating division management team can be responsive to local needs of the operating division and can execute company strategic plans and initiatives throughout the locations in their operating division. This geographical separation is the primary differentiation between these retail operating divisions. The geographical basis of organization reflects how the business is managed and how the Company’s Chief Executive Officer, who acts as the Company’s chief operating decision maker (“CODM”), assesses performance internally. All of the Company’s operations are domestic.

The accounting policies of the retail operations segment are the same as those described in the summary of significant accounting policies in Note 1 to the Consolidated Financial Statements. The Company’s CODM assesses performance and allocates resources for the retail operations segment using segment FIFO earnings before net interest expense, income tax expense and depreciation and amortization (“EBITDA”). The Company defines FIFO EBITDA as EBITDA excluding the LIFO charge. The Company’s CODM also uses segment FIFO EBITDA to measure the operational effectiveness of the Company’s financial model, compare the performance of core operating results between periods, against budget and against competitors and evaluate whether to invest capital in the retail operations segment or in other parts of the Company, such as for share repurchases or dividend payments. The Company’s CODM is not provided asset information by reportable segment as asset information is provided to the CODM on a consolidated basis.

The following table presents the Company’s retail operations segment revenue, measure of segment profit or loss, significant segment expenses and reconciliation of retail operations segment FIFO EBITDA to consolidated net earnings before income tax expense and retail operations segment sales to consolidated sales for the fiscal years ended February 1, 2025, February 3, 2024 and January 28, 2023:

	2024		2023		2022
	(52 weeks)		(53 weeks)		(52 weeks)
Retail operations segment sales	$	143,947	$	145,701	$	143,751
Retail operations segment expenses:
Merchandise costs(1)		103,024		104,609		104,403
Expenses in gross(2)		8,655		8,813		8,062
Operating, general, and administrative		24,935		25,699		23,297
Rent		866		879		826
Retail operations segment FIFO EBITDA	$	6,467	$	5,701	$	7,163
Reconciliation of net earnings before income tax expense:
Retail operations segment FIFO EBITDA	$	6,467	$	5,701	$	7,163
Depreciation and amortization		(3,246)		(3,125)		(2,965)
LIFO charge		(95)		(113)		(626)
Other FIFO EBITDA(3)		723		633		554
Net interest expense		(450)		(441)		(535)
Non-service component of company-sponsored pension plan benefits		12		30		39
(Loss) gain on investments		(148)		151		(728)
Gain on the sale of business		79		—		—
Consolidated net earnings before income tax expense	$	3,342	$	2,836	$	2,902
Reconciliation of sales:
Retail operations segment sales	$	143,947	$	145,701	$	143,751
Other sales(3)		3,176		4,338		4,507
Consolidated sales	$	147,123	$	150,039	$	148,258

(1) Merchandise costs include product costs, net of discounts and allowances, and food production costs.

(2) Expenses in gross include advertising costs, warehousing costs, including receiving and inspection costs, and transportation costs.

(3) Other sales and other FIFO EBITDA primarily include other operating segments that are not part of the retail operations segment such as third-party media revenue, data analytic services, specialty pharmacy and in-store health clinics.