Kroger says leverage ratio to stay high for remainder of fiscal 2018

By Devika Patel

Knoxville, Tenn., Sept. 13 – Kroger Co. expects its leverage ratio will remain above its targeted range of 2.3x to 2.5x while it pays off borrowings from its recent acquisition of Home Chef, a Chicago-based private meal kit company, and its investment in British online grocer Ocado.

Kroger’s net total debt to adjusted EBITDA ratio, on a 52-week basis, is 2.59x.

“Our net total debt to adjusted EBITDA ratio target range is 2.3x to 2.5x,” executive vice president and chief financial officer J. Michael Schlotman said on the company’s second quarter ended Aug. 18 earnings conference call on Thursday.

“For the remainder of fiscal 2018, we expect our leverage ratio to remain slightly above the target range, primarily due to increased borrowings to fund the company’s merger with Home Chef and investments in Ocado.

“Kroger remains committed to bringing the leverage ratio back into the target range,” Schlotman said.

In May, the company announced it had negotiated a partnership agreement with Ocado to enhance Kroger’s digital and robotics capabilities and expand its online shopping coverage area.

The company’s cash balance as of Aug. 18, 2018, was $316 million, compared to $319 million as of Aug. 12, 2017.

Kroger is a Cincinnati-based grocery retailer.

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