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Kroger eschews bonuses, looks to spend tax savings on employee training

Kroger Co. is considering multiple options for using its windfall from U.S. tax reform — but employee bonuses are not one of them.

Instead, the grocer is looking for ways to spend tax savings on employees that result in "a strong return" for the company, such as additional employee training, Chairman and CEO William Rodney McMullen said during a March 8 call with analysts to discuss the company's fiscal fourth-quarter and full-year 2017 results. The company expects a total tax benefit of about $400 million a year as a result of the Tax Cuts and Jobs Act, Executive VP and CFO J. Michael Schlotman said during the call.

"And for our associates, we are developing plans now to invest in long-term benefits, including education, wages and retirement," McMullen said, adding that the company wants "to provide more than a onetime award" to employees.

The Cincinnati-based grocer will make an announcement about its employee compensation plans "in the coming weeks," McMullen said.

Kroger's decision not to provide workers with a one-time bonus differs from the approach taken by other retailers. In January, Home Depot Inc. said it would pay bonuses of up to $1,000 to hourly employees, and Walmart Inc. said it would raise its hourly wage to $11. Both retailers attributed the moves to tax reform in the U.S. Off-price retailer Ross Stores Inc. said March 6 that it is lifting its wages to $11 per hour.

Kroger plans to divide its tax savings evenly between employees, its business and its shareholders, both executives confirmed during the March 8 call. The company has already planned to channel some of its tax savings to Restock Kroger, the grocer's plan to develop its digital infrastructure.