This article is interesting. Looks like Kroger changed to LIFO 6/2022 and it impacted their earnings too.
Inflation Puts Spotlight on Companies’ Use of Last-In, First-Out Accounting
Concerns about rising inflation and slowing growth are putting the spotlight on an accounting method U.S. companies use to lower their federal tax bill by inflating their costs, which also squeezes their quarterly earnings.
Companies including grocery chain Kroger Co. in recent weeks have said their use of last-in, first-out accounting, or LIFO, has increased costs and dented earnings.
Kroger said it expects to take a full-year LIFO charge of $300 million this year, compared with a $197 million LIFO charge during the prior year, due to higher inflation. The company raised its full-year earnings guidance, citing strong sales, but said higher LIFO-related costs will be a drag on earnings in the year ahead. ------------------------------------------------
Interesting that the article mentions UNFI and their change to LIFO.
United Natural Foods during the quarter ended April 30 reported a LIFO charge of $72 million, up from $5 million a year earlier, and earned $67 million, up 40% from a year earlier. Inventory rose 12%, to $2.6 billion. The company has no plans to change its accounting method, but said this month it revised its metric for adjusted earnings to exclude the impact of LIFO. Maybe should have seen this coming. Wonder if it works in reverse if/when inflation cools? |
