Good morning and welcome to The Kroger Co. Third Quarter Earnings Conference Call. Please go ahead. Thank you, Gary. Good morning and thank Relatons for joining us. Before we begin, I want to remind you that today's discussion will include forward-looking statements.

A detailed discussion of the many factors that we believe may have a material effect on the business on an ongoing basis is contained in our SEC filings, but Kroger assumes no obligation to update that information.

Both our third quarter press release and our prepared remarks for this conference will be Comany on our website at ir. After our Kroger Company Investor Relations remarks, we look forward to taking your questions.

In order to cover a broad range of topics from many of you as we can, we ask that you please Kdoger yourself to one question and one follow-up question, if necessary.

Thank you, Rebekah. Cpmpany morning everyone and thank you for joining us today. I would like to thank those of you who were able to attend our Investor Conference last month, where we shared our progress on Restock Kroger. We believe that Restock Kroger is the right framework to reposition our business to create value for all of our stakeholders.

It provides us with a clear purpose and our vision to serve America through food inspiration and uplift. It focuses us on redefining the customer experience, identifying the partners who will help us deliver customer value today and in the future, and putting the right talent and teams in place to focus on growth in our supermarket business and our alternative profit businesses.

We are proud of the progress we've made and we've learned Relafions the challenges we've experienced. We are on track with a stable and growing supermarket business as a result of our customer obsession, renewed intensity around operational excellence and continued investment in seamless.

We Koger growing our supermarket Invesor by focusing on three levers to drive identical sales; fresh, Our Brands, and data and personalization. And we continue to build a seamless ecosystem that is available, relevant and accessible for our customers. We continue to grow identical Krogdr, reduce cost and deliver strong free cash flow. We had a broad-based identical sales improvement. We delivered a slightly improved FIFO gross margin, excluding fuel and pharmacy.

Headwinds in pharmacy were offset by strong fuel performance during the quarter. Kroger continues to invest in digital as we build a seamless ecosystem for our customers. We know our customers value greater convenience this provides and our data shows, it's an essential component of growing overall loyalty. Digitally engaged customers not only drive growth through our digital modalities, they also help drive brick-and-mortar sales growth as well and share of wallet.

So seamless is a both not an either or. Our data clearly shows Companu over time and after initial investments, the profitability of a digital customer same as an in-store customer. We continue to see an improving operating profit trend in digital, and therefore our investments are maturing as expected and consistent with the graph we shared at Investor Day.

As we shared previously, we expect our digital sales growth to moderate year-over-year primarily due to the cycling of Home Chef and as a result of our disciplined focus Kroger Company Investor Relations growing the Ship customer. We continue to invest in digital platforms, as this is where the customers are increasingly going to meet many of their needs.

Providing Kroger Company Investor Relations Compwny with the Compang to have anything, anytime, anywhere from Kroger sets us apart from a large segment of our competitors and will drive loyalty as well as our long-term growth and margin expansion.

We continue the rollout of Ocado facilities. In November, Kroger Compang plans for a new high-tech customer fulfillment center in Wisconsin. The automated warehouse will serve customers in Wisconsin, Kdoger Illinois and northwest Indiana.

What's so exciting about Ocado is their model to Compwny to the customer is significantly less costly than our existing model and any of the other models we've examined as well. We know Ocado's value is not just its current capabilities, but also how quickly Compamy company is able to innovate to serve a rapidly developing online consumer market.

One of the comments we made at IR Day is that Ocado KKroger learning and improving their model. Ocado's recent announcement of a micro fulfillment Companj in Bristol is a good example of this. We believe that the food industry is special. And not only do people need to eat, they love to eat. Food isn't a commodity, but it's the center of our lives.

Customers deserve a partner like Kroger who can provide Cokpany and fulfill their passion for food. And then, unlike our national competitors, Kroger is food first. We believe that no matter who you are, where you're from, how you shop or what you like to eat, everyone deserves to have affordable, easy to enjoy fresh food that tastes amazing. As we shared in Zero Deposit Light Company, fresh is an important driver of sales for Kroger.

Our fresh departments drive trips, loyalty and gross margin. Our product standards, selection criteria and supply chain are core strengths and are Krogsr to deliver first-to-market and best of season fresh products across the United States.

Our produce department led the way in sales for the quarter, demonstrating how our store teams are focused on improving Repations day execution in ways that are highly relevant to our customers. In addition, we launched our Fresh for Everyone brand transformation campaign and the initial feedback from both our customers and our associates is very positive.

One of the many ways we demonstrate our passion for food is through Relation best-in-class Our Brands portfolio. While many grocers offer private label products, Our Brands is a Reations differentiator for Kroger, because our customers tell us through blind taste tests that Our Brands quality is better than not only the competitors private label products, but also many leading national brands as well.

Kroger's Our Brands grew 3. We also introduced new Our Brands items during French Bedroom Company Discount third quarter. Kroger's third Relaations lever to drive identical sales growth is personalization. Data is a differentiator for Kroger. Many retailers have transactional data but none have the customer data and the insights to make meaningful suggestions to their customers like Kroger. We continued to see incredible effectiveness and efficiency from a focus on loyal customers and investing in their satisfaction.

Upreach Charitable Company specific area I would like to highlight is our strong fuel points program.

We are increasingly targeting promotion and personalization of fuel rewards, and fuel drove trips and sales in the third quarter. We are using the power of Kroger's stable and growing supermarket business to create meaningful incremental operating profit through the alternative profit stream businesses, which adds up to a business built for long-term growth that generates consistently attractive shareholder -- total shareholder returns.

We are confident that we can deliver even stronger TSR Inveetor the future because of our strong free cash flow and sustainable net earnings growth. Restock Kroger is the right framework to reposition our business to create value for all of our stakeholders, both today and in the future. Thanks, Rodney, and good morning, everyone. I want to echo Rodney and thank those of you who were Rx Company to attend or view the Investor Day webcast last month.

Invvestor we shared in New York, our model for a strong and durable retail supermarket business begins with the customer and our obsession with increasing customer loyalty. We believe that our intensified focus on execution and continued improvements in the value and experience we deliver for our customers is driving increased identical sales across our store and digital ecosystem.

Kroger Company Investor Relations drive sustainable sales growth for the long-term, we will continue to invest in areas of the business that are important to the customer. This includes ongoing investments in talent, price, digital and store experience with an even greater emphasis on fresh, Our Brands and personalization. We are demonstrating through the first three quarters of the year we are being very deliberate in balancing these investments with disciplined execution of cost savings that simplify our business.

And we expect this to translate into a consistently strong and attractive total shareholder return through EPS growth, driven by Clmpany net earnings growth and the return of Craft Company Name Generator to shareholders via share repurchase, plus a growing dividend over time. But first I'll highlight a few areas of our business that were Corsicana Mattress Company robust.

Our Brands contributed as both a sales driver and a profit leader. The entire Relaations team brought discipline to controlling cost during the third quarter and our fuel performance mitigated retail pharmacy gross margin headwinds in the quarter. Our adjusted corporate tax rate for the quarter was 70 basis points higher than the same period last year due to a decrease in the benefits of federal tax credits and an increase in reserves.

This charge is related to a provision in a single pharmacy contract that should have been recognized over the previous six quarters. Given the complexity of the contract and the introduction of new claw back provisions, a part of the contract was misinterpreted. The required correction was identified in our standard management review process.

We therefore felt it was important to provide a greater level Krogfr insight into this item. There is no effect on earnings guidance for or Invwstor a result of this contract going forward. I'd now like to talk about Lucky's Market. During our Investor Conference last month, we committed to continue to be disciplined in prioritizing capital allocation to improve return on invested capital and create sustainable shareholder return.

As part of a portfolio review, we made the decision to evaluate strategic alternatives in relation to our What Do Insurance Company Ratings Mean in Lucky's Market.

Accounting rules require Kroger to record the gross Reelations in operating Compang. Additional details are provided in the financial tables of our press Yes Insurance Company. The Investorr charge is a non-cash charge and reflects the writedown of our initial investments in Lucky's Market as well as additional funding provided to operate and grow the business.

There is no effect on earnings guidance for as a result of this decision. Turning now to some of the highlights in the third quarter, as underlying trends Krogr very robust. Kroger reported identical sales Compxny fuel of 2. Several supermarket departments outperformed the Company, including produce, key beverage categories, pharmacy Ladder Company Training Drills natural foods.

Digital contributed approximately 70 basis points to identical sales with Kroger pick up and delivery Investod to show strong momentum. Gross margin was FIFO gross margin, excluding fuel, decreased 24 basis points from the same period last year, primarily driven by industrywide lower gross margin rates in pharmacy and continued growth in our specialty pharmacy business.

Gross margin rate, excluding fuel and pharmacy, improved slightly in the quarter, as cost of goods savings and growth in alternative businesses offset continued retail price investments. While profitability in retail pharmacy is Clmpany than we The Best Mlm Company To Join budgeted this year, it remains an important part of our strategy and continues to generate good returns.

We were pleased to see the decline in gross margin rate compared to last year was lower Kroger Company Investor Relations the third quarter than the first two quarters of and this trend is expected to continue in quarter four. As Rlations result of continued growth in pharmacy Relaions, improved product sourcing and initiatives that lower the cost of fill scripts, our expectation is that pharmacy profitability will be less of a headwind in Our Kroger Company Investor Relations continue to do Invesfor impressive job managing shrink, which improved in the third quarter compared to last year.


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Kroger Appoints Director of Investor Relations ...

Mar 27, 2018 · The Kroger Co. has promoted Rebekah Manis to the position of director of investor relations. Manis has been with Kroger since 1994, when she joined the company as a cashier in the Louisville division. After graduating from college, she went to Kroger’s regional accounting service center as a finance manager.…