The Kroger Co. (KR) 12 Sep 242025 Q2 Earnings call transcript

Good morning, and welcome to The Kroger Co.

Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I'd now like to turn the conference over to Rob Quast, Senior Director, Investor Relations. Please go ahead.

Good morning. us Second joining Call. XXXX for you for Quarter Kroger's Earnings Thank Foley. am Chairman Interim McMullen; Todd Kroger's today Chief Chief Officer I by Rodney and joined Executive Officer, Financial and

you on business SEC your our remarks, factors on ongoing Before materially. Company basis no discussion that turn statements. our effect material we have to update A questions. prepared in want you contained an will and detailed now are caution After the filings. assumes that taking of is may Instructions] I such look forward to want a our results actual begin, Kroger call The to events [Operator We Rodney. today's will that or we over include obligation to I believe discussions information. to forward-looking statements predictions, many that the remind can differ

thank Good Rob. everyone, morning, you, today. Thank for and joining us you

provide powers an this Then of will I start merger of I'd to begin, outline our strategy, an advance we quarter our second our sharing topics discussion how by our and our sustainable go-to-market performance like results we drives Before highlight and continue And financial quarter. the will with update with Todd on for second I our will cover Albertsons. a our for to close value which finally, model morning. growth creation shareholders. long-term pending recap

to Turning quarter. our performance this

solid are our to results continue model. We delivering the financial strength our we and diversity strategy through and of execute

through seamless We of products, promotions compelling great affordable unique combination are prices experience. with all personalized positive on a driving and quality activity customer a

items built while through store economic for to continue to on as into pandemic, which This as trends at lower-priced our been other on elevating of execution, up customers' seeing to savings of budget-conscious more interest changes buying make customer reduction customer up segments the also meat, beginning on Customers and of essential to seeing month current enhanced customers now rewards. the beginning less cuts buying and then focusing especially the strong reflect second through And the stock the are customer essentials. progresses, The customers, the by are most well. are Budget-conscious purchasing excess but keeping the cautious focus we've rates we're true supporting now, personalized is as customers effect experience response, are excellent of and their groceries. Our during a ability quarter. Customers inflation we environment. they spending. In adjusting promotions, spend. more month discounts, the and including our fuel low offers higher continued our prices loyalty with for pressuring are

alternatives also point. portfolio noticeable multi-tiered at quality, lower expanding Our national price provides brands which on Brands to We our customers a products, are of while exceptional competing

increase by that loyalty share demonstrates model and low, prices long-term Our grow wallet. of we customer keeping consistently

While the competitive sustainably us that invest food-at-home industry competitors. in maintain key to remains competitive, allow and spreads with our model price drives value efficiencies

bringing are a a are how total store customer of and increase ourselves our Fresh. like the loyalty positioning and we this in experience, households Personalization life prices, lowering and another led customer our visits. we through visits. loyal increased led Mainstream customer customer Our leading cover we are long-term sales moving more more segment, consistent strategy, for of our and to of and to trends, up starting enhancing by growth customers go-to-market sales delivering growth. I'd with households, our our largest for quarter we execution. household including By now strategy proud Seamless. to strategy Fresh, pillars, quarter addition our an through In strong growth This Brands, another excellent associates go-to-market executed to with ladder

is a of & picked peak reflects to the grown Everyone Our every products. enables possible our freshness. only quality Field our freshness the trust through which one can source newest and with suppliers, This and Kroger that regionally promise farmers lines, customers promise the berries offers Vine, relationships freshest of strong purchase. commitment our for item Fresh they brands

We are customer this with the response initial line. pleased to very

price thoroughly aggressively year. with introduced tested purchased is to and differentiator products of and with Our Our brands, of value. our on sales quality. important national low-priced quality Smart Each our point we new to delivering Brands a for ultra of on More These budget. pantry sales earn growth Brands, XXX one of with staples our our products and customers a in portfolio is into led time. Across on of customers to that is we our business, essentials value exceptional opening quarter. Brands Way, categories spot no an enabling products innovative products need national this offer brand brands Our Brands value almost most. know us to are validated combination this than This its outpacing Our these at the already great the launching competing XX% new customer that during expanding households new growth shelves, are compromise

the for in second value. our quarter more Smart the meet Way We continued expanding to lineup customer needs

making on out, Brands be Our We refreshment to progress portfolio with refreshed later year. roll Brands this Our also more are of

respond customers new We these to to designs. are excited see our

meet and mix needs, As and expand are we portfolio, our customer we innovate profitability. driving within better the improving to

keeping us allow products, on grow manufacturing margins. own many our while we savings ability to example, customers our to our preserving plants lower as costs those make to of For pass

personalization. on update an is Next

better personalization value and and Our collect us capabilities, us deliver personalized and enable promotions. product more the data shelf enabled loyalty program recommendations enhance insights, which We to price. effective delivering promotions beyond to our

to unit industry. Boost, we program on our the greater paid membership supports compared result, personalization capabilities. a are promotions our lift generating As

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and Seamless. driven grew to turning increase both XX%, households in Digital Now sales traffic. an by

love digital we from app our customers ladder the into are or the households. move convert website up, This to households is using a and ways Centers. refrigerated volume drive focus Customers moving Customer and on-time Delivery also we grow. increased to purchases tell homes. Profitability Kroger e-commerce once simply as a making quarter, demand. loyalty means through digitally-engaged One our us Fulfillment many of led shopping to retail customers through remains Households Demand one which pickup we with growth convenience they stores media teams shop quarter. continues key very digitally because our who households loyal channels. in monetization the across provides of they opportunities. Delivery e-commerce our solutions are their growing us with strong important experience, sales our right to and again of most work This our are this customers our in delivery premium growth resulted and network, XX% showing these this

daily refining more teams to loyalty are shape well of Our improve and opportunities. growth areas weekly demand working strategy, as By as the improve we and customer go-to-market to delivery density. trade building creating hard are executing our

us First, to XX% with Kroger and a results led internal strong media businesses, which track more had with line in alternative profit year. growth keep than expectations quarter Precision in their by this on were deliver Marketing, growth

wellness. and Next is health

with to grocery are who be We to continue know pharmacy customers, customers, also area are spend us. our that loyal optimistic Kroger We of about more more business. this and

to and we disruption, pharmacy our period healthier of have a opportunity share. customers industry transformation grow lives going is the help unique While a through live and

to long growth. future the remain Over and and hard our we are teams term, the challenges confident position working industry navigate company for

of but last expectations, sales outpaced was internal the pressures year, GLP-X strong mix product to to a profitability During result behind as similar sales. expectations due quarter, internal specifically

to our the We a results GLP-Xs expect the impact similar have on year. remainder for of

help are Our of half GLP-X the of the efforts now offset the in second and impact vaccine ramping some up should year.

associates. to Turning

fresh appreciate again best-in-class experience, is to Our our road friendly quarter. this and achieving delivering map our full we associates commitment and customer a for

customer our We commitment to this choice. experience are be through employer of an improved facilitating

Best to are financial Inclusion take over Todd making score Work Disability this year. With great Index, the efforts turn Todd? supportive environment. through continuing by associate Kroger a see It to our fifth perfect quarter for investing Equality -- work it for with consecutive you and We Place to that, create now a by results. on I'll is second Inclusion to outstanding the achieving recognized in these XXXX Disability an to wages

good made to Kroger's investments model Rodney, second economic our Thanks, diversify uncertainty. morning, of resilience everyone. quarter are us as and our results to enabling reflect environment business the of an navigate

in sales momentum, Our results achieved take sales with quarter our I'll able you X.X%. through expectations, without to full with year growth we the the of half improving guidance. our our identical are results. We financial fuel reaffirm year of and our now second first are through line

and total positive sales were identical customer As metric Rodney increases increased mentioned supported households earlier, trends, customer including in several by visits. and our loyal

progress we by trends make encouraged unit favorable growth. are toward unit achieving as We to positive continue

a promotions that in wait part great strong, ecosystem delivery in been team's will completed our long-term pickup perfect XX% rate providing delivering times which saw quarter, relentless Pickup by with sales the growth customers vendor are we with and a in our led As our a rates, of of first both in reflects resulting we a support continue in strong, sales an appropriate commitment a XX%. with on to value. Digital time. has orders, exceptional and are customer be reduction on fill an to solutions. had deliver for strong XX% This focus increased quarter, is fill important and and demand improvement seamless digital growing wait within experience, orders XXX% continues

of to times we in productivity These pickup batching experience are cost lead With AI-enabled offer all an serve. in improvements improvement in help and able our resulting advancements by routing, accompanied and being dynamic customer to in enhancements, the X-hour in are stores.

would our I trends a second rates. like quarter Turning about little OG&A gross to spend talking and time margin margins. today in to more

consistent with balance and shareholders. This rate OG&A term, cost-saving there is our way to to deliver prices Brands returning for margin takes are can the that associate slightly us to through alternative XXXX and value lower higher Though wages model margins businesses fiscal expectation operating be well these a deliver we investments time. margins measures long consistently well. quarter-to-quarter, true flexibility initiatives profit that over as year-over-year designed ensure As to in business you Our our in gross over as in in expanding all growth as the rates and productivity, and we know, model long-term puts from is and gives

excluding slightly year, positive, negative. FIFO rate slightly OG&A the gross be now For will be which fuel, to the full without by margin expect we rate, balanced fuel,

to due OG&A last quarter, was unfavorable during our as quarter. This favorable nonrecurring Conversely, fuel expectations, basis expectations to the fuel, and well several year slightly for items, FIFO excluding points rate, to the unfavorable points XX was gross quarter. as was our last XX and primarily excluding to basis the rate, charges ahead margin of adjustment year

Looking grocery competitive favorable primarily sales. in mix results. benefits, shrink at margin offset issue. FIFO being ability detail quarterly manage XX.X% Gross attributable gross helping margin by was reflects lower to rate, improve business, in product fuel, reflected sourcing on in team our significant result budgets. The our to they while The more from of price in increase challenging margin improvement The Our operations shrink and and margins. our including this the Brands, ongoing lower partially was Kroger's excluding pharmacy work as their address customers

items, was liability in adjustment nonrecurring rate, by and costs While the theft of driven financial continued incentive an historical investments severity to due mitigate excluding costs, wages, to impact. The work a increase partially OG&A to still the we and and on initiatives. plan shrink in increase hurricane in and with execution general by including basis, quarter, further related high we claims, offset fuel expenses the cost this pleased savings to are associate increased of costs do have result remains

quarter During LIFO same recorded $XX for was of $XXX operating million. the year. of a second profit compared million Adjusted charge to last FIFO $X charge we quarter, a million, the

relations. frequently. diluted to provide but am update cycling Inflation to builds the total wanted outpacing last relatively topic year to flat profitability be about sales half, the Our adjusted brief It the first in update to fuel the loyalty like gallon the margins associates Plus an quarter quarter, this our labor on compared our results, was last on consistent expect compared slightly stronger our to quarter EPS gallon customers a X%, a expectations trending per to quarter. value Fuel in but offering and $X.XX part year. I led a In a decline second X% which program through second the is from the was since start by with cents around inflation, second provide year. I'd a last share, and important of to I basis. industry per is save brief another compared to Kroger now on way we of increased proposition. is of year. Fuel asked stronger will be

quarter, second in labor and division our covering Less to UFCW meat reach grocery Anderson is right stores, Shelbyville the Southern New and we in agreements Columbus bargain. for Michigan, working warehouse, Valley than more the to Food Fred During clerks, California, for associates. X with agreement Bakery, XX collectively clerks Market associates new warehouse Central ratified Peoria Michigan Kroger our West XX,XXX Portland. We Mid-Atlantic stores, respect associates' and at stores Meyer stores an

UFCW. with for Negotiations week, chose X last continue to we open this constructive stores the remain dialogue these before week. at strike and Associates work days to returning to

business growing for way balance to profitable our security the our ensure customers with underlines growing goal in associates. company untenable. and with more associates, a and proposals and not in keeping supporting We are to groceries coming the do local table are also job helps jobs that that affordable and are They It to model for advancement create investing unions. opportunities of more communicating a

generation range merger in ratio enabling the X.X Kroger's deleverage cash our adjusted an our and total strong EBITDA Albertsons. operating us second of is adjusted the part X.X. anticipation X.XX, consistent to continues to is cash end debt model Consistent compared free through our of flow of to to net flow target generate flow. to free to Turning important cash was results. quarter, Kroger with of At of

flexibility value. to Our growth strengthened us sheet enhance pursue provides balance and shareholder

to a to and disciplined do investment-grade take increasing approval We're rating, prioritizing business continue strength deploying dividend of opportunities in our business. and shareholders our to capital highest deliver returns of for we We approach so. The cash to us capital, ability are invest our subject when to flow the growth maintaining Board to shareholders. gives growth over that excess free the time solid to returning debt able committed the our strengthen our

capital are We store year. allocating projects and to more this minor our major

of billion position raising store our guidance $X.X for a full year we Our last our capital projects teams have amount expenditures towards completed our from completing excellent later to us of job a which $X.X And dividend billion this, the year XXXX range of second free range second guidance as projects in by we in this we to cash flow, on billion. schedule. $X.X to the also the free of billion reflecting $X.X flow Based does of time, to our XX%, and adjusted creates of projects earlier capacity completed half cash to quarterly strong to affect ability quarter, are double change our year guidance. In not at cash to generate XXXX raised the our flow. work year confidence CapEx will the strength ahead have almost an done reflect as grow we year-to-date, the XXXX. opening It this in had well. To

reinstated to additional a consecutive grown dividend annual year XXXX, since growth XX.X% of Our the color quarterly outlook of some rest the being for marked rate and provide this year. the XXth in compounded has on now increases. I'd dividend like our at

are encouraged performance the We with that line of were expectations. our which half led by to year, the in results first through

X.XX% us give the sales confidence expect end identical of now the the fuel guidance. the be Our our fuel first without low X.XX%. full year of identical in to of solid quarters to year sales to through results We X sales raise range without

year cautiously are food half for to the continue and optimistic customers essentials. prioritizing about outlook the expect sales second and We our of

grocery, economic the and fuel in and navigate engagement, model various including provide value. with and profit and us drive strength spending we our are We of current that have pressures, expect shareholder businesses enables components where The customer designed by model, we merchandising unit is how environment wellness, volumes. to create our of health alternative us to flexibility to an enhance developed improve customer plans spending constrained

the we As of rest are to reaffirming guidance. I'll full year Rodney. a result, call now our the back turn

Todd. Thanks,

merger briefly like our Albertsons. speak Before for I pending about to it I'd up Q&A, open with

of incredible I is while has like It and and and strengths progress, and teams both and laser-focused my Kroger day-to-day strengths our continues preparing even exciting running forward to associates the a complementary for First, are on long our serving transition their have to our a better of appreciation combining customers for day commitment. the X. see been seamless and also It ensuring done we provide experience. customers excellent operations an for from our the look would Albertsons to these associates customers express organizations, journey, and an job associates merger. work Integration business, our to to

of expected notes, the mandatory of offering successful the senior proceeds for to A portion closing special preparation, fund recently to part well the is a consideration As contingent offering of unsecured as Albertsons for for not Kroger of an with offering cash redemption merger merger our portion as of the upon net this launched billion exchange does close. new merger notes merger. subject proceeds proposed of the the the a if a $XX.X

at buy facts Every are Stores, restaurants. of they preliminary with to at making range injunction are they retail eat brick-and-mortar. how to digitally the competitors in and wide their eat Amazon and and more on groceries. the day, from we where our decisions Dollar its competitive where shop shop the to industry They FTC They be a continues to Costco nears and and conclusion, of strengths our position. The to we trial customers As shop. the know confident

customers, future. provide we will look As bringing the life. meaningful we position of strength and of said we before, closing outcome the to merger measurable I our the it to are is commitments forward and the a trials, Regardless optimistic to across Kroger and for operating from these benefits communities and of because have associates committed country, remain about

Our model ever, sustainable diverse business provides and value us our than to creation drive growth. is more multiple ways with

We shareholders. With your our morning. litigation, that, Todd the attractive be that questions are in free delivering drive in taking merger and look us business strong Because and will not we forward are allows cash our to invest on questions. we returns this for taking I flow to

for [Operator of Kelly Wells first today question comes Fargo. Our from Instructions] Ed

seeing what talk you are mean half you about concern the the increased competitive backdrop, the the been as guidance are plans your raise standpoint? across a industry. then and There's think the rising about I And gross around you a competitive just what promotional promotions Can year? today. bit of from margin you back did

So believe you what's around you thoughts just it But and going certainly seems there promotional manage on out your can like it. plans.

If you promotions was much because are there obviously, back And during would were COVID, promotions supply getting the say chains tremendous I normal. look, pressure. less under to pretty

doing The that we say grow -- their for the other would we're thing well as partners promotions the we that more those they're tonnage. doing are effective as and trying the support of view we are on CPG increasing to ones some are

you for, now. feel we overall, to gross good which the our years doing of about year in mix are cost helping I changes outlined, investment think, and balance the close been If reductions XX Todd that at, we've continued look as pricing, and balancing and

comes Kelly from next Our BMO. from Bania question

how included that really here? some Just the next couple the profitability and digital But a is on kind half you can wanted factors of was just general gross years forward into bit of and Is your the you strong, margin? gross out in category? quite back you It a And digital to look mix there. of help understand in more impacting as update dive us margin. called really little on just

to, glad Kelly. right. you're We Yes, Yes.

to the about relatively into talked quarter in our little the expectation went margins year, year-over-year. expectations that second we As in flat. we included And an was a of bit the be for increase

on out, So quarter growth had Our the Our even like some saw It's quite brands a expectations. great a national And tremendous the while we Brands, sales above there and helped seeing actually, had our outpaced that -- but in shrink results. since shrink in of we it on we quarter. we've of been positive top Brands, drive we looked a year-over-year that called that, meaningfully also, strength

So still as of on see was little a to do lot -- work that go-forward called it than exciting out, was a bit But better a our some, to expectations, do for we therefore, to so basis. really we and which the favorable [ now a year, year for of were to balance margins the the be basis. year-over-year up full expect on be ] slightly there

want space? from standpoint, profitability digital anything add you if a So that in Rodney, to

Yes, comments. I'll just a of couple --

We make to progress. continue

you to about The make or the years, at X accountable look would still with we're pretty for you see they seamless, ourselves at actually into that progress, X engages over is when we overall look physically that. significant that's ecosystem special If doing the and next thing we a go opportunity customer hold us that building, stores. the

they sometimes They up. pharmacy. in delivery, do do also they other aspects, pick Sometimes become engaging members, in Boost becoming loyal more

of out excited business you gross store. years, or in the over media are continued that and about significantly that different ever next we've as So and is sold margins we margin the anything potential the supermarket helps the look that in than the progress. Obviously, X X the very

John Partners. next comes Guggenheim from question Our of Heinbockel

there bottom reductions, media been losses, how line moderating digital of the on greater for Between in than and years? areas the proactive so, to other a benefit this cost flows This business? versus amount the P&L through the should the And Anders benefits growth reinvestment John. is of much if into recent of Myhre expect incremental have we

time. it out an things through create able Rodney we and business. improvements call programs question. cost that the invest you model over we've to that of examples out as we've that productivity to important past being value Yes. some of overall that in about of in use the to our alluded called enhancement talked the you part Great the The That's great are margin things as the of improvements back well business it. some that that realized

the reinvesting a that, history way grows that operating long in profit a time. back rate slightly in of have our over and time, taking it over business value We

able the investments the that top So time. as we we balance we're the over with get bottom drives grow from as the those, that line, to line benefits

I it's TSR continue good customers. and move our model that invest That a TSR model a prices in assumes always alternative to our X% grow invest think year. we businesses, to in long-term wages, to profit Yes, continue for XX% is that long-term reminder continue to lower

As you tremendous come then generate stock. from we that, know, to there's insights cash fortunately, that happen back for for time a accretion And of once of to We over free the merger happens, would of time incremental growth of will buying give amount happens, more because expect into. flow. the the business as the a merger that obviously, merger period we'll once more opposed

next comes Leah of Sachs. question from Jordan Goldman Our

for on could the in been especially investment you? you're area know your seeing interested share any you in quarter, if market on trends of that's color big in Seeing specifically in what a as comment and Fresh I

Yes.

Overall, the you would balance they at If forward, improvement be okay continue overall, Fresh where that see the our we are. about we're I center see throughout trends, if feel store. and we But would we expect to of you stronger to look, year. look going improvement, say would the than we --

areas of we're where So it's one those satisfied. not

which also, strong as growth progress gaining strong and the are as household always future leads We loyal to well, in well. past, growth household

year share what the excited the which of next incrementally about because the see and for and trends we balance more as on year So okay I we we're we We're well. storing see would where also helps market we adding well, as say where are. that are feel where

Our next Simeon comes question from of Stanley. Gutman Morgan

how and look reflects comp second and difference second the quarter it slightly you like you're the piece, looks in I between a if units changing than but inflation guiding It how that inflation? heard to, the at this. consensus. better the first, half, Two-parter, the is curious guidance

part can think flat stays, environment, -- you're trying is, dollars or stay next low roughly core keep same do second -- environment comps. backdrop? you and this single-digit But flat the we business grow and very this in margin low in and not the you're the year, EBIT if The this to way share you improve if spend know you in I

Simeon. Good question, Yes.

start with end taking our as for year, me in points basis I We bottom of XX top saw X.XX points, basis the that that take update end differences range range, the sales to up that off the thought the was the Let you from did XX guidance was of process points. think the low but kept around really table. -- And our at basis to comp. the end

into was still hitting about you disinflation that to and the we we of navigating the that a that kind early uncertainty. year, If think year, were quite there and make was sure us bit last of where in came year wanted through

similar of through back it's about back the certainly went of the thought we the expectations inflation at as then. and for was that X%-ish half, go first very the really, half year a half year. the low that's way through Our as we we the on our played the was it And to the And time we first in would QX out year. the throughout consistently be backdrop point view expected that are that as of year, we would grow the sales our

on say expectations bit. we that to by of the sales to encouraged and a to that and fact inflation the which little progress unit that the half unit the making side, a the contribution a the the to hasn't expect trend I think about we to alluded against So trends we we're the space encouraged the our really a be still would sales we talked environment back negative that on standpoint, we've see that growth both whole be in continue part continue backdrop were the but flow. From changed lot, little that by of and for year. there will be Rodney

expect are continue units. Yes, see seeing we to on units. to would We progress on progress

end if seeing the on then our you strong. ask, the of budget. really I really the first holidays You business of that's the what constrained being the is, get is mentioned month, we're thing strong, -- in but people when of now, because earlier, to right weaker they're a the are didn't And month, and it

quarter, in we're than better far little third tracking were in second So bit a the quarter. the we where

is So all the believe we programs -- we connection. making doing improved we're fundamentally,

relative would question a Your of on to start relative made comments where our about we XXXX. position we've earlier just XXXX, really we long-term just model sharing also we the us merger, well. I those would update to for business to and factors I be the it's to and XXXX, still -- as merger to are expect integration completed say to Obviously, would where I would early would the and need apply in of and the a merger guidance

thanks, So for question. Simeon, the

Our Montani of from ISI. comes next question Evercore Michael

the to with come and/or margin on seems that costs parse EBIT again? you in there's particular, the just that up could or that, understand up guide I wanted even a there's up if you OG&A certain give us It behind stable if back if drivers for year. wouldn't bit shrink, quantify And compares little half slightly to in of a the favorable confidence, relation that coming you onetime could that out is implying the

do, Yes. We'll Michael.

shrink margin we year-over-year. would caution about saw given will shrink lot those will be back gross we call that high be And the expect balance But little be on to our to we a slightly trend OG&A, view of year the we on of will I half Great slightly year-over-year. again, there. And we've a our costs the on trends we're as do annual that in year, the the but we is is to are still unfavorable be out. in talked this. issue the come favorable second right. bit to And the at results quarter, for that earlier. out. We out talked about You're about, have saw look they history relative been shrink, work we And where that the mentioned really That excited there. reasonably do. There as

drive continues to and So it. our that work team space to continues in

have You have can't a data a you until point. trend

costs... of year. Relative some about we're so opportunities optimistic cautiously we're but of other where for And to of shrink to excited we're for balance at, kind the the the see the

shrink, at additional our might shrink is might on we've you quarters. of you Fresh our business, meaningful over one made up, everyone several that that move improving Michael, -- find you helpful progress side look if Before

technology, you job process-oriented. when But our been to retail as tremendous other and couldn't done the by things, using it. it's the shrink. really with That's Fresh on center subject organized changes processes, look but theft, AI have store not at there's side teams a crime improving nice and see much Now you of

Todd, talk about the now, go and of you other let So some I'll stuff.

one we color, the in did that little that. costs the our through. side, Hurricane a bit type that to of it expectations, driven Obviously, some items. little Talking that. was -- worse Yes. Great related came appreciate second in main a see bit nonrecurring why of are was cost there The I quarter Beryl event part on some than was to relative

the the we've year, The second, about talked and well. less being We've impact of expectations. think than OG&A seen bit do that what year-over-year than second on of talked we've incentive little a as in little half this. an past a for our have We the will higher our about bit

couple those in half. the think to I things of of second examples that continue don't are a expect So we the

Our Kenneth next JPMorgan. comes of Goldman question from

bit in this I but and usually, numbers little light deeper correlated, PPI changed. a in that at into And X now, have came wanted they're rates of a dig perfectly inflation, clip CPI They're correlated. is somewhat increasing faster than not the PPI right food morning, just out to CPI. the

your how sense about is PPI it's that, get how think to inflation? for of to then that than fact with good the not need a proxy. budget-conscious we reconcile proxy that on growth is just PPI wanted much but and to to perfect So pass balancing appeal continue so desire do I all that consumers, know to somewhat a that of faster a the GM you for so with Balance growing when I the CPI? was

Yes.

in is it certain stable. based any estimating as a As it's we it's probably balance it we reasonably time, along then increase are are -- we but it's we'll market. you've parts of on be the permanent Part PPI all a to mean, blip, will being And I is short-term something as difficult where then think we to the mentioned, trying period you're if manage what's as as is the on seeing If cost pass going always fast inflation now -- can. commodity-driven. of try going that we And to of that pieces.

you be we If look still range price in the said have inflation we'll close. of of X CPGs certainly out us that. Over that in increases do see And pretty would in around find we kind we of advance it up overall happening, that obviously, be don't where different terms the to that's of us already see shared it because that causing see line with much be will time, X%. anything we think than

home meal. that move restaurants X/X inflation is and at food for we of to other away food back home getting on cost beginning And at thing meal at out from from is because a you home a home. meaningfully we can seeing are customers than about of going prepare higher see food are The to the

So we bit that is little on well. I you of beginning that want know, as don't to anything else something see a add inflation? Todd, are to

you're on. Rodney. No, right Thanks,

next comes question Rupesh from Oppenheimer. Parikh from Our

CapEx, So range year. this first on so for higher

growth you're think should normal this between and I think later I want EPS get then week of if So forward. cadence the as sense a of sure giving terms if secondly, in a how of to QX this more clarity we as level lapping year. you're going spend know just about the QX XXrd any not about to And of

Yes. color, Rupesh. Great

as customers. On the to projects serve hard really be open opportunity the about able We've working as to CapEx, these yes, get we to can take to I storing we it. quickly think talked been

higher, And next late in be shifting bit what spend early CapEx in so create too. -- been to you year's open have our early help 'XX, late that's early, saw construction projects early to a might little process can 'XX so 'XX, 'XX pull capacity into us we year-to-date from going some to

the should time. to lift strong see execute capital we'll given in think I in plan then our cash over be in that, the spend flow think our I So a business, continue if we're what able to

seeing versus to store open as up lot later investing, to year we're And a easier that budget it's a earlier as well. performance we're And we're good well. the in expansion remodel or -- money in year new the the operationally,

that And we -- quarter than we half, back But as compare think balance think the guiding quarters behind then par a for balance out where slightly talking to -- with results landed comment, landed the year. year, probably right when first that's where we've year-over-year the bit your Yes, trend the the where out Rupesh. the EPS that, half half ahead probably we third slightly first XX-week for to, thought. well. be XX, our will quarter of XX for year to on quarter rest the were landed expected of of the and And first of but on is do we play how been probably fourth a basis half played Within little you differently the will in it -- the first of the where we our the given in expected. where sorry, the kind we reaffirming it we of actual

from UBS. comes Our of Lasser next question Michael

for Mark It's on Michael morning. this Lasser Carden

trade seeing that's middle changes And are some talked and cohorts, in of did customers when facing. additional see highlight you that more you cohorts? accelerated also down become pronounced? in the the you income are your some So budget income pressures above kinds this behavior of and about of XQ to What

the beginning term holidays. throughout And it it's than celebrating to on at be aggressive I the as It's the before, we're year, and continue people month or more the whatever mentioned end Yes. month. seeing of the -- of the is right

is important are of to -- aren't one changes of think I Now many to us. beneficial the changes those those remember things always that's

about eating a and products at things they'll at because think more smaller for us. people from us moving you as buy customers' typically Brands, beneficial those that's we some If they to Our changing home, buy at of cooking if segments, well. look restaurant that's for So and packages good will

of look, last the those months, you promotional things month. But with all all offers when what say, I pronounced as get things really things. -- times at make changing been it's toward it's over the of are your few we different been approach, the the month customers, the end throughout. of So those and But obviously, would connection your that you you're more

to it on ago a product entry to without to family. having we was that trying addressing we're coming, we to on product a that, saw as because I saw we we've introduced more we X.X meal that and we add a a probably that. But eating years said as customers can able along, to was especially all coming was going X have that customer, the and do reason overall, everything in budget. on point be years for ago, are continue item help price a be and proactive customer That compromising trend aggressive So much strain, us, Way under Smart say be the to our or and to tremendous why an great want

customer experiencing, And and connecting trying the with is that. customer the so to making to the support we're changes changes customer is the far, well

particular people their to to to for everything what going they in them we are, situation feel support help you do where try terms of So and we're on can is.

from Our Bank Ohmes next America. of question comes of Robert

for you. wage OG&A in where also, even Todd, half the on called we liability some gave the the back Maybe, back for -- half. versus -- a Kroger line general guys get year, how you the little say, claims. the front Can color is you Maybe the And out already half? on pressure of more

an quarter. the that and in that only back this get some If second You're or issue retailer we quarter pressure was much is half? in to that -- how not the a the out pressure call

the be great will unfavorable No, call second to guidance saw to in is we slightly again, year now our where ago. year quarter, out. Yes. a we OG&A Relative the second what given half were on

as I the beyond be the our -- year. of that, half will but so trends And expected second think in

probably collective XX% we've One time, pressure. a in at But wages pressure You talk is our our on about in of those. wages thing are keep to in so any point agreements, of because wage bargaining locked bargaining got in, our of XXX-or-so wage come agreement. collective many mind through

are up have negotiate. we of constantly or X/X each maybe We year that X/X those that

perspective that those most guidance because those have we're where are of there at wage expectations a into to year. we out known from the and going So reflects us the

averages of at. And to rates, There's at, on When least The lens is a X we're incident history. we're comment that low incident our rate pieces piece we're results are liability. phenomenal. where record are kind of much industry very company OSHA through territory claims. actually, modern even it the the in really general below at Your at where as GL there, look you in

higher. number what was as incidents extremely about of work teams the we're the that from manage the cost relative time And we seeing were claim through being the standpoint of the do and around the we the to these to so cost much claims. What average and that some analysis this our going excited of to were we settle claims saw

pressure to claims. more environment those on average there, cost more the we're out that's Given settle seeing and the

to And so wise it evaluated trend, in it. we that thought was that outstanding as had what space, given update we for we reserves

to in those job place more comfortable down. that think, types mitigating be a we'll and strategies I trying place, now of put to need to be expect able the to But I and did, claims in with be and has past have announces continue in cost of of the we to into more to half effective of have the we variety keeping in the that where We put to year. done nice that items think a average don't us recur those back

And to half -- time. like able and a in I have good the in we've to you Todd the skill that over look other talking next would expect reductions that as out forward is, developed cost a comment OG&A skill second comment on One year identify we'll about that's being well. feel would to we also we was Robby, as add

we've better less good The a done store to think store able find to forward. to have job still to to where the operate And made other be it's labor our teams process and going have thing those we changes progress, of we with nice a run. simplify one plenty continuing of get that opportunity is on but

appreciate really question. I the So

from Our Northcoast Chuck Cerankosky next comes from Research. question

range put where Rodney, factors wider when the pressure sort seems you consumers. at the growth are you're at mentioned also competitors the economic difficult have pressure nontraditional sales you on channel. putting of as to be what -- on But to the consumers, look of a strengths accelerate it challenges, compare trying you Can those headwinds supermarket of the Kroger? you sales and

felt changes. supporting not ever figured them. And it's continue we've the and changes still good increase you Costco offering in And of The nontraditional out, to a obviously, competitors, really those when at it and Amazon could And I to say one basic you where, things your need in the to them make we against it's you and and is for that that but has Walmart -- it's litany, need think look customer to about successful go those if you've I do how terms change would made, change. trend. been XX-year you on we of you be how continue and good, do customers' the those on to

making that's away a home. away home be And we that. in a change. some the in continuing on continuing good staying promotion, wages, invest with feel about have profit reason food because on food And more so our compete. those the customer ability we from alternative continually food would why to to we invested no half reason the money much food seamless a growth share perspective, shouldn't and up of invest We'll So -- we is hope connected spent competitor over we've see It's things able and of stronger time, away of with to why on mix. to but to get from

there's look we and had it large Brands as the Brands manage Our is at feel which well. whatever confident helps think because opportunity even strong Our And so and you the stronger that's in pressure customer support -- to a quarter. under in have moving of If parts. with business, our it the We far, economic that lot a obviously or fortunately, there's that, things ability deal or we a economic pressure like

wouldn't those feel far, I you comfortable far those seeing, ability with mean, things on depression, a a different to in would so that if I But changes. so I answer. -- or had confident the deal So on our we we're give

next question Our Telsey comes from Group. from Feldman Joe Advisory

guys really bit going about which are could wanted able because I'm little so inventory units? I prices because just a that? ask is thinking how share more almost you've -- And forward. you good just was fewer you levels it forward? shape. have it down, what lower wondering going level, think, down that that? come guys been about a Maybe bit it I drove of the is to year-over-year, the to which you inventory Was and Is down around color be little a inventory X%,

some Great on the Yes. And of question, Joe. I you think keys. hit

laser-focused And a right need, a we're it's sure think is our don't we're little strong on what and bit good tension steward less variety for -- part having being been is capital customers is our working our average that balancing together. I there seeing about that in an it -- And making working item a go of of an cost but have too shelf capital stock inflation, less. of relative talk working management. it's always we customers capital. sure important those the between both part capital. we having so flow of our of cost It's much things. making working and But also that's to generation, cash the Inventory, very it's of so we the we're have

of year-over-year for and right I is we're so what make seeing to in the combination our you're stock sheet inflation think And item, relative cost per working management the of sure the level capital customers. balance on lower

we further remarks. no At take questions hand so for further will today, Rodney any I'll to for this time, back

a our take to the like to we and comments for program was than all our and in our questions. moment couple awarded have of of XXXX, all we you recipients I'd we totaling your Kroger And These Thanks, thank listening as to X,XXX we Scholars. a conclude more call, we've acknowledge like Since XXXX almost launched our to Kroger -- in, associates. always a million scholarships, a $X their Alex, to you fun And volunteering on XXX to children with Scholars share everyone to beginning, extracurricular to always And know, before everyone. academic many them. based of like associates great you will a to everyone selected our I for help us activities, well, thanks season little winners on year. And work including talk this able holiday to but their service, know broad joining and experience. always much. of today. as I And activities, very it's December thank were it's early, be range be before civic congratulations hope and it to criteria, and we education has performance

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