The Kroger Co. (KR) 5 Dec 242025 Q3 Earnings call transcript

Good morning, and welcome to the Kroger Co.

Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I'd now like to turn the conference over to Robert Quast, Senior Director, Investor Relations. Please go ahead.

morning. Good joining Third for Call. XXXX for us you 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

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

range prepared to yourself many look forward as follow-up remarks, can, In of taking you our necessary. as order question ask one we question limit topics a please of if that you we from questions. After one broad and we to your to cover

call I will the turn now Rodney. over to

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

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

performance, model. engagement by results strong delivered versatility remains strong. of Turning our our performance. third Customer first We the our pharmacy digital and reflects sales led which quarter to

drove prices, experience, in customer Our growth our along personalized both products brand with low incredible convenient, and and total households. great seamless loyal quality offers through value shopping

are fresh make and celebrations special. XXXX, providing affordable last entered focused of holiday we we As that products the on quarter the quality,

macroeconomic current to continue habits factors. Customer spending adjusting

more households As inflation positive are are the Mainstream quickly. primary to feeling normalizes, and engagement customer shopping driver our their confident mainstream households more are our premium and patterns trends. returning pre-pandemic of

are overall us the sentiment which improving, year. holidays low, While for into and remains next consumer well expectations positions

term, budget-conscious remain economic macroeconomic to are said, under expect effects managing these pressure the some households improvement. interest had impact the customers take inflation of these and Spending households. households from a we near on as uncertainty. for longer benefits we Therefore, As rates have of it will larger higher feel multiyear

with value delivering Kroger is customers the commitment seeking. they provide are on to its long-standing

prices Digital to savings important offer XX% ways, digital helping for save customers multiple are that far offers, more multi-tier Our continues customers and and savings expanded more grow are has led engagement and in competitive with offers personalized Brands X% including customers. to fuel way so we this We an portfolio. and shelf year, loyalty clips rewards discounts, an deliver to Kroger

are for additional We to save. customers creating our always ways

the and people new for group quarter, to price Week, memorable per Thanksgiving, consecutive year a of of a a And $X by thanked our customers Appreciation person. bundle help lowered enjoy with meals celebrated that served customers third we great offering we Customer XX This less the Thanksgiving meal for our a than creating deals.

priorities strategy We to of the go-to-market a fresh, our appreciate fresh experience Personalization efforts our continued our elevate our key experience areas again quarter. this our friendly executing on strategy through life this Seamless. by of customer focus improving focused and are full and customer bringing We to brands, deliver on associates' to differentiated and

I our would now are we like how enhancing cover strategy. to go-to-market

as Kroger. fresh. Customers to Everyone a which our freshness. our supply Improvements starting in brand with end-to-end many of growth differentiator increasing our initiative days Fresh chain of strategy, for key are promise, for runways long fresh of seeing are strongly part is across for connect the We areas

bagged offer of has led are and more Customers produce freshness. to it now identical this than noticing For X salads of days than quarter. more customers X% example, sales in

constantly technology we experience to to our ways new even evaluate days better freshness fresh data an and apply provide more of customers. addition, and In for deliver

of implementation inventory, are These doing items ways resulting and insights this fresher provide on consistently us in One with bakery our labels the higher RFID levels. is we in-stock labels fresh greater embedded recent through of items. into

we in to locations We forward piloted have we encouraging more results, labels, stores. this including seen where RFID the have and sales look higher categories scaling and to

talk those back investments and we've significant I brands Brands. delivering are in and Turning would to Our investments value our like shareholders. made the to to customers about how step and both

exceed label offered private of creating national Several and the and why For untapped goal future match envisioned brands, industry phrase points. lower at we grocery years, would coined or our recognized growth products ago, recognition with of quality private label an for we years brands. products the the products our primary innovation, which a the in products is opportunity these where price

Smart optimize brands Guided needs want and brands cannot refining portfolio national brands shelf. offering played out Way, our on built national unique rounding we point important that on price plays vision, a successful that to our portfolio the attractive recognizable teams new and and an addition by at and love, brand, an focused product customers unique our every our in role opening in meeting providing our brand point. architecture distinct alternative price the ensure that brand of more multi-tiered each The fill. value to role Recently, and

equity the packaging, improving involved work and phase shopability. refreshing and next and The of brand designs enhancing quality reinforcing the

across growth. freshness, reinforce driving guarantee to a and Kroger branded Innovation are products. brand's long-standing remains placing labels we our of for our quality guarantees force our example, on For

to understand us differentiate items enables trends customer brands, from, by We both on consistently areas, ourselves to utilize help growth with that our loyalty. creating portfolio from increasing data brands a private destination organic our build demands and other This new including insights to and label introducing national customer multicultural. items meet focus and free innovation and

the Our for an we us supply, customers manufacturing to advantage savings pass important to and capabilities our develop products Kroger. and quality to allowing the continue unique while margins, With grow keeping a true the can ability our low, win-win will brands. while preserving and oversight be costs for customers to differentiated over

This will quarter, our more brands continued strong to deliver in results, detail. cover which financial Todd

Next, to Personalization.

traffic Our access program our that customers in experience. our Kroger turn rewards Plus loyal savings provides to to seamless and drive

deeper trends and grow As Kroger relevant insights effective us more more promotions gain the engaged, and Marketing recommendations. customers that become while data customer product deliver creating to enables into we Precision

level through addition program annual quarter, or this working we benefits. benefits new We Boost loyalty with are the of the announced to grow And Disney+, next Hulu of our streaming memberships. Boost, ESPN+

affordable us delivery. model stores and both one increase important an sales we Turning retail customers to our grew are customers sales model Boost well. as our shop of digital, digitally providing Increasing grew increased Digital ways are increasing and continues XX% channels. as delivery and important households who opportunities driven in Within loyal free an traffic. membership XX%, e-commerce the other and media is penetration, our with Seamless. for households is to at by in e-commerce outpace monetization penetration to are most

a model. becoming digital channels building As properties, results. our investing and larger enhancing creating our have network. we industry-leading our in is significant introducing an our pickup personalization in nearly capabilities, in more Over our both on it continues financial business a in investments impact delivery even priority to financial important out profitability delivery, decade, a automation, digital own our made to grows, and media Improving and network, particularly key distribution retail

we now experience While digital each that investments, of have significant a required customers these enjoy. our capabilities unique

value forward, the are we in-store. profitability will while efficiency Narrowing gap years. introducing to narrow gap and the several over drive next generate Moving help operating automation that helping create margin us between online volumes, new growing that committed will gains and benefits meaningful utilizing technology and shareholder

our we Precision profit go-to-market deliver more building solid Kroger continued are which loyalty, had strategy, increasing and growth executing significant another with businesses. profit quarter. creating most growth Marketing customer first, alternative from the our engagement businesses, alternative opportunities, to By

and lives health growing share the Next, opportunity of has unique a in as industry. the bigger industry role Kroger pharmacy transform, while continues to helping our play healthier live in wellness, to a patients

about healthier year, lives. live area quarter the in demonstrates of can and profitability profitably business customers performance and vaccines. this led our GLP-Xs this this grow its quarter are in to business of supports Sales growth we were last excited a ahead We both this and way that well by

and trust Kroger for season, in of growth vaccinate of them families start reflect to and flu Our the during in vaccinations. the year cold quarter the the their peak patient strong vaccines

year this our vaccine wellness teams versus in did building quarter ago. significantly an and year share excellent more health job and growing vaccines administrating capabilities, around Our a this awareness

pressures offset helped GLP-Xs. mix These from the product

loyal which leading across vaccine to important and customers more is as to scripts, Our these are become spend are the households store. efforts more patient new likely

We efforts priorities of our better a another their by experience, associates and we our the improvement full appreciate customer in retention. are excited for key experience leads of to elevate on Team to about friendly. customer delivering consistency continued fresh and quarter

benefits development opportunities. associate holistic Our as investments and enhancing focus experience as career a on in well wages reflects training, strategy, the and retention through including technology

quarter Todd through will to With Todd? third results. that, you I hand financial take our over it to

profitability reflect model pharmacy the results helped good Thanks, from our morning, lower quarter Rodney, strong fuel year strong that third we as cycled and ago. results offset results everyone. fuel a Kroger's durability with of

adjusted our ranges quarter our adjusted year profit As are and gives year, of we full of the this without model EPS deliver guidance. the identical us on on head we narrowing into The confidence to guidance. strength FIFO in the fuel, ability operating sales final our

couple through the by results, affected of our from like results. our third financial covering a would to financial start I walk I off that items quarter quarter Before

approximately lower $X we total sales during million to The last the of period business finalized million. quarter sale same year, going sale Kroger $XXX Pharmacy the forward. sales the third reduced approximately third compared for in First, quarter, Specialty and will annualized $XXX billion by our be the company

business. KSP was a low-margin

the increased administrative costs had margin sales. as general As of It sale a the result, of operating, operating a material Kroger's profit. gross business effect no both and rate on and

combined OG&A. a unfavorable events strike customers year-over-year the have basis, stocked on on in hurricane impact Together, of point on material profit. events. these on XX sales total as not did operating favorable Second, impact These basis and port approximately an had this a had season anticipation impact up a

We identical sales take fuel of you financial our through quarter now achieved I'll growth X.X%. third results. without

sales pharmacy without As Rodney customer total and identical We're the positive of sales. households. also loyal in metric by led continuation mentioned increases by strong trends, our including fuel earlier, were digital encouraged and

same the sales brand, in our to a are Customers growth for led mid-single-digit brands premium had brands products, but premium national strong at outpacing continue with most by Selection. Our time, quarter quarter, this again Private looking value. demand

Our an solution Private Selection customers perfect offering is quality by our a premium brand price. at attractive

a another These quality a brand customers' in the ability excellent meet digital for offering CFC breadth by Digital superior growth driven well fulfillment delivery experience and of on-time XX% glove in The customers double-digit and basket delivered our are of customer growth, value. a and as portfolio with in delivery. led increase growth items driven our white sales fresh results significant quarter as CFCs an by solutions, by increase size. demonstrate and the in-stocks, centers. to households trips was needs

as in quarter the identical We customers affected recalls the with in mind acted became by quickly as that results Head were the began of quarter. the third safety second soon without aware our of situation. Our fuel we sales Boar's

customers a are sales. is supplier Head our an important loyal driver deli with of that brand Boar's strategic

quarter their offset some headwind a term. unfavorable purchasing and sales for we expect take sales sales will category. result, favorable prior have in and the away customers near As the the remain largely The strike. this Head behavior, from this by Boar's the migrated to resume a some time to from those port temporarily hurricane effect impact from It customers to was

in compared rate excluding and Gross was increased lower margin by expectations. offset pharmacy price year partially Turning our to to to ability the brand's of of XX.X% and basis XX manage improve rate, budgets. margin was gross points sale primarily The margins. helping The to fuel, attributable Pharmacy, was of ahead Kroger's last FIFO performance Specialty margins. on shrink, their increase sales, and and customers while Kroger margin our being result lower reflected competitive

plan items, XX The adjustment of the Kroger the driven OG&A increased and execution increased by incentive Pharmacy excluding rate, of offset basis cost by sale fuel savings Specialty partially initiatives. points, continued and costs,

when demonstrating Excluding that fuel been to sale ID we and Specialty the leverage achieve fuel year-over-year, X%. sales OG&A Kroger sales our adjustment of our of rate can Pharmacy, our items, expenses without flat model would nearly to goal X% have long-term

part focus remain experience on our enhance model. technology This an utilizing possible which are cost These the simplification experience. savings focused initiatives, to customer our by impacting made initiatives and essential productivity and on the is relentless associate without of

launched we generative both in AI-powered tool, departments inventory new and manage quarter, tracking center This a developed store better sell-through through real-time which insights internally fresh us helps sales and shipments.

our teams sell-through, optimizing and and prioritize increase sales on enables margins. shelves This to freshness both

we enhance further plan AI on the into management. end-to-end platform by ahead, improved to forecasting inventory capabilities this and Looking extending

year. the increase a During adjusted of lower same third and $XX FIFO diluted Adjusted LIFO the we for expected compared was period to to X% year-over-year billion $X last an EPS charge year inflation. $X.XX last million $X.XX was share, quarter, of due operating recorded of charge per million a compared to profit

our of attributable Fuel lower per significantly average was customer per cents a profitability compared to Plus were result lower ago as quarter is an part gallons this important rewards and strategy. lower help margin. program year, a gallon. last Fuel of sold sales also retail year build Fuel fewer Fuel through Kroger behind our gallon meaningfully loyalty. price to

a remains remains it on quarter, in I around was topic to of a but second as wanted Inflation inflation third to X%. investors. interest compared for brief the provide the update down quarter many slightly

consistent expect We remain the to quarter. inflation in fourth

update to a I relations. provide would associates now and labor like brief on

clerks, California, Central Fred and new Streator retail associates. During Division, nearly for Co stores Northern ratified in meat Northern Foods covering the contract XX,XXX Missouri agreements Portland clerks, we Illinois all third the Dillons quarter, Meyer and Ottawa labor clerks, and Columbia

These in to associates. supporting unions a business proposals of right affordable that communicating in proposals profitable in are growing the our associates' with respect to that also job for that advancement not a and model balance We untenable. collectively way with We're security table and bargain. keeping and operating local investing ensures way to customers stand coming do for associates the business our opportunities groceries

for third in to is to flow end the adjusted was quarter, At business strong ratio generate growth. our to our Free to important the Turning flow. consistent Kroger net of to for EBITDA of invest part cash is model X.XX target range our X.X operating Kroger's debt cash of generation compared total X.X. to and flow results. enabling continues free us an adjusted cash

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

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

operating identical quarter After on now narrowing FIFO color of like would some adjusted third the adjusted ranges profit and I our outlook additional year. the to for guidance. rest delivering solid results, provide we're EPS without of fuel, the sales

it to rate for have and expect updated be tax adjusted guidance XX.X%. we effective our Additionally,

fuel We with trends X.X% midpoint range. to we year in the will quarter-to-date be of now to this expect be the for near X.X%, identical the sales range signaling of without

with line our the Our have favorable results identical slightly from season to vaccine fuel strike of strong for being effects sales largely without in QX year-to-date the expectations during with growth immunizations. hurricanes, been and port due the peak ahead the expectations

our with beginning forecast the quarter for are of year. expectations at fourth sales fuel consistent identical without Our the

remain into forecast due that expect benefits not the strong, quarter cycling identical for of sequentially fourth QX but are third weather quarter, QX to than our We the of to current sales partially built XXXX. from lower XXXX

per to in diluted of range to the adjusted billion and $X.X in expect billion is net profit share to be to operating expected adjusted range of We $X.X $X.XX. be the now $X.XX earnings FIFO

in business Looking next XXXX the plan. year, to of we are process finalizing our

to While growth deliver have many operating stand-alone on unknowns, still we we basis. Kroger expect do profit FIFO a

call, our quarter full earnings more detail. During outlook to fourth plan year we our in share XXXX

strong results, another quarter value deliver to of reflect happy resilience are model. the creation we closing, of In our which

model gives us returns in to value This wellness, businesses. to including shareholders. for remain and and and create which conditions our sustainable attractive levers, flexibility fuel our profit us multiple and any uncertain, health ways macroeconomic in we confidence has the environment, enable shareholder alternative ability While navigate grocery, generate

now will I the to Rodney. back call turn

Todd. Thanks,

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

of to appreciation customers like operations incredible the day-to-day would my and job express have a and while our I First, the an our and business our merger. for excellent been their associates It serving also has running preparing for long commitment. journey, associates done

who who both federal teams about a merger. special who courts, case like would benefits state thanks testified the and a litigation compelling and in the the supported associates meaningful extend measurable the to those the prepared and I to of

ensure associates is of better X. we and It an to ready transition Our the strengths teams from look complementary provide customers and our and are to Kroger even a to to see customers experience. combining with strengths exciting day these seamless for organizations, both forward Albertsons

the the regulatory strengths their shop. day, merger country. to and and range said brick-and-mortar. and they customers, look Dollar Stores at measurable to because to to these And customers forward The will remain the buy merger, are for it benefits challenges meaningful shop position. restaurants. of committed shop competitors continues be across groceries. we rulings bringing the remain decisions await from the associates where we know Amazon I've Costco life. confident for communities we wide As as in on And and to before, provide and They to digitally eat closing to for commitments competitive, industry the they where to to more our They court retail and a the Every at eat our and and of how we making facts we

a are position the the and trials, Regardless outcome from about our optimistic strength, operating of we of Kroger future. of is

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

sheet Our our to with invest cash business in strong provides ability and balance the strengthened free flow us shareholder value. and enhance

Todd look this will forward that, we not taking on and I litigation, questions the be merger are Because your morning. in we With to still questions. taking

Our first Gutman question for comes Simeon today from Stanley. Morgan of

question is the for XXXX. P&L on My

If core single-digit out on even you the looks potentially the the high costs, extra tough. some nicely nicely, fuel And pretty been and the big it lower that's lap really ones, out like growing profitability of and has and the pull environment pretty week then business EBIT percentage. is you merger-related mid-single, take despite

that mixing is characterization? you between first, the And So the fair have a alternative? thought way is and it the core would business

question, Simeon. Great for that. Thanks

think results a pharmacy. the pharmacy. were that's of only I the from very results pleased you've we fair on We're We that described coming in saw obviously business read how we've but seen particularly with happy inclusive it. not core

talk today. You about heard Rodney

So coming and lever were to business despite to giving quarter, and mix pleased the a the with around we see. that growth relative alternative to relatively I the from that what expected are headwind fuel have think that consistent we alternative continuing. The expectations us core growth core and the core we this profit business see business,

And so I think that as be going the balanced we those quarter. are -- continue into as to expected

which our Delivery, And the as and business profit knows, supermarket the is the And term on that brick-and-mortar Pickup businesses, flywheel business to whole there, than a engine very we're excited great opportunity. Seamless we everyone continue business the behind continuation about. longer And driving see higher that our and business, between meaningfully is business. alternative margins the

the business about, the core you And That's again, is helps call, part omnichannel, as in double-digit and Simeon. growth growth, and we growth you drive of the is digital an described. that, that when profit, important mix double-digit what in low Rodney. low right again a We alternative talked on which about saw at great growth Rodney business both our talk our that expected the

sure been like the is where and And may more premium end. this the have there income been Curious All premium made. has positively. about Rodney sounds a inflection more It today healthy. been one thought reading the if inflected little an I that's and I'm mainstream comment follow-up, same. mainstream the has fair. towards too comments not we about much if Lower the the talked a that's the in. felt lower year, on mainstream, your resilient

are much are know. the just things us than performed accumulation is did we telling better. driven to they certainly, affect other certainly with affected third much feel And and of customers under a that higher of better, on to second be customers mainstream that in them don't because connected budget inflation lot aspects they're more. have continue the and How a we interest the better the and The quarter. feeling us rates of They're of Yes. continue quarter and -- strain, how

don't other or cases, as on to the thing think inflation savings and those in have a many out than customer, -- of person things. is remember I many the important and that in little in house that's bit others. little starting always And careers that a those harder are things a physical assets they And affects obviously

comes from Oppenheimer. next Parikh Our question Rupesh of

So just to your going guidance. back

the lower the year. you So did full range profit to of operating the for range the end narrow

curious just that? driving So what's

let you I'll and... start Todd,

Yes. for tick the X been Rupesh, than part left, that's that we think in expectations. to When there narrow look midpoint our $X.X to variability down think wanted thinking to we've higher range less we is guidance with $X.X year. should you what sales the range what at thinking consistent on pretty I million, before. at had the be been I million of The a the try With quarter because

we're about all look was Rodney digital frankly, space, strong. we've particularly QX, how -- relative in to to that. growth about right about And been actually is one when that be QX vaccine the you the pharmacy and really there, think thinking we And we pleased. all of that's it expect talked I where at the really talked in the on year

for it pleased time. and that being were quarters that point paid really to vaccine see hard Super that, and at saw continue that throughout to vaccine season early we growth in business, that grow our the off in then Bowl But this We've key with been -- vaccines, working QX we year.

being where that we So that's expected. really what being guidance saw strong we QX QX and really

again, at thinking and look our side where really been that range the and narrow it for we've you took the top off of of consistent range about the We Rupesh, the midpoint the there. When it bottom guidance, a side, on nickel year. with is EPS pretty the side

we think in on. of range and that eye As things of keeping range about couple fourth that that key the some factors quarter, a the for we're an key

to comments. forward-looking is year it We One were just weather. There in our drove alluded a don't prepared forecast a that several weather meaningful And weather benefits. we ago basis. events some on

we magnitude tends is and towards one quarter us and So to volatile, could the fuel. would we And of range. that something be I fuel year, weather of number see in the end push then the that be And other events certainly, that fourth the year. think that seen pretty higher -- this this we've

from they were frankly, And with per where the fuel line from we're pretty to year. have the sequentially gallon cents gallon been periods. few trend last be in And consistent last pretty from quarter, really, in expectations we've over where a a performing trend fourth we and

variance have that the or could end bottom the range, either the we think respectively. us or towards I top positive lean fuel that of if So in negative, profitability,

it. but Todd just important said highlight I to this, think it's

that relative don't Todd Obviously, really, mentioned, side the budget quarter for storms there's the look what top just the where year, to been than be. the And third other we in tougher was some quarter we but stores. those you a thing know. major range expected we been it weather because fuel don't haven't the and at -- to in operate places storms, we that If

we And people affected home have restaurants. that's so to really a generally, going opposed eat it at us because as to So positive far. weather when hasn't

very my quick then And follow-up question.

Just well. Disney Boost on as added membership, you the the

you're Just with the you happy sign the guys that retention are seeing program? in that with overall,

it. that, if customers the it's guess, and say and rate I would And very the customers. potential for value score. is we're about we a I happy, an renewal have I thing a excited get more NPS high love incredible but high because

more is to educate it. So our customers job continue to on

deeper more going And really forward. the excited customers. So with connection about the opportunity overall

question. great So Thanks, Rupesh.

of Our comes Goldman next Sachs. Leah from question Jordan

for what inflation thinking you fourth the vendors, and are categories the it year, commentary on more add you as plan from seeing Thanks about on how if But with hearing how your thinking color across inflation quarter. you're morning those in into you're seeing you this partners? can about next and

QX the question. said, the a we No, less ago. expect early coming that But think QX, more see just played coming bit about this to where we little or next maybe been at still less it's which we for a out Maybe into in we great expected, a as that Maybe to Yes. disinflation we It's of expected. year. we we but to inflation little way stable crazy if think even under obviously, next were back think were about year, relative year. you X%. year, what relatively than year And had saw has out I a step slight

vendors, inflation. looking year, next see as slight the what to but again, As inflation might at we as it's macro we seeing with look both expect don't different to to next year at of see we're with a to And point, conversations early and well kind with tell. now inconsistent governmental still anything studies some right this really expansion or meaningfully of

Yes.

CPGs see more as a to time, And well. that aggressive little continuing over trade are be dollars. little inflation obviously bit affects a We on

to But some up improvement the been while, new produce on me. days there. for it like improving RFID know initiatives. Fresh of I so seems of is on you've tags I wanted follow see a Great. bakery working to your freshness some in within just great to

you the stores about of that today? Just wanted more the are many you think category? And over should your rollout to how time? How we have color degree of add there. it when lift seeing What

excited we're terms I excited early. The that early product it's We're the about and potential. little we job this testing -- in as easier. we be It's customers, to thing do. about initial be customer do for But associates result. enough it. us mentioned, what we it's their we happy fresher bit can the as with in too early the It's a much Well, are have to benefits the would able budget for And helping make too stay our sure say much our better. we're to of helping stock

And exciting. it's super

We focusing per at than still is. cost see would still Leah. continue excited is process areas what to will positive early work tag of we the potential. on the early in it down. results, But Thanks, store so of kind about on and higher look really to like, tag the to to opportunity we cost need the per other get The

next question comes of from JPMorgan. Ken Our Goldman

sort I the early doing I topic that Simeon's is up despite specifics, core as year. that talked question, any agree that I next when about there very bit any think and merger And predictable digital words, for it's too other you the being for about read single-digit unusual that and little appreciate just I'm the next numbers. out should range. headwinds steady in fuel tailwinds we cost and or and low asking fair to a and you follow inflation wanted not we underlying so well, of think were forth. directionally those the you mix to year? But and ex of consider the consistent on Are it's a business

would reasonably from having throw trying just of off year. to kind good for sense get you a what another I'm

be of of and algo your up, X%, to course. us will but longer-term profit much, tell operating that how didn't say X% is you did You kind

early which Yes. as you obviously, to And well. guidance the we're it would will the for too ruling merger, tell on awaiting specifics. affect be way And

X last third The a we And years. we In you more continue open will positive have think opened in talked the done, number standpoint, most that as from that that to expect years. know, we other of I year, more this it's we year open about actually stores about. excited than we've quarter, to or in several I stores the expanded it would guess stores. I'm we thing that, a And quarter in

they're we're creating of opened, happy and happy with of way terms that well. the with And so profitability the they're read stores volumes early as stores we've on customers, the far, in we're the the the connecting and

tailwind. where work to that lot online as continue whether So of shops continue to be really awesome to we're critical XX-year somebody in our would to or there. that we a obviously, make or to store, X- we have future to still with we that, And us -- there. hope over do continue indifferent to And on of a time, Seamless, and we'll effort would lot put be see a

I'll of In that's... that terms let can think -- of you Todd, you anything headwind,

a the in have about we sit it's our We've we a lot we today. us unusual momentum them spaces are good of business, have those. digital already. executing talked are in momentum things profit. creation I But of And model on and into or part It's areas is that year, our it's growth in our the pharmacy, and of on alternative can't our strength those lot what frankly, today, good think headwinds has of tailwinds of going as Ken. about optimistic next value here anything feeling the

standpoint, And a to price. We're to headwind going going to from in the continue invest invest business. in we're

we assume more view year be going to last it every hasn't that say before, Rodney and is competitive than changed. heard You've the

And continue by wages. to to we're them -- value And in invest and sure delivering shopping continue customers, investing so investing experience. we're committed their engaging make to price in we'll in to

in value just are use that through deliver to parts keep our the model of that value the those to as some They're invest of we're headwinds. the the we propositions, model all our our in moving. able business to So flywheel different

continue And dollars. about aggressive speaking price be investments, on to mentioned Okay. CPGs trade more bit you a little that then Rodney,

it's largest in last competitor your largest kind more those they -- see competitor of or from But food see agree price would retail competitor vendors. of not. in commentary more investments week week the key a had food how to that this Your judges we'll if retail like about or

be since more the are beneficially saying, don't will more sort happy your vendors play way want, tone, about private investment? you Or level content that, of I'm look, of for you'll customers sell out you, curious are known vendors you Rodney, your Investor always agnostic more you? has you that. of it been either whatever label. agnostic terms stand in with of just price to our just I've invest where -- sort with if and

in that, to If with bit willing CPGs more dollars to And really little term growth. lot not we a guess and of to benefit talked being tonnage. with there's long they're make both back us trade gets do I for on sure is cannot if be the growth I a long-term that comment -- us right Yes. the of customer the The gets that satisfied the access both. their good to CPGs, customer, at you it those tonnage partnering of for about. benefits look tonnage on believe aggressive

they of higher share brand. Brands, Our the national they to it, our Brands several find Our okay we profitability coming brand, points there's I repeat both rate if money. customers Because Brands, and the strong a a back quality have -- with CPGs what and high. no we're to on continue a customer Because that. to find is hundred is and than of willing for up have had once tries are what is incredibly And quarter. mentioned compromise The great Todd the give value is Our they basis

really the they Brands. opposed of when customer But want wins is something. customer at the to to end as Our decides the buy where they -- So what buy a run try day, buy it to we them forcing business to the

Ed Kelly Our Fargo. next Wells question of from comes

you've couple A gross front. had the the of about good margin -- on quarters margin. gross couple a Curious

spec don't into expected. think know, How gross than you thinking are to maybe like ex margin. pharma margin QX? divestiture. meant quarter and but And -- takes the about even sort that. talking And I year, this of I'm next outlook the give talk the around then I just you're not going it better And in like like was gross puts about for

came And it strong the that of key margin, excluding question, think other benefit of of piece Great in half you year-over-year margin -- growth outpacing in about, going Brands, brands, just expansion. -- we was Brands national growth Rodney about Our it part hit our gross what solid and that thinking talked about I was what divestiture. them, Rodney Our the of about is KSP. in to sales always on and well was But we of continue a quarter a it, -- layers really Yes. We Ed. both was a highlighted have talking result to with drive

saw another the And quarter. what we second had very certainly saw then in and so that's we third shrink again similar to nice in quarter, the what

progress got are but on us helped shrink in there, space we've making really we're cautiously optimistic the that progress we the third. So making on the

pull some KSP, look relatively As excluding think think the overall Reflecting fourth, be -- probably you slightly we we'll that be to the in to that think I flat fourth. probably of out, I on we'll when relative Brands we on KSP, little I the relatively things I puts like over may QX. be bit relatively but be favorable, think we whatnot, Again, a and in if in year-over-year margins the index takes. overall, Our flat but consistent favorable and we'll

on a pieces helping I gross totally Todd the said. add agree also margin pieces. that's of everything big And smaller should said continue. would that couple Todd with I

to Fresh continue look product our continues you some more at grow value-added to and to as if we progress there, transportation and well. and continues So customer the make buy warehouse costs,

things talked that So to help in Todd mix addition those that are things on about.

it And down is need And you at rejected? about deal Rodney, else do prudent And would deal. simply capital? feel or How to have do transformational? more you. one's about be double to on patience and for the you quick more it, what their a reward for transformational you Kroger's for on of follow-up. Or This just painted if hunt it just shareholders is Albertsons kind return position talked a with but something you

great a it's Yes, question.

probably capacity we use transformational have, would have. that If would else that we you look at the be balance sheet the balance would nothing that there's sheet capacity that

I know find next the be would So that trying Albertsons. don't to what's we there out

As don't you of was we've said we've has to reasons it, make need Kroger and one proud our business we made that of always what and successful, done. know you that just do that to sure been always mergers the

there business able and we The will a able ton We're people we continue Albertsons provide value happen, super be it we'll career be go to doesn't additional our excited to believe better opportunities value. the grow But on. add potential, security about of and and support communities. create for if will customers giving and to and

make get at position are and continue of we do chase the not always a we But is we you will that of grow to only As one we're it something. to makes sense, to ways won't when to those the ways know, something try sure a chasing look always Mergers we where and business. growing in business. merger having we

So great Ed. question, and thanks,

from comes question next of UBS. Lasser Our Michael

this growth second track the point a made quarter, that of that on it this line in to its year, and deliver XX% As was presentation Kroger more had was removed than quarter. media

that's to support perhaps business? the the is for And the is the outlook revenue which long-term more element algorithm choose to So are media starting interpret that accelerate its right its it there Kroger of to advertisers of in and the dollars? to advertising as if stream, driver is growth, order direct that slow, platforms an case, for important alternative does how

Yes.

XX% call. a that year. still our for start still good in our the It's for of me growth we're there, expect continue range to that media seeing fast-growing retail growth. Let question. that to do Thanks and the the Michael. We we're see It's be a positioned business, demonstrate that part well outcomes for

with that we on As are CPGs that outsized those they're spend the look generating. we ad see at advertising us, return

we're And demonstrate, so that's we're why those seeing I able to and say results.

CPGs strong. And those at are for not coincidentally, sales Kroger the

of kind as continue this But there. own And has the proliferation flavor to everybody what of you as their is. there's points I proof say, think of options got be so a

to results. think in we I demonstrate the that continue So the because to the proof will think be need just CPGs, I

that's and down tonnage on double just only me it, I'm why -- me And the most to to -- spending CPGs platform. which listening that point top. last the of our in, on it. increased Todd's wanted with it CPGs the growth reason to power highest if us is I the shows you adding had on are said Todd The

its you spending, storm-related need from to you year, do contributors algorithm long-term been to the is what be order those -- perhaps in question won't to my what contribution achieve sales drive This piece happen follow-up year. Kroger there's the to meaningful drug, And a Okay. XXXX? drive in some next need GLP-X of do as

market would in on that some inflation been comp So share b, And have stabilizing? a that you be of the some acceleration is this offset driving what And is year? realistic? banking it to

experience. the not experience, you've -- gets back we a customer it our the we us be that customer would dependent -- down on when times, rewards it's we fresh double really say us it's on continue and we full, to find that. And Yes, inflation improve wouldn't really that customer heard or friendly. million to, And it and follows the business we for

opportunities. capital other growth is outside that our areas, storing, Seamless, would to support The and sales continues that increasingly cost to online allocating projects of obviously we're reductions thing then and supporting continuation have that specific business, growth. be And

that as storing with you on Yes. earlier especially you said, agree everything I well. Rodney, the get

in to manufacturers GLP-X, in continue more and become mix get But area I the that mentioned as of to think here and as see to and has certainly to drug. that You more this continues more and available, been the utilize part we patients growth supply more today, expect year. sit that we it continue

see foreseeable at least still -- the in expect future. near GLP-X well see we'll think the as space for to I growth So future,

comes Heinbockel of Guggenheim Our John next Partners. from question

you your double per today? broadly When you that selection? cost take initiatives talk -- referenced where down, much take out? that from the in How you about down Rodney, about on how release, think order we can productivity you is the initiatives, are the rolled I can order digit can in-store

-- to a reasonable about out. to X we we about talk expect double amount I over Over have the are talking time, it's or we when I'm take today. it where from roll time, over And X digit still down years. certainly And next it would

first. Now biggest know opportunity start as with you we to -- the out, followed long you -- enough roll that places we whenever we Kroger will something start

the those of things. volume highest kind So it's and locations

fundamental of hope use The we'll business. exciting of that is look I we things I actually and learning can technology behind find that think the you opportunities. at And to those the in that continue that same is areas fascinating the kind would other thing if software, we're

So is somebody and indifferent, be But satisfied that, team until going us. not comfortable shops how confident certainly, feel to stuff type of it's to improvement. our get they I with where double-digit

Our next Evercore of question comes from ISI. Montani Michael

just first, had did there. wanted I miss give added contribution a the for to And then Wondering just CPG I color some ask fuel I this could you quarter? follow-up. if

Yes. Thanks, quarters Michael. a We few don't typically around CPG. details giving -- we stopped ago

that third I a expectations as little be to that we Rodney over and in few QX, stable year volatility will is on fuel little the bit last the think catch bit more that's trends that that to our of some a point the look relative CPG in year-over-year the brought quarter. were versus and in a think we down that this periods will did gallons we've ago, expectation the You seen and Again, in out both margins. both fuel. to -- fourth our But supported be fuel is gallons by the quarter

question next Jefferies. of comes Our Robert from Dickerson

seems like it some front, green up consumer maybe there set is sentiment little bit. low, but are a you know I still Rodney, maybe shoots, Great. improving it's

you have almost wondering and current the seen I'm through kind the the sequential retail then as Thanksgiving real-time, incremental, actual holiday we're holiday So stores? as like traffic got just you of kind like in improvement of season, any

The is X I say We would we between and -- feel days Christmas. time less it are. takes there's don't still Thanksgiving guess, we thing, I shopping that quite about where good

We're going and -- they customer how feel and as most you feel And we of where relaxed to better of cautious are look are we tracking and mentioned, where out. -- are. we what's bit we a be, are how seeing things play in starting thought the where less terms customers bit coming still we a does but the little than because about of stand little good So that we days shopping X comfortable forward. would more the

comes Research. question Our next from Jacob Aiken-Phillips Melius of

to bit. to back inflation I a go little just wanted

with do comps, And of that it people like tariffs, of think terms relationship in SG&A So wage wanted and inflation forward also flat just we're leverage of be self-fulfilling to thoughts then of causing that were about happening. able terms the tariffs excluding KSP. if How there stuff your prophecy in wage even kind you that. and actually like a showed view I you inflation we investment? that buying aren't could given on going

critical It's other investments. important in our investments it will we experience. because to We've for our that invest wage to with wage balance a continue enhancement they're lot those how start the Yes. But to great delivering a associates, is talked question. so we customer us say. with profitability items I'll about the

us environment able inflationary balance any and to demonstrated sales wage time. be the increases to pull environment, our any enables in we've those model in So levers accordingly leverage over that to

given able that said we if you be fairly the comments So investments. to want our tariffs. I balanced think SG&A, with on the comment to we'll inflation, leverage know we including wage Rodney, don't

internationally, Yes. on than effect less buy a but is little first Tariffs the us for product probably us, most of And it's modest. we pretty all, companies.

less you of in department, Fresh If XX% the than the stuff. it's look

look Store, of If Center it's a in you the that. fraction

our than done competitors to deal would others the the be with and like generally tariffs we'll feel us, will more thing. manage we to affecting same because So able is see have we whatever

Cerankosky comes Research. question Our Northcoast next from of Chuck

Kroger's you restaurants, can they also, what the those groups were do customers observe, offerings? be are food offset right before fairly in going you there making close to had of that well premium And be sort maybe more that COVID. now. what doing from are and mainstream the seem that pretty been spending mentioned prepared How you to Rodney, likely to which how to But categories? are with I changes

huge Well, we that, opportunity. believe that's all, first of a

Our over a it's half. bought is consumed market a I home. Actually, think little in a car at restaurant of share meals half -- at or

lot huge us a different trying to things. So we of I working of a companies a that help we're with opportunity. as We've see we're outside would say trying there. -- couple

we've than huge so is a the -- we we -- to a and found far. of because opportunity the customer versus But it's to a me, been And usually to restaurant. unlock have opportunity believe X/X cost can that X/X is future, what we more a a buy able out from to bigger it's going it's meal in us

for surface. but opportunity, So it's we're the us, great it's -- just a scratching

time, this we'll further At questions. no take

back for hand Rodney I'll to So remarks. further any

the listening Thank And our always, you in. have a we lot questions. for associates of as

like and hurricanes. during the dedicated by this would First, team associates, also did on send of They our a I thoughts things express time. and especially would communities. my amazing recent just supporting to I to those like impacted prayers take for to appreciation to gratitude our moment

for Thank do associates proud so of communities our for you that have each customers, our I stepped for am be and there who to customers. up and other. you know, our vital during Kroger types them of customers are essential and as on serve. stores you And other food to rely provide community times, And us items. these each with our our And everything we to

everyone for you wish Year. thank holiday you today. And New Happy season. Merry We a us joining Christmas very happy and

today's Thank you for all joining call.

your disconnect now may You lines.