Kroger Co. is a prominent food and drug retailer operating 2,722 supermarkets across 35 states and the District of Columbia, with additional online operations through a digital ecosystem **[0001558370-24-004603_kr-20240203x10k.htm:76]**. The company primarily focuses on its retail grocery business, which includes retail pharmacies and fuel centers, aiming to grow customer loyalty by delivering value and convenience **[0001558370-24-004603_kr-20240203x10k.htm:38]** **[0001558370-24-004603_kr-20240203x10k.htm:5]**. Kroger's revenue is mainly derived from the sale of consumer products in its stores, fuel centers, and online platforms, with retail operations accounting for 97% of its consolidated sales **[0001558370-24-004603_kr-20240203x10k.htm:38]** **[0001558370-24-004603_kr-20240203x10k.htm:7]**. The company's product lines include non-perishable items, fresh produce, supermarket fuel, and pharmacy products, with its private label, Our Brands, playing a significant role in its merchandising strategy **[0001558370-24-004603_kr-20240203x10k.htm:82]** **[0001558370-24-004603_kr-20240203x10k.htm:39]**.

1. **Non-Perishable Items** - Offers a wide range of packaged and shelf-stable products, contributing significantly to total sales.
2. **Fresh Produce** - Provides a variety of fresh fruits and vegetables, emphasizing quality and freshness.
3. **Supermarket Fuel** - Operates fuel centers that offer gasoline and other fuel products to customers.
4. **Pharmacy Products** - Includes prescription medications and health-related products available in retail pharmacies.
5. **Our Brands** - Features a private label line that enhances the company's merchandising strategy, offering exclusive products across various categories.

f590fe8f2a0411f6b5f592adf8574304c3b86d47501c5e388f481734b042061e

Digital Sales Increase (%)

Delivery Solutions Growth (%)

Identical Sales Excluding Fuel ($ million)

Supermarkets Opened

Supermarkets Relocated

Major Remodels Completed

Supermarket Square Footage Increase (%)

2067787028247d30cf138e7ccefc2c8355d7317b8caf5ccf9437ae5ba49745fc

Identical sales excluding fuel (percentage)

Digital sales (percentage)

Delivery solutions (percentage)

Fuel gallons sold (percentage)

Average retail fuel price (percentage)

Number of supermarkets opened, expanded, relocated or acquired (count)

Number of remodels (count)

Total supermarket square footage (percentage)

Total supermarket square footage excluding mergers and acquisitions (percentage)

9650ddaa67e9357ff128b4d3b4dafda5b5d55ce15b7c0cbb9e6fa3a97c17a7fe

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

SG&A [USD, Millions]

R&D [USD, Millions]

D&A [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

EPS - Basic [USD, Per Share]

EPS - Diluted [USD, Per Share]

56d9c7a9762f83de4fd1e4e9ac501fe48be7b07c9430833e6fd3c2291c990123

| Metric | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 |
|--------|---------|---------|---------|---------|---------|---------|---------|---------|
| Total Sales ($ billion) | **34.2**  **[0001104659-22-123457_tm2231551d1_ex99-1.htm:1]** **[0001558370-22-018508_kr-20221105x10q.htm:27]**  | N/A | **45.2**  **[0001104659-23-071412_tm2318560d1_ex99-1.htm:1]** **[0001558370-23-011335_kr-20230520x10q.htm:23]**  | **33.9**  **[0001104659-23-099123_tm2325655d1_ex99-1.htm:1]**  | **33.957**  **[0001558370-23-019686_kr-20231104x10q.htm:26]**  | N/A | N/A | N/A |
| Sales Excluding Fuel ($ billion) | **30.0**  **[0001558370-22-018508_kr-20221105x10q.htm:21]**  | N/A | **39.7**  **[0001558370-23-011335_kr-20230520x10q.htm:23]**  | **29.6**  **[0001558370-23-015803_kr-20230812x10q.htm:27]**  | **29.580**  **[0001558370-23-019686_kr-20231104x10q.htm:26]**  | N/A | N/A | N/A |
| Supermarket Fuel Sales ($ billion) | **4.2**  **[0001558370-22-018508_kr-20221105x10q.htm:27]**  | N/A | **5.1**  **[0001558370-23-011335_kr-20230520x10q.htm:23]**  | **3.95**  **[0001558370-23-015803_kr-20230812x10q.htm:27]**  | **4.105**  **[0001558370-23-019686_kr-20231104x10q.htm:26]**  | N/A | N/A | N/A |
| Digital Sales Growth (%) | N/A | N/A | **15%**  **[0001558370-23-011335_kr-20230520x10q.htm:23]** **[0001558370-23-011335_kr-20230520x10q.htm:20]**  | **12%**  **[0001558370-23-015803_kr-20230812x10q.htm:23]**  | **11%**  **[0001558370-23-019686_kr-20231104x10q.htm:26]**  | N/A | N/A | N/A |

c58cb6f6593d994d1359143b14232db75b20095822651a3012231166065653e5

| Name                | Position                                                      | Start Date          | Short Bio                                                                                                                                                                                                                                                                                                                                                     |
|---------------------|---------------------------------------------------------------|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| W. Rodney McMullen  | Chairman and Chief Executive Officer                          | January 1, 2014     | W. Rodney McMullen has been with Kroger since **1978**, starting as a part-time stock clerk. He was elected as Chairman of the Board effective **January 1, 2015**, and has served as Chief Executive Officer since **January 1, 2014**. Prior to these roles, he held various leadership positions, including President and Chief Operating Officer  **[0001558370-24-004603_kr-20240203x10k.htm:13]** **[0001104659-24-061665_tm2414296d2_def14a.htm:18]** **[0001558370-23-004767_kr-20230128x10k.htm:12]** . |
| Gary Millerchip     | Senior Vice President and Chief Financial Officer             | April 2019          | Gary Millerchip was elected as **Senior Vice President and Chief Financial Officer** of Kroger effective **April 2019**. Before this role, he served as Chief Executive Officer of Kroger Personal Finance from **July 2010 to April 2019**  **[0001558370-23-004767_kr-20230128x10k.htm:12]** .                                                                                                             |
| Stuart W. Aitken    | Senior Vice President and Chief Merchant and Marketing Officer| August 2020         | Stuart W. Aitken was named **Senior Vice President and Chief Merchant and Marketing Officer** in **August 2020**. He was elected Senior Vice President in **February 2019** and served as Group Vice President from **June 2015 to February 2019**. He has announced his resignation, effective **January 1, 2025**  **[0001558370-24-004603_kr-20240203x10k.htm:11]** **[0001558370-23-004767_kr-20230128x10k.htm:10]** **[0001104659-24-122174_tm2427516d5_8k.htm:1]** .                               |
| Yael Cosset         | Senior Vice President and Chief Information Officer           | May 2019            | Yael Cosset was elected as **Senior Vice President and Chief Information Officer** at Kroger in **May 2019**. He is responsible for leading Kroger's digital strategy and assumed responsibility for Kroger's alternative profit businesses in **August 2020**  **[0001558370-24-004603_kr-20240203x10k.htm:11]** **[0001558370-23-004767_kr-20230128x10k.htm:10]** .                                                                                     |
| Timothy A. Massa    | Senior Vice President and Chief People Officer                | June 2018           | Timothy A. Massa was elected **Senior Vice President** in **June 2018** and serves as the company's **Chief People Officer**. He joined Kroger in **October 2010** as **Vice President, Corporate Human Resources and Talent Development**  **[0001558370-24-004603_kr-20240203x10k.htm:12]** **[0001558370-23-004767_kr-20230128x10k.htm:11]** .                                                                                                           |
| Todd A. Foley       | Senior Vice President and Interim Chief Financial Officer     | March 2024          | Todd A. Foley was named **Senior Vice President and Interim Chief Financial Officer** of The Kroger Co. in **March 2024**. He has held various leadership positions within Kroger since 2001  **[0001558370-24-004603_kr-20240203x10k.htm:12]** .                                                                                                                                                           |
| Carin L. Fike       | Vice President and Treasurer                                  | April 2017          | Carin L. Fike was elected as **Vice President and Treasurer** of Kroger effective **April 2017**. She began her career with Kroger in **1999**  **[0001558370-24-004603_kr-20240203x10k.htm:12]** **[0001558370-23-004767_kr-20230128x10k.htm:11]** .                                                                                                                                                                                                        |
| Valerie L. Jabbar   | Senior Vice President                                         | August 19, 2021     | Valerie L. Jabbar was elected **Senior Vice President** at Kroger effective **August 19, 2021**. She joined Kroger in 1987 as a clerk in the Fry’s Division  **[0001558370-24-004603_kr-20240203x10k.htm:12]** **[0001558370-23-004767_kr-20230128x10k.htm:11]** .                                                                                                                                                                                          |
| Kenneth C. Kimball  | Senior Vice President                                         | March 2022          | Kenneth C. Kimball was elected as **Senior Vice President** in **March 2022** and is responsible for the oversight of several Kroger retail divisions. He joined Kroger in 1984  **[0001558370-24-004603_kr-20240203x10k.htm:12]** **[0001558370-23-004767_kr-20230128x10k.htm:11]** .                                                                                                                                                                       |
| Mary E. Adcock      | Senior Vice President                                         | May 1, 2019         | Mary E. Adcock was elected **Senior Vice President** at Kroger effective **May 1, 2019**. She joined Kroger in 1999  **[0001558370-24-004603_kr-20240203x10k.htm:11]** **[0001558370-23-004767_kr-20230128x10k.htm:10]** .                                                                                                                                                                                                                                   |
| Gabriel Arreaga     | Senior Vice President of Supply Chain                         | December 2020       | Gabriel Arreaga was elected as **Senior Vice President of Supply Chain** at Kroger in **December 2020**. He is responsible for the company's supply chain organization  **[0001558370-24-004603_kr-20240203x10k.htm:11]** **[0001558370-23-004767_kr-20230128x10k.htm:10]** .                                                                                                                                                                               |
| Brian W. Nichols    | Vice President, Corporate Controller                          | March 2024          | Brian W. Nichols was elected as **Vice President, Corporate Controller** at Kroger in **March 2024**. He joined Kroger in **2000**  **[0001558370-24-004603_kr-20240203x10k.htm:13]** .                                                                                                                                                                                                                       |
| Christine S. Wheatley| Senior Vice President, General Counsel, and Secretary        | May 2023            | Christine S. Wheatley was elected as **Senior Vice President, General Counsel, and Secretary** of Kroger in **May 2023**. She joined Kroger in February 2008  **[0001558370-24-004603_kr-20240203x10k.htm:13]** .                                                                                                                                                                                             |

0425a1142509b3477000505f9560a79545905930f335db686106066769598669

1. Fuel sales and profitability were significantly lower this quarter compared to last year. What strategies are you implementing to offset this decline in fuel profitability, and how do you anticipate it impacting your earnings in upcoming quarters?
2. With inflation normalizing around 1% and expected to remain consistent, how do you plan to sustain sales growth and margin expansion in a low-inflation environment, especially considering the ongoing pressure on budget-conscious households?
3. You mentioned that budget-conscious households remain under pressure and may take longer to feel the benefits of economic improvement. What specific actions are you taking to retain and engage these customers to prevent potential loss of market share?
4. In discussing your prepared food offerings and competition with restaurants, you acknowledged that you're just scratching the surface. What challenges have you faced in fully capitalizing on this opportunity, and what initiatives are you implementing to accelerate growth in this area?
5. Given your net total debt to adjusted EBITDA ratio is significantly below your target range, and considering the potential that the Albertsons merger may not proceed, how do you intend to leverage your strong balance sheet to drive growth and enhance shareholder value through alternative investments or strategic initiatives?

b131992419b5eb9ed34eee6664f7c9681d3aec324f5330c6cad71d050b6c8414

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from Debt [USD, Millions]

Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

bb6654aef8186e01f97b9db51e3aabfe62f44f56821233ec7a2a4cf3fd375362

c9ded8a2518484388b2c2e20038e07bc06cde56a852d0e0d7751afab305cf664

### Q3 2025 Earnings Call
- **Issued Period**: Q3 2025
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Identical Sales Without Fuel**: Expected to be in the range of **1.2% to 1.5%**.
  2. **Adjusted FIFO Operating Profit**: Expected to be in the range of **$4.6 billion to $4.7 billion**.
  3. **Adjusted Net Earnings Per Diluted Share (EPS)**: Expected to be in the range of **$4.35 to $4.45**.
  4. **Adjusted Effective Tax Rate**: Expected to be **22.5%**  **[KR_3411058_6]** .

### Q2 2025 Earnings Call
- **Issued Period**: Q2 2025
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Capital Expenditures (CapEx)**: Raised to a range of **$3.6 billion to $3.8 billion**.
  2. **Identical Sales Without Fuel**: Adjusted to be in the range of **0.75% to 1.75%**.
  3. **Gross Margin and OG&A Rates**: FIFO gross margin rate, excluding fuel, expected to be slightly positive; OG&A rate without fuel slightly negative.
  4. **Adjusted Free Cash Flow**: Guidance remains unaffected.
  5. **Fuel Margins**: Expected to be relatively flat compared to last year.
  6. **Inflation**: Expected to trend around **1%**.
  7. **Earnings Per Share (EPS)**: Third quarter expected to be slightly ahead year-over-year; fourth quarter slightly behind on a 52-week basis  **[KR_3401638_6]** **[KR_3401638_4]** **[KR_3401638_5]** **[KR_3401638_15]** .

### Q1 2025 Earnings Call
- **Issued Period**: Q1 2025
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Full Year Guidance**: Reaffirmed annual guidance.
  2. **Adjusted EPS**: Expected decline in Q2 similar to Q1 due to pharmacy business pressures.
  3. **Gross Margin**: Expected to be relatively flat year-over-year.
  4. **OG&A Rate**: Expected to be similar to slightly higher in Q2 compared to Q1.
  5. **Inflation**: Expected to be slightly over **1%**.
  6. **Digital and Retail Media Growth**: Expected growth in excess of **20%** for the year  **[KR_3392642_5]** **[KR_3392642_6]** **[KR_3392642_8]** **[KR_3392642_12]** .

### Q4 2024 Earnings Call
- **Issued Period**: Q4 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Identical Sales Without Fuel**: Expected to be between **0.25% and 1.75%**.
  2. **Adjusted FIFO Operating Profit**: Expected to be between **$4.6 billion and $4.8 billion**.
  3. **Adjusted Net Earnings Per Diluted Share**: Expected to be between **$4.30 and $4.50**.
  4. **Inflation**: Expected to be around **1%**.
  5. **Capital Investments**: Expected to be between **$3.4 billion and $3.6 billion**.
  6. **Fuel Business**: Expected to be flat in operating profit year-over-year.
  7. **Pharmacy Margins**: Expected to remain stable.
  8. **Quarterly Earnings Per Share**:
     - **Q1**: Expected to be down low double digits year-over-year.
     - **Q2**: Expected to be relatively in line with last year.
     - **Q3**: Expected to increase double digits compared to last year.
     - **Q4**: Expected to be in line with last year on an adjusted 52-week basis  **[KR_3377049_7]** **[KR_3377049_20]** .

b253e6b4b80746b4ae91bf99b2d016139c1c23a242d3a445daa15f750d956605

- Albertsons Companies, Inc. (included from June 26, 2020 when it began trading)  **[0001558370-24-004603_kr-20240203x10k.htm:33]** 
- Costco Wholesale Corporation  **[0001558370-24-004603_kr-20240203x10k.htm:33]** 
- CVS Health Corporation  **[0001558370-24-004603_kr-20240203x10k.htm:33]** 
- Koninklijke Ahold Delhaize N.V.  **[0001558370-24-004603_kr-20240203x10k.htm:33]** 
- Target Corp.  **[0001558370-24-004603_kr-20240203x10k.htm:33]** 
- Walgreens Boots Alliance Inc.  **[0001558370-24-004603_kr-20240203x10k.htm:33]** 
- Walmart Inc.  **[0001558370-24-004603_kr-20240203x10k.htm:33]** 

77e90e7365c565856d1aaeb263a399185ad8f32dc3da8ac123ccca80fbfe1cdc

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

Non Perishable

Fresh

Supermarket Fuel

Pharmacy

Convenience Stores

Other

Total Sales to Retail

- Without Fuel

Total Revenue

7d3df6bc805ddd6dfea6df4a01f1f3b7b3e8c6dcdbd3db9689dca1e791c9347c

| Program Details           | Program 1                  | Program 2                  |
|---------------------------|----------------------------|----------------------------|
| Approval Date             | September 9, 2022  **[0001558370-24-016233_kr-20241109x10q.htm:20]** **[0001558370-24-016233_kr-20241109x10q.htm:46]** **[0001558370-24-016233_kr-20241109x10q.htm:40]** | December 11, 2024  **[0001558370-24-016233_kr-20241109x10q.htm:20]** **[0001558370-24-016233_kr-20241109x10q.htm:46]** **[0001558370-24-016233_kr-20241109x10q.htm:40]** |
| End Date/Duration         | December 11, 2024  **[0001558370-24-016233_kr-20241109x10q.htm:20]** **[0001558370-24-016233_kr-20241109x10q.htm:46]** **[0001558370-24-016233_kr-20241109x10q.htm:40]** | Not specified  **[0001558370-24-016233_kr-20241109x10q.htm:20]** **[0001558370-24-016233_kr-20241109x10q.htm:46]** **[0001558370-24-016233_kr-20241109x10q.htm:40]**     |
| Total additional amount   | **$1.0 billion**  **[0001558370-24-016233_kr-20241109x10q.htm:20]** **[0001558370-24-016233_kr-20241109x10q.htm:46]** **[0001558370-24-016233_kr-20241109x10q.htm:40]**  | **$7.5 billion**  **[0001558370-24-016233_kr-20241109x10q.htm:20]** **[0001558370-24-016233_kr-20241109x10q.htm:46]** **[0001558370-24-016233_kr-20241109x10q.htm:40]**  |
| Remaining authorization   | **$0.0 billion**  **[0001558370-24-016233_kr-20241109x10q.htm:20]** **[0001558370-24-016233_kr-20241109x10q.htm:46]** **[0001558370-24-016233_kr-20241109x10q.htm:40]**  | **$7.5 billion**  **[0001558370-24-016233_kr-20241109x10q.htm:20]** **[0001558370-24-016233_kr-20241109x10q.htm:46]** **[0001558370-24-016233_kr-20241109x10q.htm:40]**  |
| Details                   | Terminated  **[0001558370-24-016233_kr-20241109x10q.htm:20]** **[0001558370-24-016233_kr-20241109x10q.htm:46]** **[0001558370-24-016233_kr-20241109x10q.htm:40]**        | $5.0 billion expected via accelerated share repurchase  **[0001558370-24-016233_kr-20241109x10q.htm:20]** **[0001558370-24-016233_kr-20241109x10q.htm:46]** **[0001558370-24-016233_kr-20241109x10q.htm:40]**  |

95a2722f8f3c70b44eab99aced2eccbeb347a465b9cc1623f02d1860912a7653

**Annual guidance for FY 2024:**
- **Identical Sales Without Fuel**: 1.2% to 1.5%  **[KR_3411058_6]**  (raised from 0.75% to 1.75%  **[KR_3401638_6]** )  
- **Adjusted FIFO Operating Profit**: $4.6 billion to $4.7 billion  **[KR_3411058_6]**  (no prior guidance)  
- **Adjusted Net Earnings Per Diluted Share (EPS)**: $4.35 to $4.45  **[KR_3411058_6]**  (no prior guidance)  
- **Adjusted Effective Tax Rate**: 22.5%  **[KR_3411058_6]**  (no prior guidance)  

a758c358a4f00ba3437b1a27bf7661f8c1878589a0dcc4a52db65edfc5cd749a

| Name                          | Start Date | End Date | Reason for Change |
|-------------------------------|------------|----------|-------------------|
| PricewaterhouseCoopers LLP    | 1929  **[0001558370-24-004603_kr-20240203x10k.htm:68]**  | Present  | Current auditor   |

5c99dbb3512dfbfc1b400ad40d699969400801c9e2d9f1b3dd99de10dbc745b2

c61fff5541198c96b4d3c006c88fc03d511d2d7300a16fc61eba9534a180d56a

- Total Revenue: $33.634 billion (-1% YoY)  **[0001558370-24-016233_kr-20241109x10q.htm:2]** **[0001558370-23-019686_kr-20231104x10q.htm:2]**   
- Supermarket Fuel: $3.335 billion (**-19% YoY**)  **[0001558370-23-019686_kr-20231104x10q.htm:26]** **[0001558370-24-016233_kr-20241109x10q.htm:2]** **[0001558370-24-016233_kr-20241109x10q.htm:30]**   
- Operating Income: $828 million (**-9% YoY**)  **[0001558370-24-016233_kr-20241109x10q.htm:2]** **[0001558370-23-019686_kr-20231104x10q.htm:2]**   
- Interest Expense: $87 million (-8% YoY)  **[0001558370-24-016233_kr-20241109x10q.htm:2]** **[0001558370-23-019686_kr-20231104x10q.htm:2]**   

4857263f50e18a5024128c04c24b63974163d36360467edcc9d6107e6ab58447

21a637abf043abe261de2a4d5f7cfac8dd122a39382be8ea534b00fb304da7f4

8860bd33e81d27e674820c4b5ac13ab28ea6de2e7d79f7adefe672ea16ef6b3d

1. **Gross Margin Outlook**  
   **Q:** Can you discuss expectations for gross margins and key drivers?  **[KR_3392642_8]**   
   **A:** Management reaffirmed expectations for relatively flat year-over-year gross margins, anticipating improvements beyond Q1 results due to successful margin expansion efforts. They highlighted strong performance in **Our Brands**, growth in **Fresh** categories like produce, and over **20% expected growth in retail media** in the second half. Despite pharmacy headwinds carrying into Q2, they remain confident in achieving their margin expectations.  **[KR_3392642_8]** 

2. **Competitive Pricing and Promotional Intensity**  
   **Q:** How is the competitive pricing landscape affecting your strategy?  **[KR_3392642_9]** **[KR_3392642_10]** **[KR_3392642_15]** **[KR_3392642_22]** **[KR_3392642_24]**   
   **A:** Management feels good about their relative price position, noting that promotional activity has returned to pre-COVID levels. They continue to invest in pricing annually, aiding budget-conscious customers without compromising on quality. Vendor funding is increasing as CPG partners focus on tonnage, which supports their ability to offer competitive prices. They are executing their planned pricing strategy and see no need for reactive measures.  **[KR_3392642_9]** **[KR_3392642_10]** **[KR_3392642_15]** **[KR_3392642_22]** **[KR_3392642_24]** 

3. **Pharmacy Headwinds**  
   **Q:** What are the pressures impacting pharmacy margins, and will they persist?  **[KR_3392642_8]** **[KR_3392642_14]** **[KR_3392642_18]**   
   **A:** Pharmacy margins faced unexpected pressures due to product mix, particularly from high retail but low margin **GLP-1 drugs** and increased costs on certain medications due to regulatory restrictions. Management expects these headwinds to carry into Q2 but anticipates potential alleviation in the back half from increased vaccine volumes and normalization of supply issues.  **[KR_3392642_8]** **[KR_3392642_14]** **[KR_3392642_18]** 

4. **ID Sales Growth**  
   **Q:** When can we expect identical sales to return to 2–4% growth?  **[KR_3392642_16]** **[KR_3392642_17]**   
   **A:** Management expects IDs to improve throughout the year, moving towards the high end of guidance by the second half. As they cycle last year's heavy disinflation and with moderating inflation stabilizing around **slightly over 1%**, they anticipate returning to their long-term model of 2–4% ID sales growth.  **[KR_3392642_16]** **[KR_3392642_17]** 

5. **Delivery and Pickup Profitability**  
   **Q:** When will delivery and pickup operations reach profitability?  **[KR_3392642_13]** **[KR_3392642_25]**   
   **A:** Some divisions are now at breakeven or slightly profitable in these operations. While not specifying a date, management aims for these customers to be as profitable as in-store shoppers over time. Key drivers include improving the customer experience to encourage repeat orders, increasing basket sizes, and leveraging technology for operational efficiencies.  **[KR_3392642_13]** **[KR_3392642_25]** 

6. **Second Quarter Guidance**  
   **Q:** What factors are influencing lower Q2 guidance?  **[KR_3392642_11]** **[KR_3392642_19]**   
   **A:** The Q2 guidance reflects pharmacy headwinds and higher incentive plan accruals, especially impacting the second quarter. Despite the strong Q1 performance, it's early in the year to adjust full-year expectations significantly. Management remains on plan for Q2 relative to IDs and other metrics.  **[KR_3392642_11]** **[KR_3392642_19]** 

7. **Leverage and Capital Allocation**  
   **Q:** How are you approaching leverage targets and capital allocation?  **[KR_3392642_20]**   
   **A:** Management aims to maintain a leverage ratio of **2.3 to 2.5**, aligning with a BBB credit rating for optimal cost of capital. Currently operating below this target, they intend to utilize this capacity for strategic initiatives like the pending **Albertsons merger**, while continuing to invest in growth opportunities and returning value to shareholders.  **[KR_3392642_20]** 

8. **Store Execution Improvements**  
   **Q:** What are the impacts of store execution initiatives?  **[KR_3392642_23]**   
   **A:** Improved store execution, such as better in-stock positions and enhanced customer experience, is driving customer count growth and broad-based improvements across customer segments. Lower turnover and investments in fresh offerings contribute to these positive trends. Management sees ongoing opportunities for further enhancement.  **[KR_3392642_23]** 

9. **Volume and Tonnage Trends**  
   **Q:** How are current volume and tonnage trends shaping up?  **[KR_3392642_21]**   
   **A:** Tonnage trends are improving across all customer cohorts, partly due to moderating inflation and better store execution. The company is seeing increased connection with customers, particularly among budget-conscious shoppers, supporting a positive outlook for volumes.  **[KR_3392642_21]** 

10. **Fuel Margins and Inflation Expectations**  
    **Q:** Can you update us on fuel margins and inflation outlook?  **[KR_3392642_12]**   
    **A:** Fuel cents per gallon margins were down low single digits in Q1. Inflation remained around **slightly over 1%** and is expected to stay at this level for the year, with no broad-based deflation anticipated. Commodity prices may fluctuate, but overall inflation is stabilizing.  **[KR_3392642_12]** 

e902c7532da249172524092f8a1e688759c36f7b2e136f1e8976be243fb5689f

| Year | Amount Due (in millions) | Debt Type       | Interest Rate (%) | % of Total Debt |
|----------|------------------------------|---------------------|-----------------------|---------------------|
| 2026     | $1,000 **[0001558370-24-016233_kr-20241109x10q.htm:18]**               | Senior Notes        | 4.70 **[0001558370-24-016233_kr-20241109x10q.htm:18]**         | 4.4% = (1,000 / 22,600) * 100 **[0001558370-24-016233_kr-20241109x10q.htm:40]** **[0001558370-24-016233_kr-20241109x10q.htm:18]** |
| 2027     | $1,000 **[0001558370-24-016233_kr-20241109x10q.htm:18]**               | Senior Notes        | 4.60 **[0001558370-24-016233_kr-20241109x10q.htm:18]**         | 4.4% = (1,000 / 22,600) * 100 **[0001558370-24-016233_kr-20241109x10q.htm:40]** **[0001558370-24-016233_kr-20241109x10q.htm:18]** |
| 2029     | $1,400 **[0001558370-24-016233_kr-20241109x10q.htm:18]**               | Senior Notes        | 4.65 **[0001558370-24-016233_kr-20241109x10q.htm:18]**         | 6.2% = (1,400 / 22,600) * 100 **[0001558370-24-016233_kr-20241109x10q.htm:40]** **[0001558370-24-016233_kr-20241109x10q.htm:18]** |
| 2031     | $1,300 **[0001558370-24-016233_kr-20241109x10q.htm:18]**               | Senior Notes        | 4.90 **[0001558370-24-016233_kr-20241109x10q.htm:18]**         | 5.8% = (1,300 / 22,600) * 100 **[0001558370-24-016233_kr-20241109x10q.htm:40]** **[0001558370-24-016233_kr-20241109x10q.htm:18]** |
| 2034     | $2,200 **[0001558370-24-016233_kr-20241109x10q.htm:18]**               | Senior Notes        | 5.00 **[0001558370-24-016233_kr-20241109x10q.htm:18]**         | 9.7% = (2,200 / 22,600) * 100 **[0001558370-24-016233_kr-20241109x10q.htm:40]** **[0001558370-24-016233_kr-20241109x10q.htm:18]** |
| 2054     | $2,100 **[0001558370-24-016233_kr-20241109x10q.htm:18]**               | Senior Notes        | 5.50 **[0001558370-24-016233_kr-20241109x10q.htm:18]**         | 9.3% = (2,100 / 22,600) * 100 **[0001558370-24-016233_kr-20241109x10q.htm:40]** **[0001558370-24-016233_kr-20241109x10q.htm:18]** |
| 2064     | $1,500 **[0001558370-24-016233_kr-20241109x10q.htm:18]**               | Senior Notes        | 5.65 **[0001558370-24-016233_kr-20241109x10q.htm:18]**         | 6.6% = (1,500 / 22,600) * 100 **[0001558370-24-016233_kr-20241109x10q.htm:40]** **[0001558370-24-016233_kr-20241109x10q.htm:18]** |

8dd01bde94595dbc8bbddb839aa42d5e2882e92227679bec46e47014b9527ae1

- **Strong momentum in growth areas** such as pharmacy, digital business, and alternative profit businesses, which **gives Kroger confidence in operating profit growth in 2025**.  **[KR_3411058_14]**
- **Kroger is opening or expanding the most number of stores in seven years**, and expects to continue opening more stores, which are **performing well in terms of customer connections, volumes, and early profitability**.  **[KR_3411058_14]**
- **Mainstream customers are feeling better and increasing their engagement and spending**, contributing to Kroger's positive performance, and **current trends are tracking better than expected during the holiday season**.  **[KR_3411058_9]** **[KR_3411058_22]**

64249a8f4b869c8e61c3d805e1e18d384bf841af018199e33b8f9895ae525b02

1. **EBIT Margin Outlook**  
   **Q:** Is the guide implying stable or higher EBIT margin?  
   **A:** We expect gross margin to be **slightly favorable year-over-year** and OG&A to be **slightly unfavorable**, but they should balance out. We had a great shrink quarter, but there's more work to do. Some non-recurring costs in Q2 won't recur in the second half, such as Hurricane Beryl expenses and higher incentive costs.  **[KR_3401638_13]** 

2. **Gross Margin and Digital Profitability**  
   **Q:** How is digital impacting gross margin and profitability?  
   **A:** Our Brands had a **tremendous quarter**, with sales growth outpacing national brands, boosting gross margin. We also had a great shrink quarter. For the full year, we expect margins to be **slightly favorable** year-over-year. Digital profitability continues to improve, and over the next **2–3 years**, we see significant potential. Our media business also enhances gross margin.  **[KR_3401638_9]** 

3. **Cost Reductions and Reinvestment**  
   **Q:** Will P&L benefits from cost reductions flow to the bottom line?  
   **A:** The benefits from cost reductions, media growth, and moderating digital losses are part of our margin enhancement programs. We have a long history of reinvesting these gains back into the business, leading to a slight increase in operating profit rate over time. Our long-term TSR model is **8% to 11%** annually. We expect more growth to come from the business, and post-merger, there will be incremental accretion.  **[KR_3401638_10]** 

4. **Inflation Impact on Margins**  
   **Q:** How do you balance passing on inflation with appealing to consumers?  
   **A:** If cost increases are permanent, we pass them on quickly; if they're short-term, we manage accordingly. We still expect overall inflation to be around **1%**. Over time, PPI and CPI tend to align. With food-away-from-home inflation higher than food-at-home, we're seeing customers return to cooking at home.  **[KR_3401638_14]** 

5. **Comp Guidance and Spending Plans**  
   **Q:** How is comp guidance changing between units and inflation?  
   **A:** We updated our sales guidance, raising the bottom end of the range. Our view is that Q1 was the low point, and sales will grow throughout the year with inflation around **1%**. Unit trends are improving but still slightly negative. For 2025, it's too early to provide guidance, but our long-term business model applies.  **[KR_3401638_12]** 

6. **CapEx Guidance and EPS Cadence**  
   **Q:** Is higher CapEx spend the new normal? EPS growth between Q3 and Q4?  
   **A:** We're accelerating projects to open earlier, which may lead to higher capital spend over time. Given our strong cash flow, this is feasible. For EPS, we expect Q3 to be slightly ahead year-over-year, and Q4 to be slightly behind on a **52-week basis**.  **[KR_3401638_15]** 

7. **Sales Growth Challenges**  
   **Q:** How do economic factors and competitors affect sales growth?  
   **A:** The rise of non-traditional competitors is a long-term trend. We must continuously adapt our offering to meet customer needs. We feel confident in our ability to compete and manage economic pressures by supporting customers and leveraging Our Brands.  **[KR_3401638_18]** 

8. **Consumer Behavior Changes**  
   **Q:** What changes are you seeing in middle and upper-income cohorts?  
   **A:** Throughout the year, especially in recent months, we've seen more pronounced changes at the end of the month due to budget constraints. Customers are shifting from dining out to cooking at home, which benefits us. They're also buying more of Our Brands products.  **[KR_3401638_16]** 

9. **Market Share in Fresh**  
   **Q:** Comment on your market share trends in Fresh.  
   **A:** Our Fresh trends are stronger than center store. We feel okay about our position but expect improvement throughout the year. We're gaining strong household and loyal household growth, leading to future progress.  **[KR_3401638_11]** 

10. **OG&A and Wage Pressure**  
    **Q:** Where is Kroger on wage pressure and GL claims?  
    **A:** Most of our wages are locked in collective bargaining agreements, and our guidance reflects these expectations. In Q2, we saw higher average costs to settle general liability claims due to external factors, but we don't expect this to recur in the second half.  **[KR_3401638_17]** 

11. **Inventory Levels**  
    **Q:** How are you managing inventory levels going forward?  
    **A:** The reduction in inventory is due to lower cost per item from decreased inflation and our focus on working capital management. We're ensuring we have the right balance between being in stock for customers and not carrying excess inventory.  **[KR_3401638_19]** 

12. **Promotions and Competition**  
    **Q:** What are you seeing in promotions and the competitive landscape?  
    **A:** Promotions have returned to normal levels after COVID. We're making more effective promotions, with increased support from CPG partners. We feel good about balancing cost reductions and mix changes that help gross margin, along with our continued investment in pricing.  **[KR_3401638_8]** 

cadcd103c1a3d917c13a3f47911de0534c87041fab7bd11cf539edea94e80a7e

- **Kroger is accelerating organic store growth in high-growth markets with strong Return on Invested Capital (ROIC), supported by strong cash flow**. Despite the pending merger with Albertsons, Kroger is investing in new stores independently, balancing investments between digital and physical stores to capitalize on growth opportunities.  **[KR_3377049_13]**
- **Kroger is expanding margins through increased penetration of own-brand products and operational efficiencies**. Initiatives like driving product mix, increasing fresh product penetration, optimizing logistics, operations, and supply chain, and improved sourcing partnerships have led to margin expansion in 2023 and are projected to continue driving growth.  **[KR_3377049_16]**
- **Kroger's advanced personalization strategies are enhancing customer value and loyalty without compromising on experience**. By offering unique, customer-specific promotions and investing cost savings into lower pricing, Kroger is providing customers with incredible value, leading to increased sales and strong customer satisfaction.  **[KR_3377049_15]**

d67fd86aebfbab45c4ffb9fbc53097c133124561491932a87df4a01b9be81256

- **Delivery sales nearly doubled year-over-year**, driven by broad-based customer adoption across all segments and improved technology, including acceptance of SNAP benefits.  **[KR_3392642_25]**
- **Tonnage trends are improving across all customer cohorts**, partly due to moderating inflation and enhanced customer experience, indicating strengthening demand and positive momentum among budget-conscious consumers.  **[KR_3392642_21]**
- **Increasing capital investments in new stores and expansions** are showing early positive results, supporting future growth and helping Kroger reach its long-term identical sales growth target of **2% to 4%**.  **[KR_3392642_16]**

856892e667bc44b50e7b4138d10de181703e436d9302a26c594bec71f8e61433

1. **Next Year's Outlook**  
   **Q:** What are the expected tailwinds and headwinds for next year?  
   **A:** Management indicated it's too early for specifics on next year's guidance, especially as they await the merger ruling with Albertsons, which will affect guidance. However, they are optimistic due to momentum in growth areas like pharmacy, digital business, and alternative profits. They don't foresee any unusual headwinds or tailwinds at this time.  **[KR_3411058_14]** 

2. **Albertsons Merger Impact**  
   **Q:** How will Kroger proceed if the Albertsons merger is rejected?  
   **A:** Management stated that if the merger doesn't happen, they won't seek another transformational acquisition. They'll continue to focus on organic growth, as they don't need mergers to be successful.  **[KR_3411058_17]** 

3. **Gross Margin Outlook**  
   **Q:** How do you view gross margin trends into Q4 and beyond?  
   **A:** Excluding the impact of the KSP divestiture, gross margin improved due to strong growth in **Our Brands** and reductions in shrink. They expect margins to be relatively flat year-over-year in Q4, excluding KSP. Improvements in warehouse and transportation costs and favorable sales mix also contribute positively.  **[KR_3411058_16]** 

4. **Inflation Expectations**  
   **Q:** What's your outlook on inflation into next year?  
   **A:** Management expects inflation to remain relatively stable, possibly with a slight expansion next year. They don't anticipate any significant changes and note that vendors are being more aggressive with trade dollars, which could affect inflation over time.  **[KR_3411058_12]** ,  **[KR_3411058_23]** 

5. **Price Investments and CPG Trade Dollars**  
   **Q:** Are you content with the level of price investments from vendors?  
   **A:** They observe that CPGs are becoming more aggressive with trade dollars. Kroger is open to partnering with vendors to drive **tonnage growth**. If vendors are less willing to invest, Kroger is content to promote its higher-margin **Our Brands**, as customers respond well to them.  **[KR_3411058_15]** 

6. **Alternative Profit Business Growth**  
   **Q:** How is the alternative profit business performing?  
   **A:** The alternative profit business continues to meet growth expectations, with margins **meaningfully higher** than the supermarket business. **Digital growth** at low double digits supports both the core business and alternative profits.  **[KR_3411058_8]** 

7. **Pharmacy and Digital Sales Growth**  
   **Q:** How are pharmacy and digital sales contributing to performance?  
   **A:** Management is pleased with strong results in pharmacy, particularly in vaccine growth. Digital sales grew at **low double-digit rates**, aligning with expectations and driving both core and alternative profit growth.  **[KR_3411058_8]** ,  **[KR_3411058_10]** 

8. **Consumer Sentiment and Customer Segments**  
   **Q:** How are different customer segments performing?  
   **A:** **Mainstream customers** connected better in Q3 than in Q2; they report feeling better. Lower-income customers remain under strain due to accumulated inflation and higher interest rates, affecting them more significantly.  **[KR_3411058_9]** ,  **[KR_3411058_24]** 

9. **Media Growth and Alternative Revenues**  
   **Q:** Is retail media growth slowing down?  
   **A:** Management expects retail media growth to be around **20%** for the year, continuing to be a fast-growing part of the business. They acknowledge more advertising platforms are available but are confident due to strong **returns on ad spend** for CPGs partnering with Kroger.  **[KR_3411058_18]** 

10. **SG&A Leverage and Wage Investments**  
    **Q:** How will SG&A leverage relate to wage inflation going forward?  
    **A:** They will continue to balance wage investments with profitability enhancements, aiming to leverage SG&A even with stable inflation and sales. They are committed to investing in wages while maintaining SG&A leverage.  **[KR_3411058_23]** 

11. **In-Store Order Selection Efficiency**  
    **Q:** Can costs for in-store order selection decrease significantly?  
    **A:** Management expects to reduce costs per order by **double digits** over the next **2–3 years** through productivity initiatives, starting with high-volume locations. They see potential to apply technology in other areas as well.  **[KR_3411058_20]** 

12. **Fresh Initiatives and RFID in Bakery**  
    **Q:** What's the progress with RFID tags in the bakery?  
    **A:** They are testing RFID tags in bakery and are happy with initial results, which help associates and improve product freshness and stock levels. It's too early for budget estimates, but they are excited about the potential.  **[KR_3411058_13]** 

13. **Boost Membership Program**  
    **Q:** Are you satisfied with Boost membership sign-ups and retention?  
    **A:** They are very happy with Boost membership, noting **high renewal rates** and **high NPS scores**. They are excited about its potential and aim to educate more customers about the program's value.  **[KR_3411058_11]** 

14. **GLP-1 Drug Contribution**  
    **Q:** How will GLP-1 drugs impact sales next year?  
    **A:** They expect continued growth in GLP-1 prescriptions as more manufacturers enter the market and supply increases, driving further sales growth in the pharmacy segment.  **[KR_3411058_19]** 

15. **Fuel Margin Trends**  
    **Q:** Can you provide color on fuel CPG contributions?  
    **A:** Fuel performance was challenging in Q3, with declines in gallons and cents per gallon. They expect fuel profitability to be more stable year-over-year in Q4, based on recent trends.  **[KR_3411058_21]** 

16. **Prepared Food Offerings**  
    **Q:** How are you competing with restaurants in prepared foods?  
    **A:** Management sees a **huge opportunity** in prepared foods, noting that over **half of meals** bought at restaurants are consumed at home or in cars. They are trying different approaches and working with outside companies but are just scratching the surface.  **[KR_3411058_24]** 

17. **Tariffs Impact**  
    **Q:** How might tariffs affect your business?  
    **A:** Tariff impacts on Kroger are modest since they import a small percentage of products. In fresh departments, less than **20%** is imported, and even less in center store. They believe they can manage any tariff-related challenges effectively.  **[KR_3411058_23]** 

85eec14dd5336517994c786cf21ff854704c00ebf49fd6f1094882d856e103b7

- Kroger is experiencing intensified competition from non-traditional competitors like Amazon, Costco, and Walmart, requiring continuous adaptation and potentially pressuring market share and margins. As CEO McMullen stated, "we feel good about our ability to compete. We'll have to continually change."  **[KR_3401638_18]**
- Economic pressures are leading to changes in consumer behavior across various income segments, with customers purchasing less, buying lower-priced items, and being more cautious with spending, especially towards the end of the month. This shift could impact Kroger's sales and profit margins. CEO McMullen noted, "over the last few months, it's been more pronounced as you get toward the end of the month."  **[KR_3401638_16]**
- The company did not provide guidance for 2025 earnings, citing uncertainties related to the pending merger with Albertsons, which could introduce integration risks and affect future financial performance. CEO McMullen stated, "it's still early for us to start sharing guidance on 2025... we would also need to update where we are relative to the merger and the integration."  **[KR_3401638_12]**

e68e1a537efc05e01470806df76584012e65cbae131ad930829f4b644bbdcab8

- **Ongoing pressures in pharmacy profitability are expected to continue into the second quarter, negatively impacting earnings.**  **[KR_3392642_19]** **[KR_3392642_9]**
- **Delivery and pickup services are currently unprofitable, with no specific timeline for reaching profitability across all divisions.**  **[KR_3392642_13]**
- **The company is operating below its optimal identical sales growth rate of 2% to 4%, with uncertainty about when it will return to this level.**  **[KR_3392642_16]**

5f825efc9396895f3bc94f7cdc0e828735e647598c69b27cfdaba9c557a6ff8d

- **Strong Growth in Alternative Profit Businesses:** Kroger's alternative profit businesses had a strong quarter, led by Kroger Precision Marketing, which is on track to deliver more than 20% media growth this year  **[KR_3401638_3]** .
- **Effective Cost Management Supporting Sustainable Growth:** Kroger is proactively reducing costs and improving margins through cost-saving initiatives and productivity enhancements, supporting their long-term total shareholder return model of 8% to 11% per year  **[KR_3401638_10]** .
- **Anticipated Benefits from Pending Merger with Albertsons:** Kroger is confident in the pending merger with Albertsons, which is expected to provide meaningful and measurable benefits for customers, associates, and communities, positioning the company for future growth  **[KR_3401638_7]** .

65d2b280631207d8f08755484fbe6f4ebdbeee9146bf3ad13b53123d7cf7c0dd

- Kroger is experiencing ongoing **market share pressure among lower-income customers**, and management acknowledges they have "a lot of work to do" in retaining these customers, which could impact sales growth.  **[KR_3377049_1]**
- The **fuel business**, previously a significant profit driver, is expected to be **flat in operating profit in 2024**, after being "a little bit behind year-over-year" in 2023, suggesting a decline in this profit contributor.  **[KR_3377049_20]**
- **Pharmacy margins** are under pressure due to the sales of lower-margin products like GLP, which are "a little bit of a headwind relative to rate because of the margins on those," potentially affecting overall profitability in the pharmacy segment.  **[KR_3377049_13]**

be871f1cbe9c55a7897b6bb27d5391e77117cb48f0bd81896b37e4c8a9487731

- **Kroger anticipates continued margin pressure due to investments in price and wages to remain competitive, which the company acknowledges as headwinds.**  **[KR_3411058_14]**
- **Budget-conscious customers remain under strain due to inflation and higher interest rates, affecting their spending and potentially impacting Kroger's sales.**  **[KR_3411058_9]**
- **There is uncertainty surrounding the pending merger with Albertsons, and if it doesn't proceed, Kroger may have limited opportunities for transformational growth, affecting its future prospects.**  **[KR_3411058_17]**

39a055f146426e3ad302526023e178503c9d0bb8836895f32763bda193dbf37a

1. **Sales Growth & Market Share**  
   **Q:** How will you drive sales growth and market share?  
   **A:** Kroger expects market share to improve throughout the year by cycling ESI and SNAP benefits and opening more stores in **2024** than in **2023**. They've seen improvements in tonnage and dollar sales and anticipate this trend to continue, despite a tougher first quarter.  **[KR_3377049_10]** 

2. **Margin Outlook & Drivers**  
   **Q:** What factors will impact your margins this year?  
   **A:** Margin expansion is driven by merchandising strategies, including product mix enhancements, increased fresh penetration, and growth in "Our Brands." Efficiencies in logistics, supply chain, and sourcing are also contributing. These initiatives, which improved margins in **2023**, are expected to continue delivering benefits.  **[KR_3377049_15]** 

3. **Digital Sales Profitability**  
   **Q:** Can digital sales profitability significantly increase in next 3 years?  
   **A:** Yes, Kroger is making meaningful progress in digital profitability, viewing it as a significant tailwind for the next **3 to 5 years**. The in-store digital business is on a path to match in-store margins, and at maturity, delivery sheds are expected to achieve **better margins** than stores due to media and other revenue streams.  **[KR_3377049_17]** 

4. **Alternative Profit Growth**  
   **Q:** What's driving the 20% growth in Kroger Precision Marketing?  
   **A:** Growth is expected from both on-property and off-property media as Kroger enhances its digital ecosystem. A new platform allows clients easier activation of campaigns using first-party data for custom audiences. They aim to increase their share of CPG media spend by delivering strong ROI for advertisers.  **[KR_3377049_27]** 

5. **Wage Growth & Cost Management**  
   **Q:** What's your wage growth assumption for 2024?  
   **A:** With **75%** of collectively bargained wages locked in, Kroger will continue investing in associate wages and benefits, having increased average hourly rates by over **30%** in the last **5 years**. To fund this, they're targeting around **$1 billion** in cost savings through productivity improvements for the seventh consecutive year.  **[KR_3377049_14]** 

6. **Capital Allocation & Store Growth**  
   **Q:** Why accelerate store growth before the Albertsons merger?  
   **A:** Kroger is focusing on strong ROI opportunities independently of the merger, investing in high-growth markets with robust returns. Balancing investments between digital and in-store operations supports customer needs, and they see value in proceeding with these growth plans regardless of the merger outcome.  **[KR_3377049_13]** 

7. **Leverage Targets Without Merger**  
   **Q:** Will leverage targets change if Albertsons deal fails?  
   **A:** While focused on closing the merger, Kroger indicates that their strong free cash flow and balance sheet would allow them to maintain financial strategies similar to the past. Priorities include keeping an investment-grade rating, investing in growth, and returning money to shareholders through dividends and buybacks.  **[KR_3377049_20]** 

8. **Unit Volume Outlook**  
   **Q:** Can you return to positive unit volumes?  
   **A:** Kroger expects to achieve positive unit volume growth, holding themselves accountable for this goal. They've observed sequential improvements in unit trends and increased trade support from CPGs focusing on tonnage growth. Success has been notable with mainstream and upscale customers.  **[KR_3377049_21]** 

9. **Fuel and Pharmacy Profitability**  
   **Q:** What's your outlook on fuel and pharmacy margins?  
   **A:** For **2024**, Kroger expects fuel operating profit to be flat year-over-year. Pharmacy margins are anticipated to remain stable; they're reinvesting savings to improve service by reducing wait times. Competitor closures present an opportunity to gain market share in pharmacy services.  **[KR_3377049_19]** 

10. **Promotional Environment**  
    **Q:** How do you view the promotional backdrop this year?  
    **A:** The promotional environment is expected to remain similar to last year, with an emphasis on personalized offers rather than traditional advertising. Value-seeking customers are increasingly using digital coupons, with **4 billion** downloads—a rise of **1 billion** from the prior year—indicating heightened engagement.  **[KR_3377049_22]** 

d4a0673f6d2fe07deef550933453c87ab78a4310341ebdf01d8ca9f03d04f2a4

Kroger Co (KR)

Financials