The Kroger Co.

Good morning and welcome to the Kroger Company fourth quarter 2019 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. If you had joined the question queue previous to this moment, please press star 1 again to rejoin the queue. Please note, this event is being recorded. I would now like to turn the conference over to Rebecca Maness, Director, Investor Relations. Please go ahead.

Thank you, Gary. Good morning, and thank you for joining us. Before we begin, I want to remind you that today's discussion will include forward-looking statements. We want to caution you that such statements are predictions... and actual events or results can differ materially. A detailed discussion of the many factors that we believe may have a material effect on our business on an ongoing basis is contained in our SEC filings, but Kroger assumes no obligation to update that information. Both our fourth quarter press release and our prepared remarks from this conference call will be available on our website at ir.kroger.com. After our prepared remarks, We look forward to taking your questions. In order to cover a broad range of topics for as many of you as we can, we ask that you please limit yourself to one question and one follow-up question if necessary. I will now turn the call over to Kroger's Chairman and Chief Executive Officer, Rodney McMullen.

Rodney McMullen Thank you, Rebecca. Good morning, everyone, and thank you for joining us. With me to review Kroger's fourth quarter and 2019 fiscal year results is Chief Financial Officer Gary Millership. We were pleased with our 2019 results and improving trends in our supermarket business. As a result of our customer obsession and renewed intensity around operational excellence, we delivered on our commitments for identical sales without fuel, adjusted FIFO operating profit, cost savings, and delivered over $100 million of incremental operating profit through alternative profit streams in 2019. For the full year 2019, we delivered on the total shareholder return, or TSR model, that we outlined at our investor day and our position to deliver on our TSR model of the future. We are using the power of Kroger's stable and growing supermarket business to create meaningful incremental operating profit through the alternative profit stream businesses positioning our business for long-term growth that generates consistently attractive total shareholder returns. We continue to generate strong and durable free cash flow as reflected by the fact that the company has reduced debt by $1.1 billion over the prior four quarters and continues to increase the dividend to create value for shareholders. In total, we returned $951 million to shareholders in 2019. Our confidence that we can deliver even stronger TSR in the future is guided by our strong free cash flow and sustainable net earnings growth. By executing against the restock Kroger framework, we are repositioning our business by widening and deepening our competitive moats. The four main areas of Restock Kroger framework, redefine the customer experience, partner to create value, develop talent, and live our purpose, continue to be a top strategic priority for us. We are continuing to enhance the customer connection with investments in our competitive moats of today, which are product freshness and quality, our brands and personalized rewards, and our competitive mode of tomorrow, the seamless ecosystem we are building. Fresh continues to be an important driver of sales for Kroger. Our fresh departments drive trips, loyalty, and gross margin. Again, our produce department's strong identical sales for the quarter demonstrated how our store teams are focused on improving everyday execution in ways that are highly relevant to our customers. Our Fresh for Everyone campaign has been well received and is driving significant improvements in marketing effectiveness. It is also driving more trips to our seamless ecosystem in-store and online. Our Brands achieved its best year ever, exceeding $23.1 billion in sales. We introduced 758 new Our Brand items in 2019. which helped drive strong year-over-year sales lift across our portfolio of brands. Since its launch in 2013, Simple Truth has become the leading natural and organic brand in the country, with annual sales exceeding $2.5 billion in 2019. After identifying plant-based foods as a key food trend well before 2019, we introduced a Simple Truth plant-based collection in 2019. And that launches off to a strong start. The Simple Truth brand expanded into plant-based meats with the Merge grinds and patties in January. And in only one month, these products ranked third in the category for the entire fourth quarter. Our private selection brand eclipsed $2 billion in sales for the first time. The Kroger brand exceeded $13.7 billion in sales, capitalizing on product development around key customer trends like global and regional flavors. Kroger continues to invest in digital as we build a seamless ecosystem that combines the best of the physical store experience with the digital customer experience for our customers. This is where customers are increasingly going to meet their needs. We know our customers value the greater convenience this provides, and our data shows it's an essential component of driving overall loyalty. Digitally engaged customers not only drive growth through our digital modalities, they also help drive brick and mortar sales growth and share of wallet as well. Providing our customers with the ability to have anything, anywhere, anytime from Kroger sets us apart from a large segment of our competitors and will drive loyalty, as well as our long-term growth and margin expansion. Our approach to partnerships is simple, but not simplistic. We think they work best when the two of us can do things together that neither of us could have done alone. We are roughly a year away from our first fully functional customer fulfillment center with Ocado, and Monroe, Ohio. These facilities will accelerate our ability to provide customers with a seamless experience in a much more cost-effective way. We continue to be excited about the partnership. As we've shared previously, we believe Ocado's value as a partner is not just on its current capabilities, but also how quickly the company is able to innovate and serve rapidly changing consumer markets. We continue to roll out our plan, and you should not assume just large facilities. We are designing a flexible distribution network, combining disaggregated demand and proximity of our stores, medium-sized facilities, and large facilities. Our network will flex as demand matures, and the optionality will allow us to fulfill same-day or next-day delivery or pickup, and the customer or store replenishment. As America's grocer, we continue to invest in our associates as part of Restock Kroger and have made significant investments in our associate wages. The investments Kroger is making in human capital is putting more money in our associates' pockets today. Our investments in associate wages has increased Kroger's average hourly rate to $15 an hour in 2019. And with our comprehensive benefits factored in, our average hourly rate is over $20, benefits that many of our competitors don't offer. We are working hard to ensure that we have the right talent, teams, and structure in the right focus areas in our core supermarket business and our alternative profit businesses. Our focus is on developing, training, and promoting internal talent while at the same time hiring seasoned food industry executives to drive our retail supermarket business. In addition to investing in American workers and communities, Kroger is also leading the effort to end hunger in the places we call home and eliminate all waste across the company through our award-winning Zero Hunger, Zero Waste social impact plan. We made this bold commitment rooted in our purpose because we fundamentally believe that customers, associates, and investors are increasingly choosing where to shop, work for, and invest in companies that are purpose-driven and are actively making the world a better place. In these ways, Restock Kroger is the right framework to reposition our business to create value for all of our stakeholders, both today and in the future. Our focus on the strategic driver's is expanding Kroger's competitive moats and will drive total shareholder return in 2020 and beyond. And now I will turn it over to Gary for more details in the quarter financials. Gary?