The Kroger Co.

Good morning and welcome to the Kroger Company first quarter 2021 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. 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 for Kroger's first quarter 2021 earnings call. I'm joined today by Kroger's Chairman and Chief Executive Officer, Rodney McMullen, and Chief Financial Officer, Gary Millichap. Before we begin, I want to remind you that today's discussions will include forward-looking statements. We want to caution you that such statements or 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. The Kroger Company assumes no obligation to update that information. Our first quarter press release and prepared remarks will be available on our website at ir.kroger.com. Additionally, we have introduced a new presentation summarizing our first quarter results, which is also available on our IR website. And we welcome your feedback once you have a chance to review this new document. After our prepared remarks, we look forward to taking your questions. In order to cover a broad range of topics from 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 over the call to Rodney.

Thank you, Rebecca, and thank you for joining us today. While the COVID-19 health crisis has not ended, this is the first quarter where we saw significant signs of recovery and the beginning of a return to what we are hopeful will be a new normal. Our quarter results demonstrate that Kroger is even better positioned today to connect with our customers than we were before the pandemic. because of our relentless focus on leading with fresh and accelerating with digital for our customers. I'm incredibly proud of our amazing associates who continue to be there for our customers, communities, and each other. Because of our associates' commitment, Kroger's first quarter identical sales without fuel grew ahead of our internal expectations. Digital sales grew triple digits since the beginning of 2019. We saw strong growth in alternative profits and significant progress with our cost savings initiatives. All of this gives us confidence to raise guidance for the year and announce a new $1 billion share buyback program. I'd like to spend the next few minutes discussing three key areas. First, how customer behavior is changing in this transition period. Second, how we are leading with fresh and accelerating with digital. Finally, I will highlight how we continue to live our purpose to feed the human spirit through the associate experience and our work to vaccinate millions of Americans. Our customers are in a time of transition. During the quarter, we began to see some pre-pandemic habits resume. For example, smaller holiday gatherings are likely to fade as more than half of our shoppers believe holidays will return to normal by the 4th of July. We are also seeing customers shop more frequently as COVID restrictions ease. Importantly, we saw a continuation of several pandemic trends. This includes heightened digital engagement across demographics, expanded consumption in key fresh areas like meat, produce, and natural foods, and trading up to more premium products. New trends are emerging as well as customers settle into new routines. In a recent survey of our customers, a remarkable 92% of the people say they enjoy cooking the same or more than they did pre-COVID. And as people's busy social lives pick up, more customers are looking for convenience in cooking options. We continue to utilize our data to understand those behaviors that are more permanent in nature. Whether customer habits are returning, hardening, or emerging, we will continue to meet the customer where they are and use our data science expertise to be where they are going. As we discussed during our investor day, fresh is incredibly important to our customers. Our produce fresh score metrics continue to improve, and we are testing and learning through end-to-end fresh initiatives to consistently improve the experience and deliver even more value to our customers. We announced our go fresh and local supplier accelerator. providing more local and regional suppliers the opportunity to partner with Kroger, and providing our buyers with the opportunity to discover new suppliers who share our commitment to advancing freshness, quality, and our fresh for everyone commitment. In fact, since launching on May 12th, we've already received more than 1,000 applications to participate. We are building on the momentum of 2020 within our seamless ecosystem through expanded capacity, improved customer experience, and continuous innovation. During the first quarter, we expanded capacity by 15% to support our continued sales growth. Our teams worked together to improve in-stock fill rates and further reduce wait time at car side. enhancing the customer experience. To date, we have over 2 million time slots available per week to serve our customers the fresh food and essential products they want when they want it. We continue to expand our seamless ecosystem through our new customer fulfillment centers powered by Ocado. We opened our first facility in Ohio in March and at the beginning of June launched Kroger Delivery in Florida. Launching a new geographic is incredibly exciting and a milestone moment in our history. Our Kroger delivery team is ready to bring fresh, affordable food and a consistent customer experience directly to the doors of our customers. In addition to the Groveland CFC, a spoke in Tampa and Jacksonville are also now open. The hub and spoke model allows us to extend the range of our CSCs, allowing us to serve more customers incredible products directly to their door. And we are just getting started. We are thrilled to report that MPS scores are among the highest in the digital retail, and we continue to be pleased with our fill rates and our on-time delivery metrics. Kroger's data and personalization capabilities will contribute to increasingly meaningful ways to grow our e-commerce reach and capabilities, and we continue to elevate our personalized customer experience with our data today. During the quarter, we made more than 258 billion personalized recommendations to our customers through our digital experience. At Kroger, we have always known that our associates are the heart of our business. We are proud of our opportunity culture, where people can come for a job and stay for a career. More than 70% of our store directors began as part-time clerks. We are building a connected culture that embraces agility and collaboration and that celebrates and incentivizes lifelong learning and growth. For example, since launching it in 2017, our industry-leading education assistance program has helped more than 6,300 associates take steps to learn and grow as individuals and employees. That is one of many ways we invest in our associates. We continue to invest in wages, with our average hourly rate increasing during quarter one as well. We are on track to increase our average hourly rate to over $16, and with comprehensive benefits, our average hourly rate will be approaching $21 by the end of the year. As we have done throughout the pandemic, Kroger remains committed to health and safety. To support the Biden administration's goal to have at least 70% of U.S. adults receive their first COVID-19 vaccine dose by July 4th, we launched an aggressive customer and associate marketing campaign and community immunity giveaway. Next week, we will announce the first $1 million winner and 10 free groceries for a year winners. Since announcing the giveaway, we are running 29% ahead of forecasted vaccinations. Today, Kroger Health has administrated over 5 million vaccines in our pharmacies, and clinic locations and at community sites across the country. Now, I would like to turn it over to Gary to take you through our first quarter results. Gary?