The Kroger Co.

Good morning and welcome to the Kroger Company third 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 Rob Quast, Director, Investor Relations. Please go ahead.

Good morning. Thank you for joining us for Kroger's third quarter 2021 earnings call. I am joined today by Kroger's Chairman and Chief Executive Officer, Rodney McMullin, and Chief Financial Officer, Gary Millership. 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 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. The Kroger Company assumes no obligation to update that information. Our press release and supplemental information regarding the quarter can be found 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 from as many of you as we can, we ask that you please limit yourself to one question and one related follow-up question if necessary. I would also like to announce that we will be hosting a business update on March 4th, 2022 in Florida with an opportunity to tour our recently opened Kroger Delivery Customer Fulfillment Center. We hope that you are able to join us. I will now turn the call over to Rodney.

Thank you for joining us today. We often say the holidays are our time to shine, and as we move through the holiday season, we feel great about our ability to deliver. I would like to say a huge thank you to our associates who remain engaged, energized, and focused on taking care of our customers. We are incredibly proud of our third quarter results and the underlying momentum in our business. We returned to positive identical sales without fuel for the quarter. We saw triple digital sales growth on a two-year stack and we've increased our full year 2021 guidance. Our agility and the commitment from our amazing associates is allowing us to navigate current labor and supply chain conditions and provide the freshest food at affordable prices across our seamless ecosystem. Customers are demonstrating more back to normal behaviors and at the same time are eating more food at home because it's more affordable, convenient, and healthier than other options, plus you can do it as a family. This was evidenced by our Thanksgiving holiday shopping behavior. Customers engaged in larger celebrations with friends and family compared to last year. We also saw them continuing to cook at home, leading up to and during the holiday, and select more premium products to elevate the food experience. These are all reasons why we believe the food at home change is structural and not temporary. With most people consuming meals at home and grocery stores continuing to capture the majority share of stomach, it is more important than ever that we provide customers with flexibility on how they choose to shop with us. we have the right seamless ecosystem in place to meet our customers' evolving needs. Leading into Thanksgiving, 70% of consumers said that they would be doing more of their holiday shopping in the store this year. At the same time, 84% of consumers said that they will continue to shop online the same amount or more in the future. These seemingly contradictory behaviors are exactly what Kroger's seamless ecosystem was designed to accommodate. We know that inflation is having an impact on customers as well. 82% of consumers polled across the country are feeling the impact of inflation, and one in four consumers are not confident in their finances right now. We are leveraging our data and personalization to enable our customers to stretch their food dollars We deliver value when customers need it the most with personalized promotions, big packs, and dynamic holiday offerings. Our brands also offer our customers flexibility within their spending without compromising, thanks to the wide variety of incredibly high quality and innovative products at various price points. And while price continues to be top of mind, Customers continue to desire the freshest food options, and we're there for them, leading with fresh. We grew sales in natural and organics as customers continue to gravitate toward better for you options. Our fresh departments outpaced total company identical sales without fuel during the quarter as well. We had a record quarter in our alternative farming offerings. which includes new approaches to growing produce, including vertical and indoor farm operations. These offerings expand customers' access to produce, picked at the peak of freshness. We are very proud to share that Home Chef became a billion-dollar brand on an annualized basis in the third quarter, as mealtime shortcuts and solutions, as well as new product innovations, have clearly resonated with our customers. Kroger is focused on delivering a customer-centric, seamless experience that requires zero compromise, no matter how customers choose to engage with us. We launched three new offerings during the quarter that support the plan to double digital sales and digital profitability by 2023. First, Boost by Kroger builds on our industry-leading loyalty program to deliver additional savings and personalized offers to our members. We are encouraged by the initial engagement in the program, which is ahead of internal expectations. Second, we launched Kroger Delivery Now in partnership with Instacart. This unique convenience and immediacy offering positions us to win more trips with current customers and to bring new customers to the Kroger ecosystem by offering the largest selection of quality fresh products at affordable prices in 30 minutes. Here's what's so special about this offering. It was profitable on day one, contributing to our goal to double digital profitability by 2023 that was announced during our 2021 Investor Day. And third, we announced a strategic collaboration with Bed Bath & Beyond and Bye Bye Baby that will expand our current marketplace offering and provide Kroger shoppers easy access to essential home and baby products. This exclusive offering will be available through both Kroger.com and on a small scale physical store pilot at select stores beginning in 2022. We continue to be pleased with the rollout of our customer fulfillment centers in Groveland, Florida, and Monroe, Ohio, which are exceeding internal expectations, and we are especially proud of our net promoter scores driven by our teams delivering a world-class experience for our customers, and we're really looking forward to hosting you in Groveland early next year. Turning now to our supply chain, We feel great about our ability to serve customer needs through the holidays and beyond. This is because our teams have done such a good job planning well ahead to maintain a full, fresh, and friendly customer experience. In fact, our customers took action to prepare for today's supply chain constraints back in the spring. In a great example of leveraging learnings from operating during the pandemic, we kept the additional warehouses originally brought on to support business through COVID to ensure we were able to provide for customers throughout the holiday season as well. Because of our team's agility, we are better in stock today than we were a year ago, and we were able to serve customers through the Thanksgiving holiday with items they needed for their celebrations. In fact, we increased our year-over-year pickup fill rate by over 130 basis points during the week of Thanksgiving. We chose to incur significant costs in our supply chain during 2021, which has allowed us to provide our customers today and into 2022. We continue to deploy a wide array of tools, including our own owned and operated fleet and we're working closely with suppliers to mitigate pain points for the customer. We are eager to welcome thousands of new associates to our organization as we begin an incredible holiday season. Our hybrid hiring event last month contributed to the hiring of over 64,000 new associates during the quarter. We continue to invest in our associates by expanding our industry-leading benefits, including continuing education and tuition reimbursement, training and development, health and wellness, and continued investments in associate wages. As we reflect on the one-year anniversary of our Framework for Action in response to racial injustice across the country and in the communities we serve, we are pleased to share our progress with you. Over 405,000 associates have completed diversity and inclusion training. We've increased our strategic hiring partnerships with historically black colleges and universities and Hispanic serving institutions from six to 17. The Kroger Co. Foundation has awarded more than $3 million in grants to support innovative organizations focused on building more equitable and inclusive communities. And we increased Kroger's diverse supplier spend by 21 percent to $4.1 billion last year alone, and remain on track toward our long-term goal to spend $10 billion annually with diverse suppliers by 2030. While we know that there is more work to be done, We are energized and look forward to keeping our stakeholders updated on our progress. One of Kroger's greatest strengths is our ability to manage our business successfully in every operating environment. We remain customer obsessed and focused on operational excellence to deliver for our customers, associates, communities, and shareholders. With that, I would like to turn it over to Gary to take you through our third quarter financials. Gary?