The Kroger Co.

Good morning and welcome to the Kroger Co. first quarter 2025 earnings conference call. If you'd like to ask a question at the end of the presentation, please press star followed by one on your telephone keypad. If you'd like to remove your question, that's star followed by two. Please note this event is being recorded. I'd now like to turn the conference over to Rob Quast, Vice President, Investor Relations. Please go ahead.

Good morning. Thank you for joining us for Kroger's first quarter 2025 earnings call. I am joined today by Kroger's Chairman and Chief Executive Officer, Ron Sargent, and Chief Financial Officer, David Kennerly. 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. 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 the call over to Ron.

Thank you, Rob. Good morning, everyone. Thank you for joining our call today. Before jumping into the results, I wanted to share a few thoughts since I last spoke to you in March. After nearly four months as CEO, I've been very impressed with the many talented associates I've met across the company. Kroger has a strong bench of experienced operators and dedicated associates who can move our company forward. After spending my career in retail, one thing's clear. Retail always starts with the customer. It's pretty simple. Our strategies, our focus, and our resources should be dedicated to how we can make the biggest impact on serving our customers. Grounded in these principles, my priorities in this role are to position Kroger for long-term growth, accelerate top line sales, and run great stores. We can do this by better focusing on our core business and by creating a growth culture in the company. Kroger has a long runway with many opportunities ahead, and I'm grateful to be part of the team as we transition to our next phase of growth. In the past few months, We've made a number of changes to move faster and put increased focus on our customer. We're directing investments toward projects that will grow our core business, including plans to accelerate new store openings. We are reassessing our capital allocation strategy to make sure we are spending our capital on projects that offer the highest returns. We are reviewing our non-core assets. We're aggressively looking for ways to reduce costs throughout the company, and we expect to reinvest those cost savings directly into lower prices and additional store hours for our associates so that they can better serve customers. Finally, we have restructured our leadership team to ensure we have the right talent in place. We created a new e-commerce business unit, aligning all areas of the online customer experience under Yale Kossett, our chief digital officer. We continue to elevate great leaders across the company by appointing Joe Kelly, as our Senior Vice President of Retail Divisions, as well as new division presidents in King Soopers, Food for Less, and Texas, where we consolidated two divisions just last week. These changes put talented executives in roles where they can support our stores and improve the customer experience. We are making meaningful changes to the business to create a culture that benefits our customers and our associates while improving long-term shareholder value. In the first quarter, we're beginning to see the benefits of many of these changes. This morning, we announced solid first quarter results with strong sales in pharmacy, e-commerce, and fresh. Kroger identical sales, excluding fuel and adjustment items, increased 3.2%. And adjusted net earnings per diluted share was $1.49 in the first quarter, which was an increase of 4%. Now let's take a closer look at the quarter. Strong performance in fresh categories supported our identical sales without fuel results. Fresh identical sales were better than center store sales. We know our customers want healthier options and we are well positioned to deliver them across our fresh departments. Turning to our brands. As more customers search for value, we are excited about the potential for the Our Brands business. We are growing sales by offering high quality products to customers at all budget levels. This quarter, our brands grew faster than national brands for the seventh consecutive quarter. Simple Truth and private selection led our sales growth, highlighting that customers want premium products while also spending less. Our brands is also creating new products that support customers' healthier eating habits. For example, earlier this year, we identified protein as a major customer trend. And soon, Simple Truth will introduce 80 new protein products to our assortment. Targeted directly at this important trend, these products include everything from bars and powders to shakes, all from a natural and organic brand that customers trust. This is just one way that Kroger and our brands are innovating to stay ahead of what our customers want. E-commerce continues to be a key part of our business with 15% growth in the first quarter driven by strong demand and delivery. To keep improving the customer experience, we're working to deliver more accurate orders faster and reduce pickup wait times. These improvements are attracting new households to e-commerce and giving our current households more reasons to shop with us. As our e-commerce business grows, it represents a bigger impact on our results. Our teams are committed to growing both e-commerce sales and improving profitability. During the first quarter, we made good progress. and delivered our best profit improvement yet on a quarter over quarter basis. To continue driving improvements, our team is reviewing all aspects of our strategy and operations to improve the customer experience as well as the financial performance. David will share more on this topic later. We know that our best customers shop with us through both e-commerce and in stores, which makes it important for us to continue building and running great stores. Today, we're on track to complete 30 major storing projects in 2025. And looking forward, we expect to accelerate new store openings in 2026 and beyond in high growth geographies, growing our overall square footage and adding new jobs. As I mentioned earlier, we're simplifying our business and reviewing areas that will not be meaningful to our future growth. Unfortunately, today, not all of our stores are delivering the sustainable results we need. It's also important to note we paused our annual store review during the merger process. To position our company for future success, this morning we announced plans to close approximately 60 stores over the next 18 months. We don't take these decisions lightly, but this will make the company more efficient, And Kroger will offer roles in other stores to all associates currently employed at affected stores. To recap, our top priorities are clear. We're going to move with speed. We're going to concentrate on our core business, and we're going to run great stores. This is how we'll position Kroger for long-term performance. Before David gets into more detail on our financial results, I'd like to talk a little bit about our broader operating environment. Customers continue to spend cautiously in an uncertain economic environment. Many customers want more value, and as a result, they're buying more promotional products and more Our Brands products. They're also eating more meals at home. Kroger is well positioned to support our customers changing shopping habits. We offer compelling promotions and fuel rewards, outstanding Our Brands products, and personalized promotions that offer families better savings on the products they use the most. We're simplifying our promotions to make it easier for customers to save and to see clear value at the shelf. In fact, we have lowered prices on more than 2,000 additional products so far this year. As part of our work to keep prices low, we're also watching the changing environment around tariffs. Our business model is flexible to respond to those kinds of shifts And as a domestic food retailer, we expect a smaller business impact than some of our competitors. Where we do see potential tariff impact, we are proactively looking for ways to avoid raising prices for our customers, and we consider price changes as a last resort. Tariffs have not had a material impact on our business so far, and given what we know today, we do not expect them to going forward. I'd like to spend a moment talking about our associates. Our associates are the backbone of our company and are the people who create a great customer experience. One of our top operational priorities is improving in stock levels, and we improved in stock rates in every division this quarter. I appreciate our associates hard work every day to make this happen. We continue to improve our associates wages and benefits while investing in their development and well being. These investments include hourly pay, plus healthcare and pensions, as well as technology that makes work easier in our stores, including a virtual AI assistant that is improving associate productivity and engagement. This well-rounded approach is producing results, with both store and company retention rates reaching record levels this quarter. And when our associates stay longer, they learn more, take on additional responsibilities, and deliver a better customer experience, which leads to better sales. With that, I'm happy to welcome David Kinderly, Kroger's Chief Financial Officer, to our earnings call today. We're excited to have David with us, and I'm confident he will help us accelerate our growth and improve our capabilities in a number of areas. As part of this role, I've asked David to lead initiatives across several areas, including cost optimization, efficiency, and real estate, so we can put more investment in our stores, as well as our customer experience. Now I'll turn it over to David, who will review our financial results in more detail. David.