The Kroger Co.

Good morning and welcome to the Kroger Co second 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. 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 second 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.

Well, good morning, everyone. Thank you for joining our call today. We're happy to report another quarter of strong results, which demonstrates the clear and measurable progress we're making on our key priorities to simplify the organization, to improve the customer experience, and to focus on work that creates the most value. Today, I want to talk about what we've accomplished, the proof points we see in our quarterly results, and how our priorities are positioning Kroger for sustained long-term growth. Over the last several months, we've made good progress to position the company for future success. A key part of that success is a strong leadership team. And during the quarter, we continue to upgrade our team. We promoted a top division president to lead our brands, one of our key growth initiatives. We hired a new head of product sourcing who will help us lower our cost of goods sold and close the gap with the industry's best in class. We welcomed a new general counsel, and we continue to elevate strong retail leaders across the company, including several new division presidents. As we continue to build our leadership team, we're also looking at our costs, especially those expenses that don't directly support our priorities or deliver value to our shareholders. As we shared last quarter, we've begun closing approximately 60 unprofitable stores. Last month, we also reduced our corporate administrative team by nearly 1,000 associates. While these decisions are difficult, they're also necessary for the company's long-term success. Additionally, in order to create greater focus and simplify our business, we're reviewing all non-core assets to determine their ongoing contribution and role within the company. And finally, we recently put an issue behind us by reaching a legal settlement with CNS wholesale grocers. We are pleased to resolve the claims so that we can remain focused on serving our customers and running great stores. Our efforts to create greater focus are showing up in today's second quarter results. Identical sales without fuel grew 3.4%, which was ahead of our expectations. This is our sixth consecutive quarter of identical sales without fuel improvement. Sales growth was led by pharmacy, e-commerce, and fresh categories. We know that fresh products are important to our customers, specifically in meat and produce. These categories continue to outpace center store sales and reflect the growing demand for healthier options. Our sales growth in fresh categories shows that we're making strong progress in the categories our customers care most about. Improving grocery volume is also important to us. We're making strategic price investments, which led to another quarter of sequential improvement. In fact, since the beginning of the year, we've lowered prices on more than 3,500 incremental products across our stores, which is improving our price spreads against our major competitors. As we lower prices for our customers, we're committed to doing so in a way that keeps our gross margins stable. We're making our promotions simpler and have continued to reduce complex promotional offers. Additionally, we're making it easier for non-digital customers to take advantage of all the value Kroger offers by reintroducing paper coupons in every store. Our customers are recognizing these changes, and they're giving us credit for them. We know this because customer price perception improved in nearly every division this quarter, and we saw another quarter of sequential improvement in share. Beyond the price of the shelf, families are also looking for quality and value. Our brand's products had another strong quarter with sales growth again outpacing national brands. Our brands offer unique products with high quality and represent a point of differentiation for Kroger. Simple truth and private selection brands again led our growth. Looking ahead, we see our brands as a critical strategic asset, helping us grow sales, and build loyalty with customers. E-commerce. E-commerce also continues to be an important and growing part of our business. Sales were strong in the second quarter with 16% growth, led by good performance and delivery. We continue to make progress on improving profitability, and we saw improvements in both pickup and delivery profitability on a quarter-over-quarter basis. E-com remains a top priority for us. Running great stores is also critical to our future, and our store teams are delivering on the basics, being in stock, showing clean and uncluttered aisles, and making shopping easier for our customers. Our internal composite scores, which track key metrics like in-stock levels, fresh product quality, and customer service are showing consistent quarter over quarter improvement. And as we're improving our store and e-commerce shopping experiences, We're also taking meaningful steps to reduce our cost structure. In the second quarter, we were pleased with our OG&A rate improvement and will continue to aggressively look for ways to reduce costs throughout the company. We believe that many cost opportunities remain. So to summarize, we've made strong progress so far this year, and we also know that we have a lot more work to do. Looking ahead, We're focused on investments that will grow our core business. The first of these is new stores. We're on track to deliver 30 major storing projects in 2025, and we're accelerating new store projects with more efficient layouts and faster construction timelines. In 2026, we expect to increase store openings by 30%, helping us grow both in-store and online sales faster. While we are growing our physical footprint, we're also modernizing our business to operate more efficiently and serve customers better. Artificial intelligence is one of the key tools to help us get there. Accelerating our AI efforts is a natural step for Kroger, given our long history of leadership and data and machine learning. Where we've implemented AI in different parts of the organization, we're seeing results. with more competitive pricing, shrink improvements and faster fulfillment, which enables two hour pickup for customers. These are just a few examples of what AI is doing to help us better serve our customers with more and bigger opportunities ahead to both support our associates and improve the customer experience. E-commerce will also continue to have a meaningful and growing impact on our financial results, which is why we announced a thorough strategic review last quarter. We are progressing with two key objectives in mind. First, we will improve the customer experience by using our stores to deliver groceries faster. Stores are our most important asset. And when we use our stores to fulfill online orders, the inventory is closer to customers and the last mile delivery costs are lower. As demand for convenience grows, we can leverage our store footprint to reach new customer segments and expand rapid delivery capabilities without significant capital investments. Which leads to our second objective, improving profitability and reducing our cost to serve. We're examining all aspects of our business to drive greater efficiency, including a full site-by-site analysis of our Kroger automated fulfillment network. Where we have seen strong demand and high density areas, these facilities deliver better results than those facilities where density is lower and customer adoption has been slower. We continue to evaluate all options across all facilities to improve profitability while continuing to provide a great customer experience. We expect to share an update on our strategic review during the third quarter. We're confident that the outcome of our work will lead to both stronger e-comm capabilities and a clear path toward profitability. Finally, we're starting the foundational work to refresh our go-to-market strategy. This involves a deep dive into customer data and a rigorous assessment of our competitive positioning. This important work will set us up for even stronger performance in the future. Now I'll turn it over to David, who will review our financial results in more detail. David?