Financial Data and Key Metrics Changes - Kroger achieved identical sales without fuel growth of 1.5% for the full year 2024, with digital sales growing 10% compared to last year [25][28] - Adjusted FIFO operating profit for 2024 was $4,700,000,000, with adjusted EPS at $4.47 per diluted share, reflecting a 2% decline when excluding the fifty-third week [28][29] - The FIFO gross margin rate excluding rent, depreciation, and amortization increased by 32 basis points for the full year, primarily due to the sale of Kroger Specialty Pharmacy and lower shrink [26][27] Business Line Data and Key Metrics Changes - Health and wellness was a strong driver of sales in 2024, led by growth in GLP-1s [26] - Alternative profit businesses generated $1,350,000,000 in operating profit, driven by a 17% increase in media [18] - Digital sales reached over $13,000,000,000 in 2024, with significant improvements in profitability noted in the fourth quarter [16][17] Market Data and Key Metrics Changes - Customers adjusted spending habits due to macroeconomic factors, with budget-conscious households reducing spending while less budget-conscious households remained resilient [12] - Inflation for 2024 was in line with expectations, with projections for 2025 inflation set at 1.5% to 2.5% [29][30] Company Strategy and Development Direction - Kroger aims to deliver total shareholder return of 8% to 11% over time, focusing on executing its go-to-market strategy and enhancing customer experience [9][10] - The company plans to significantly increase investment in major store projects, completing 30 major store projects in 2025 [34] - The board has formed a search committee for a new CEO, indicating a focus on leadership continuity and strategic execution [7][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate inflationary pressures and maintain low prices for customers [30] - The company is optimistic about future growth opportunities, particularly in digital sales and alternative profit businesses [19][38] - Management emphasized the importance of associate well-being and retention, which has reached record levels [31][32] Other Important Information - Kroger's net total debt to adjusted EBITDA ratio was 1.79, below the target range of 2.3 to 2.5, providing financial flexibility [33] - The company announced a new $7,500,000,000 share repurchase authorization, with an accelerated share repurchase program for $5,000,000,000 [35] Q&A Session Summary Question: Guidance for 2025 and CEO succession - Management indicated that operating profit growth is expected from both core and alternative profit businesses, with a focus on identifying the right leader for Kroger's growth [44][46][50] Question: Digital sales and profitability improvements - Management noted strong digital sales growth and improvements in profitability, with ongoing investments in technology and operational efficiency [55][56][58] Question: ID sales guidance and inflation impact - Management acknowledged that ID sales guidance reflects flat to slightly up volumes, with inflation expectations influencing the outlook [62][64] Question: Share repurchase and balance sheet strategy - Management confirmed plans for share repurchase and maintaining a leverage ratio that allows for flexibility in capital allocation [90][91] Question: Competitive pricing and inflation trends - Management highlighted the importance of competitive pricing and monitoring supplier price increases, with a strategy to keep prices low for customers [94][96]

Core Insights - Kroger experienced significant growth in digital sales, with an 11% increase in the fourth quarter, surpassing the overall identical sales growth of 2.4% [1][2] - Digital sales contributed $13 billion to Kroger's total sales of $147.1 billion for fiscal 2024, highlighting the importance of digital channels for the company [2] - The company views digital engagement as a key growth driver, noting that digitally engaged households spend nearly three times more than non-digitally engaged ones [3] Digital Sales and AI Tools - Kroger's digital sales are seen as an "important growth accelerator," with the company implementing two new AI tools in 2024 to enhance productivity [3][4] - One AI tool focuses on inventory management using real-time sales and shipment data, while the other serves as a virtual assistant for associates, aiding in onboarding and HR interactions [4] - Approximately 70,000 associates are currently utilizing the AI tool for over 70 different use cases [4] Personalization and Customer Engagement - The company achieved a 10% increase in digital coupon savings for customers and enhanced its Boost membership by adding Disney streaming options [5] - Kroger's strategy of offering high-quality products with personalized offers has led to strong customer engagement, reflected in growth in both households and loyalty [5] Future Outlook - Kroger anticipates identical sales growth of 2% to 3% in 2025, with plans to build more stores and attract new households to enhance loyalty and shareholder value [6] - The company is focused on identifying a new CEO to drive growth and enhance shareholder value following the recent resignation of the previous CEO [7]

The Kroger Co. (NYSE:KR) Q4 2024 Earnings Call Transcript March 6, 2025 10:00 AM ET Company Participants Robert Quast - VP, IR Ron Sargent - Interim CEO Todd Foley - Interim CFO Conference Call Participants Simeon Gutman - Morgan Stanley Leah Jordan - Goldman Sachs Michael Lasser - UBS John Heinbockel - Guggenheim Partners Michael Montani - Evercore ISI Rupesh Parikh - Oppenheimer Ed Kelly - Wells Fargo Ken Goldman - JPMorgan Karen Short - Melius Research Chuck Cerankosky - Northcoast Research Krisztina Kat ...

Core Insights - Kroger Co. reported fourth-quarter fiscal 2024 results with top-line sales missing estimates while bottom-line earnings exceeded expectations, although both metrics declined year over year [1][3][4] Financial Performance - Adjusted earnings per share were $1.14, beating the Zacks Consensus Estimate of $1.12, but down from $1.34 in the previous year [3] - Total sales were $34,308 million, a decrease from $37,064 million in the year-ago period, impacted by a $2.7 billion effect from the 53rd week in 2023 and a $737 million decline from Kroger Specialty Pharmacy sales [4] - Excluding fuel, Kroger Specialty Pharmacy, and the extra week in 2023, sales grew by 2.6% year over year, with identical sales without fuel rising by 2.4% [5] Margin and Profitability - Gross margin was 22.7% of sales, influenced by the sale of Kroger Specialty Pharmacy and lower shrink, partially offset by lower pharmacy margins [6] - Adjusted FIFO operating profit was $1,174 million, down from $1,307 million reported in the year-ago period [7] Balance Sheet and Cash Flow - Kroger ended the quarter with cash of $216 million, total debt of $17,905 million, and shareholders' equity of $8,281 million, with net total debt increasing by $3,584 million over the last four quarters [8] - The company guided capital expenditures between $3.6 billion and $3.8 billion and expects to generate adjusted free cash flow of $2.8 billion to $3 billion in fiscal 2025 [8] Future Outlook - For fiscal 2025, Kroger anticipates identical sales without fuel to increase between 2% and 3%, with adjusted earnings projected to be between $4.60 and $4.80 per share compared to $4.47 in fiscal 2024 [9] - Management expects an adjusted FIFO operating profit of $4.7 billion to $4.9 billion for fiscal 2025, consistent with the $4.7 billion reported in fiscal 2024 [9] Stock Performance - Kroger's shares have risen by 12.5% over the past three months, outperforming the industry growth of 2.6% [10]

Kroger Q4 2024 Earnings Release March 6, 2025 Safe Harbor This presentation includes certain statements that constitute "forward-looking statements" about Kroger's financial position and expected performance, including our proposed transaction with Albertsons Companies. These statements are based on management's assumptions and beliefs in light of currently available information. Such statements are indicated by words or phrases such as "committed," "could," "delivering," "guidance," "may," "model," "opport ...

Kroger (KR) came out with quarterly earnings of $1.14 per share, beating the Zacks Consensus Estimate of $1.12 per share. This compares to earnings of $1.34 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 1.79%. A quarter ago, it was expected that this supermarket chain would post earnings of $0.98 per share when it actually produced earnings of $0.98, delivering no surprise.Over the last four quarters, the company has surpass ...

Core Insights - Kroger reported mixed Q4 earnings, with adjusted EPS of $1.14 exceeding consensus expectations but total revenue of $34.3 billion falling short of estimates and down 7% year over year [1][2][6] - The resignation of CEO Rodney McMullen raised concerns about the company's leadership during a challenging financial period [2] Financial Performance - Adjusted EPS was $1.14, compared to analysts' estimate of $1.11 and last year's $1.34, reflecting a 15% decline [3] - Total sales decreased to $34.3 billion from $37.1 billion in Q4 2023, marking a 7% year-over-year decline [3] - Operating profit fell to $912 million from $1.19 billion, a decrease of 23.6% year over year [3] - Identical sales growth was 2.4%, a significant improvement from a decline of 0.8% in the previous year, representing a 3.2 percentage point increase [3] Business Overview - Kroger operates over 2,700 supermarkets across 35 states, utilizing a diverse retail format that includes pharmacies and fuel centers [4] - The company generated $31 billion in sales from its private label brands, known as "Our Brands," in 2023 [4] Digital Transformation - Kroger has invested heavily in digital transformation, with digital sales increasing by 11% year over year [5][7] - The company focuses on personalized customer experiences, linking 95% of transactions to customer data [5] Q4 Developments - The 7% drop in total sales was primarily due to reductions in fuel and pharmacy sales, although same-store sales rose by 2.4% excluding fuel [6] - Alternative profit businesses, including advertising and data services, contributed $1.35 billion to operating profit, with media-related revenue increasing by 17% [7] Cost Management - Operating, General, and Administrative Expenses rose due to wage investments and incentive plans, impacting profitability [8] - A LIFO accounting charge of $30 million indicated inventory cost pressures, compared to an $18 million credit last year [8] Future Outlook - Kroger anticipates identical sales growth of 2%-3% in fiscal 2025, with adjusted FIFO operating profit projected between $4.7 billion and $4.9 billion [9] - The company plans to focus on digital ecosystems and customer experience enhancements to drive growth [9][10] - Management expresses optimism for the next fiscal year, aiming to improve competitive pricing and expand its digital footprint [10]

Core Viewpoint - Kroger Co. has issued a conservative outlook due to economic uncertainties related to tariffs and trade wars, indicating challenges from factors "outside our control" [1] Company Summary - Kroger is unable to provide a full reconciliation of its earnings projections due to the unpredictability of certain adjustment items, stating that it would require "unreasonable effort" to do so [1]

Financial Reporting - The Kroger Co. plans to report its fourth quarter and full-year 2024 results on March 6, 2025, along with full-year 2025 guidance[4] Leadership Changes - Rodney McMullen has resigned as Chairman and CEO effective immediately, with no impact on the company's financial performance reported[5][6] - Ronald Sargent has been appointed as interim CEO and Chairman of the Board, effective immediately[8] - Sargent has extensive experience in retail, having served as CEO of Staples, Inc. from 2002 to 2016[9] - The Board has formed a Search Committee to find the next CEO, engaging a nationally recognized firm for the search[8] - McMullen will forfeit all unvested equity awards and will not receive a 2024 bonus due to his resignation[7]

Core Insights - Kroger reported strong fourth quarter results for fiscal year 2024, exceeding expectations and demonstrating the strength of its business model and execution by its teams [3][4][10] - The company is positioned for long-term sustainable growth, focusing on enhancing customer experience through quality and low prices [3][24] Fourth Quarter Financial Results - Total sales for Q4 2024 were $34.3 billion, down from $37.1 billion in Q4 2023, with a 2.4% increase in identical sales excluding fuel [4][10] - Earnings per share (EPS) for Q4 2024 was $0.90, compared to $1.01 in Q4 2023, while adjusted EPS was $1.14, unchanged from the previous year [10][59] - Operating profit for Q4 2024 was $912 million, down from $1.194 billion in Q4 2023, with adjusted FIFO operating profit at $1.174 billion [10][62] - Gross margin improved to 22.7% in Q4 2024 from 22.3% in Q4 2023, primarily due to the sale of Kroger Specialty Pharmacy and lower shrink [5][14] Fiscal Year 2024 Financial Results - Total company sales for fiscal year 2024 were $147.1 billion, down from $150.0 billion in 2023, with a 1.5% increase in identical sales excluding fuel [13][14] - EPS for fiscal year 2024 was $3.67, up from $2.96 in 2023, while adjusted EPS was $4.47, down from $4.76 [9][59] - Operating profit for the year was $3.8 billion, compared to $3.1 billion in 2023, with adjusted FIFO operating profit at $4.7 billion [9][62] Digital Sales and Growth Initiatives - Digital sales grew by 11% in Q4 2024, with more than $13 billion in total digital sales for the year [10][24] - Kroger introduced over 900 new Our Brands items in 2024, including 370 fresh items, and launched new meal bundles to promote healthy eating [27][24] Capital Allocation and Share Repurchase - Kroger commenced a $5 billion accelerated share repurchase program, with 65.6 million shares repurchased during the quarter [19][24] - The company expects to continue generating strong free cash flow and plans to invest in business growth while maintaining its dividend [17][24] Guidance for Fiscal Year 2025 - Kroger anticipates identical sales growth of 2.0% to 3.0% for fiscal year 2025, with adjusted FIFO operating profit projected between $4.7 billion and $4.9 billion [26] - The company expects adjusted net earnings per diluted share to be in the range of $4.60 to $4.80, with adjusted free cash flow of $2.8 billion to $3.0 billion [26]