Forward-Looking and Cautionary Statements This presentation contains, and oral statements made from time to time by our representatives may contain, "forward-looking statements." All statements other than statements of historical facts contained in this presentation, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management, expected market growth and any activities, events or developments that we in ...

Financial Data and Key Metrics Changes - Kroger achieved identical sales without fuel growth of 2.6% year-over-year, with a two-year stack basis growth of 4.9% [12][19] - Adjusted EPS was $1.05, reflecting a 7% growth compared to last year [23] - FIFO gross margin rate, excluding rent, depreciation, and amortization and fuel, increased by 49 basis points year-over-year [20] Business Line Data and Key Metrics Changes - E-commerce sales grew 17%, driven by delivery, with significant improvements in profitability [13][24] - Pharmacy business continued strong growth, contributing positively to overall operating profit despite impacting margin rates [19][23] - The company's internal composite scores for store operations showed steady improvement, indicating better customer service and product availability [9] Market Data and Key Metrics Changes - Spending from higher-income households remained strong, while middle-income customers faced increased pressure, leading to smaller, more frequent shopping trips [10][11] - Food inflation increased moderately, particularly in beef, impacting customer purchasing behavior [19] Company Strategy and Development Direction - Kroger is evolving its hybrid fulfillment model to improve operational efficiency and profitability, including the closure of three underperforming automated fulfillment centers [6][25] - The company plans to accelerate capital investment in new stores and expand its footprint, with 14 new stores expected to break ground in the fourth quarter [14][15] - A focus on leveraging technology and artificial intelligence to enhance customer experience and streamline operations is a key part of the strategy [16][17] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic uncertainty affecting consumer behavior, with a focus on delivering value through lower prices and promotions [10][11] - The company expects e-commerce profitability improvements of approximately $400 million in 2026, making the e-commerce business profitable [9][25] - Management remains cautious about the competitive environment and anticipates continued challenges in the grocery sector [39] Other Important Information - Kroger's media business showed double-digit growth and is expected to create new monetization opportunities through partnerships with delivery providers [26] - The company is committed to returning to in-office work five days a week to enhance collaboration and decision-making [16] Q&A Session Summary Question: Can you talk about the accelerated sourcing program? - Management expressed excitement about new investments in stores, emphasizing the importance of location and operational infrastructure for success [32] Question: What are you looking for in the new CEO? - The board is seeking a candidate with a deep understanding of retail transformation, customer focus, and cultural fit with Kroger [35] Question: How do you feel about the current grocery ID trend? - Management acknowledged a competitive environment and noted that consumer caution has impacted sales, but they remain focused on value and promotions [36][39] Question: Can you discuss the impact of pharmacy drug pricing headwind? - Management clarified that the changes from the Inflation Reduction Act will lower sales but will not impact earnings due to manufacturer rebates [44] Question: What is the scalability of the e-commerce business? - Management indicated that the e-commerce business is now profitable and expects continued strong double-digit growth moving forward [60][61]

Core Viewpoint - Walmart's longtime CEO Doug McMillon will retire in January 2026, with John Furner, the current CEO of Walmart US, set to take over on February 1, 2026, marking a significant leadership transition for the company [1][10]. Group 1: John Furner's Background and Career - John Furner began his career at Walmart in 1993 as an hourly store associate, earning $4.50 per hour, and has since climbed the corporate ladder over a thirty-plus-year career [2][3][10]. - Furner graduated with a business degree from the University of Arkansas and has held various roles, including CEO of Sam's Club in 2017 and CEO of Walmart's US division in 2019 [2][10]. - During his tenure at Sam's Club, Furner achieved 11 consecutive quarters of positive sales comparisons and strong membership growth [3][10]. Group 2: Leadership Roles and Contributions - Furner has held several key positions at Walmart, including assistant store manager, district manager, and vice president of global sourcing, among others [4][6][10]. - He served as the head of marketing and merchandising for Walmart China and was the chief merchant for Sam's Club in the United States [6][10]. - Furner has been involved with the National Retail Federation's board of directors, serving as chairman from 2022 to 2025 [6][10]. Group 3: Transition and Future Vision - Greg Penner, Chairman of Walmart Inc, expressed confidence in Furner's ability to lead the company into its next chapter of growth and transformation, highlighting his comprehensive understanding of the business [7][10]. - Doug McMillon praised Furner's commitment to associates and the company, noting his curiosity and digital acumen as key attributes for future success [8][10]. - Furner emphasized his gratitude for the trust placed in him and outlined a vision for innovation and AI-driven retail, focusing on serving customers and supporting associates [9][10].