The Kroger Co. (NYSE:KR) Q4 2014 Earnings Conference Call - Final Transcript

Mar 05, 2015 • 10:00 am ET


The Kroger Co. (NYSE:KR) Q4 2014 Earnings Conference Call - Final Transcript


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Good morning, and welcome to the Kroger Company Fourth Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Cindy Holmes, Director of Investor Relations. Please go ahead.

Cindy Holmes

Thank you, Laura. Good morning and thank you for joining us. Before we begin, I want to remind you that today's discussion 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, but Kroger assumes no obligation to update that information.

Both our fourth quarter press release, which includes a reconciliation of certain non-GAAP measures discussed today, and our prepared remarks from this conference call will be available on our website at 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 Rodney McMullen, Kroger's Chairman and Chief Executive Officer. Rodney?

Rodney McMullen

Thank you, Cindy and good morning everyone and thank you for joining us today. With me to review Kroger's fourth quarter and full year 2014 results are Mike Ellis, Kroger's President and Chief Operating Officer and Mike Schlotman, Senior Vice President and Chief Financial Officer. 2014 was an outstanding year for Kroger. First, let me say how proud I am to work with such a great and outstanding team of associates. Each of them deserves a round of applause for improving our connection with all customers and growing our core business, right in line with our growth strategy.

Second, I am pleased to report that we kept our commitments to you, our shareholders. As you know, the growth plan we first outlined in October of 2012 includes four key performance indicators, positive identical supermarket sales growth, slightly expanding non-fuel FIFO operating margin, growing return on invested capital and annual market share growth. In 2014, we met or exceeded each of these metrics. At the end of the year, we achieved an industry-leading 45th consecutive quarter of positive identical supermarket sales growth without fuel.

We exceeded our goal to slightly expand FIFO operating margin, without fuel, on a rolling four-quarter basis. We improved return on invested capital even as we increased capital investment. And we captured incremental market share for the 10th consecutive year. Strong performance means strong shareholder returns. We exceeded our long-term, net earnings per diluted share growth rate of 8% to 11% in fiscal 2014, and we increased our dividend for the eighth consecutive year, since we reinstated our dividend. Because we've been delivering at this level, high level of performance, consistently and for so long, it can start to look easy or be