The Kroger Co. (NYSE:KR) Q1 2016 Earnings Conference Call - Final Transcript

Jun 16, 2016 • 10:00 am ET

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The Kroger Co. (NYSE:KR) Q1 2016 Earnings Conference Call - Final Transcript

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Executive
Rodney McMullen

anytime, anywhere.

As you know, we are taking a disciplined approach to digital growth, testing new offerings in local markets so we can make sure we get it right before we scale offerings more broadly. Our Click List and Express Lane offerings are now available in 25 markets with more to come.Our merger with Harris Teeter gave us a base of learnings that allowed us to ramp up quickly the development of Click List. Customers now have downloaded nearly 3 billion digital coupons and offers from our mobile app and website, and we continue to experiment with Vitacost.com's ship-to-home technology and platform.

Earlier this week, Kroger's technology business unit was named one of the top 100 places to work by Computer World Magazine. We are obviously very proud of this honor. We've launched a new website, kroger.comlivekt, to connect with and recruit top talent from around the world to join the Kroger team. Similarly, we are finding out that Click List also serves as a great tool to both hire and retain great people. Kroger is a fantastic place for tech talent to build careers because the technology they create can improve the lives of millions of customers each and every day.

In April, we announced a strategic investment in Lucky's Market, a specialty grocery store chain focused on natural, organic and locally grown products currently operating in 22 locations. We invested in Lucky's because of their great people and unique go-to-market strategy which includes smaller-format stores that resemble an indoor farmer's market, plus a culinary department that showcases amazingly restaurant-quality prepared foods. Lucky's approach is very much aligned with our efforts to provide affordable, fresh, organic and natural foods as part of our customer-first strategy. We expect to learn a lot from each other.

There are a lot of questions about the economy and the customer, inflation or lack thereof, consumer sentiment or competition. These are all issues that we've managed through, some several times over the last 50 quarters. Inflation, for example, I've often said that a 2% to 3% inflation would be a great environment to operate in; however, you rarely get the perfect operating environment. What we know is that by focusing on our associates and our customers will be a winning formula in the future as it has been in the past. At times like this, it's even more important to have 84.51 on the team so we can generate insights into what our customers want and figure out a way to give them that without having to guess at it.

Kroger's core business is solid. We are providing exceptional customer service and the highest-quality freshest products. Customers are giving us higher marks for better product selection and store layout, as well as friendlier service. We remain focused on customer loyalty that grows tonnage and both our top and bottom lines, which then creates value for shareholders.

Where we are right now, it looks like we will be at the low end to mid point