The Kroger Co. (NYSE:KR) Q1 2017 Earnings Conference Call - Final Transcript

Jun 15, 2017 • 10:00 am ET


The Kroger Co. (NYSE:KR) Q1 2017 Earnings Conference Call - Final Transcript


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Good morning, everyone, and welcome to The Kroger Company's First Quarter Earnings Conference Call. All participants will be in a listen-only mode. (Operator Instructions) Please also note today's event is being recorded.

At this time, I'd like to turn the conference call over to Ms. Kate Ward, Director of Investor Relations. Ma'am, please go ahead.

Kate Ward

Thanks, Jamie. Good morning and thank you for joining us.

(Forward-Looking Cautionary Statements)

Both our first quarter press release 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. Thank you.

I will now turn the call over to Kroger's Chairman and Chief Executive Officer, Rodney McMullen.

Rodney McMullen

Thank you, Kate. Good morning, everyone, and thank you for joining us. With me to review Kroger's first quarter 2017 results is Executive Vice President and Chief Financial Officer, Mike Schlotman.

As we all know, there is a lot of change in the food retail industry; both in terms of the operating environment and the competitive landscape. The best thing that we can do is to stay on the offense by continuing to focus on our customers, what they want and need today and what we anticipate they will want and need tomorrow, and executing our strategy.

We continue to manage our business for the long-term and to deliver earnings growth on a three-to five-year time horizon. We are making meaningful investments in our digital and online growth. We believe that customers of the future will want to shop with us for anything, anytime, and anywhere.

In the first quarter, we saw more than 30% growth in new digital customers and a more than 30% increase in digital visits, with faster growth in mobile compared to last year. We are also building on our personalization expertise to benefit our customers. An example of this is My Magazine, which delivers personalized content like recipes to loyal households based on their shopping behavior and interests. In fact, we delivered more than 6 million unique My Magazine offers in the first quarter alone. This also allows us to offer personalized lower prices to our loyal households in addition to the low prices everyone can see. This is another example of how we leverage 84.51's expertise.

We are investing in our people. We are improving customer service by both increasing labor hours in certain areas and increasing starting wages in certain markets. Taken together, these steps will improve the customer experience and improve retention. I share these examples to demonstrate that we are laser-focused on providing our customers with the right value proposition. This is our Customer 1st Promise; our commitment to provide friendly service, fresh foods, and low prices, every day. And this is what we will continue to do, regardless of