The Kroger Co. (NYSE:KR) Q3 2018 Earnings Conference Call - Final Transcript

Dec 06, 2018 • 10:00 am ET


The Kroger Co. (NYSE:KR) Q3 2018 Earnings Conference Call - Final Transcript


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Good morning and welcome to The Kroger Company Third Quarter Earnings Conference Call. All participants will be in a listen-only mode. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Rebekah Manis, Director of IR. Please go ahead.

Rebekah Manis

Thank you, Laura. Good morning and thank you for joining us.

(Forward-Looking Cautionary Statements)

Both our third 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 CEO, Rodney McMullen.

Rodney McMullen

Thank you, Rebekah. Good morning, everyone and thank you for joining us. With me to review Kroger's third quarter 2018 results is EVP and CFO, Mike Schlotman.

At our investor conference at the end of October, we shared several big ideas. The defining ideas is that we are transforming our business model to Restock Kroger and then beyond. We will grow market share by both redefining Kroger customer experience and alternative profit streams through complementary businesses and partnerships. Redefining the customer experience means offering customers incredible physical and digital experiences, a fantastic offering and friendly and caring associates. Delivering an exceptional customer experience through the Kroger ecosystem creates incremental new profit streams which in turn drives the economic model that makes the seamless experience possible.

In this way, our new growth model will be a virtuous cycle. This all means that Kroger is also reinventing our financial model. We're moving from a traditional grocer to a growth company with both a strong customer ecosystem that offers anything, anytime, anywhere, an asset like high margin alternative partnerships and services. I will break it down a bit more detail. Successful long term businesses constantly explore new directions and adjacencies to grow their top line. At our investor conference, we highlighted one of the most successful to-date Kroger Personal Finance as well as several businesses under our 8451 portfolio including our Kroger Precision Marketing media offering.

Kroger Personal Finance delivered record year-to-date profit and is on track for the most profitable year ever. Our high margin media business is strong and growing. Revenue for Kroger Precision Marketing powered by 8451 is up more than 150% year-to-date. One service line our boosted products and search business where advertisers can influence how their products show up on our sites benefited advertisers with more than 700 million product impressions in the third quarter alone. Personalized to Kroger shoppers with click to conversion rates that are 2 times to 3 times the industry standard. We see tremendous potential in these asset like margin rich businesses, build off of a robust grocery supermarket experience which is being redefined everyday at Kroger.

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