Q1 2024 Kroger Co Earnings Call Transcript
Key Points
- The Kroger Co (KR) reported better-than-expected performance in its grocery business, which helped offset weaker results in fuel and health and wellness segments.
- The company saw growth in household numbers and an increase in customer visits, driven by strong store execution and a unique omnichannel experience.
- Digital sales grew by more than 8%, led by a 17% increase in delivery solutions, showcasing the effectiveness of their seamless delivery strategy.
- Kroger's alternative profit businesses, particularly Kroger Precision Marketing, had a strong quarter, contributing to overall profitability.
- The company is making significant investments in technology and store execution, leading to improved customer experience metrics and higher retention rates among associates.
- Health and wellness profitability pressures are expected to continue into the second quarter, impacting overall financial performance.
- The company experienced lower pharmacy margins and increased price investments, which contributed to a decrease in FIFO gross margin rate.
- Fuel profitability was below expectations, with cents per gallon fuel margin down low single digits compared to last year.
- The OG&A rate, excluding fuel and adjustment items, increased by 22 basis points due to planned investments in associate wages and increased incentive plan costs.
- The company anticipates a decline in adjusted EPS for the second quarter, similar to the rate observed in the first quarter, due to ongoing pharmacy business profitability pressures.
(Operator Instructions)
Good morning and welcome to The Kroger Co first-quarter 2024 earnings conference call. My name is Carla and I will be coordinating your call today. (Operator Instructions) Please note that this event is being recorded.
I would like now to turn the conference call over to Rob Quast, Senior Director Investor Relations to begin, please go ahead.
Good morning. Thank you for joining us for Kroger's first-quarter 2024 earnings call. I am joined today by progress Chairman and Chief Executive Officer, Rodney McMullen; and Interim Chief Financial Officer, Todd Foley.
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.
Kroger company
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