Q4 2024 The Kroger Co Earnings Call
Good morning and welcome to the Kroger Co. fourth quarter and full year 2024 earnings conference school. If you'd like to ask a question once the presentation has finished, please press star flood by one on your telephone keypad. If you'd like to remove it, you may press star flood by two.
Speaker Change: Please note that this event is being recorded. I now like to turn the conference over to Rob Quast, Vice President and Vestrelations. Please go ahead.
Speaker Change: Good morning. Thank you for joining us for Kroger's fourth quarter and full year 2024 Ernie's call. I am joined today by Kroger's Chairman and Chief Executive Officer Ron Sargent and Interim Chief Financial Officer Todd Foley.
Speaker Change: Before we begin, I want to remind you that today's discussions will include forward-looking statements.
Speaker Change: 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. The Kroger company assumes no obligation to update that information. The Kroger company is now in its place. The Kroger company is in its place. The Kroger company is in its place.
Speaker Change: After our prepared remarks, we look forward to taking your questions.
Speaker Change: 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 [inaudible]
I will now turn the call over to Ron [inaudible]
Speaker Change: Thanks Rob. Good morning everybody. Thank you for joining our call today. Before we begin, I'd like to just share a few comments. Thank you very much.
Thank you. Thank you. Thank you.
Kroger has always been committed to its enduring values.
Speaker Change: This has been true for Kroger since my first job in the summer of 1974, working in the Fort Mitchell, Kentucky Star.
Speaker Change: In many ways I grew up at Kroger, working summers in college, and then full time for 10 years following business school.
Speaker Change: I've held various roles and stores and manufacturing, human resources, marketing strategy and sales.
Speaker Change: Kroger has really been a special place throughout my career in retail, and I'm just as proud to be a Kroger associate today as I was then.
Speaker Change: I will be serving as the interim CEO as we search for a leader for our next phase of growth.
Speaker Change: The Board has formed a search committee and has engaged a nationally recognized search firm.
Speaker Change: We look forward to updating you as we have more information.
as a Board Member. [inaudible]
Speaker Change: I know Kroger's strong leadership team well and they support the unique culture that powers the company's long term success .
Speaker Change: We care for people and we love food, the most important elements of successful grocery retail.
Today, Kroger operates from a position of strength. [inaudible]
Speaker Change: We delivered strong financial results in 2024 and have positive momentum in our business.
We're confident in our plans for 2025.
Speaker Change: and our commitment to deliver total shareholder return of 8 to 11% over time.
Speaker Change: I will be especially focused on executing with speed and confidence, keeping our chains working toward the priorities that create long-term growth.
Speaker Change: We're delivering on our go-to-market strategy, providing families across America with fresh and affordable food.
Speaker Change: In my retail career, I understood that an outstanding customer experience comes from best-in-class store conditions, friendly associates, and great products at low prices.
That's who Kroger is today? No.
And that's who we will be tomorrow.
Thank you.
Speaker Change: I'll turn the call over to Todd to recap our 2024 performance, and how our value creation model allows us to deliver on our goals.
Speaker Change: He will then recap her financial results for the fourth quarter and full year 24, and then cover 2025 Financial Guidance. Todd?
Thank you, Ron, and good morning, everyone!
Speaker Change: Kroger achieved solid results in 2024, demonstrating our value creation models strength and diversity.
Speaker Change: Our performance improved as the year progressed and our momentum positions as well for growth as we head into 2025.
Speaker Change: offering fresh, high quality products with personalized offers through a unique, seamless shopping experience led to strong customer engagement trends, including growth in both households and loyalty.
Speaker Change: As a result, we are growing sales and generating traffic which accelerates growth opportunities in other areas including alternative profit businesses
Speaker Change: We're confident in our ability to build off this base from 2024 and deliver growth in 2025.
Speaker Change: Before we get to 2025, I'd like to start with a recap of last year, beginning with our customers.
Speaker Change: We saw customers adjust their spending habits responding to ongoing macroeconomic factors.
Speaker Change: The effects of multi-year inflation and higher interest rates pressured spending from budget-conscious households.
Speaker Change: Meanwhile, spending from less budget conscious households was more resilient and our most favorable household friends were driven by our core mainstream customers.
Speaker Change: Our go-to-market strategy positioned us well to meet our customers' needs, growing households and enhancing loyalty.
Speaker Change: We helped customers save in multiple ways through fresh affordable products and promotions including loyalty discounts, personalized offers and fuel rewards, and also through our brand's products, which are priced well below national brands at equal for greater quality.
Speaker Change: Our focus on operational excellence through our full fresh and friendly strategy brought our strategic pillars to life, meaning our customers can have value, selection and convenience.
Speaker Change: We will continue to improve our customer experience to drive traffic and increase volumes because it powers our value creation model and is critical to our long-term success.
Speaker Change: Fresh is one of the primary determinants of what customer shop, and we continue to invest to offer more days of freshness [inaudible]
Speaker Change: In 2024, we reduced wild time on our distribution centers, which meant most customers had extra days of freshness in their homes on key fresh items.
Speaker Change: As a result, we saw strong year over year identical produce sales improvement above our total company identical sales without fuel results. Going forward, we see more opportunities to enhance our sourcing capabilities and supply chain to deliver additional days of freshness.
On to our brands.
Speaker Change: Our brand is an important differentiator for our business, providing Kroger the ability to offer unique and high quality products and an exceptional value.
Speaker Change: We expanded our multi-tiered our brand's product portfolio in 2024, resulting in more than 90% of customer households purchasing our brand's items last year.
Speaker Change: Over time, we built distinct brands that are customer favorites. We're always listening to our customers to understand how we can create more offerings to better meet their needs.
Speaker Change: Our proprietary customer insights drive our innovation and led to more than 900 new hour-brands products released last year alone, including 370 fresh items.
Speaker Change: We look to create destination items that can only be found at Kroger.
Differentiating ourselves from competitors and national brands. [inaudible]
Speaker Change: Last year, we introduced Field and Vine, a new brand offering regionally grown berries.
Speaker Change: We also began refreshing existing product lines and rolling out new packaging, which reinforces product quality and improves shopability. [inaudible]
Speaker Change: Turning to Seamless, Digital Fails were strong in 2024, with more than 13 billion in sales. [inaudible]
Speaker Change: As our digital business grows, so does its impact on our financial results. As a result, we're making improved profitability at key priority through automation, new technology, and improved
Speaker Change: We are encouraged by our fourth quarter results, which still delivered the best digital profit improvement quarter we've seen yet.
Seenlis is an important growth accelerator in our business.
Speaker Change: Capturing more digital households is important to accelerating growth in our model because these households are more loyal and spend nearly three times as much as non-digile engaged households. [inaudible]
Thank you. Thank you. Thank you.
Speaker Change: The additional households and traffic in turn create more growth opportunities in our alternative
Purpose Alternative Profit Businesses, or High Growth and Margin Rich
Speaker Change: Alternative profit businesses delivered solid results in 2024, generating $1.35 billion in operating profit driven by a 17% increase in media, excluding the 53rd week in 2023.
Speaker Change: While our pool of alternative profit businesses fell short of our initial growth expectations in 2024, in part due to slower growth in advertiser spend.
Speaker Change: We expect both near and long-term growth to exceed our 2024 results.
Speaker Change: 2025 is off to a strong start, with increases in upfront commitments from those CPGs and agencies.
Speaker Change: KPM's mission is to be the most trusted and transparent media company by offering advertisers more effective ad spending through a compelling combination of custom audiences and ad affecting
Speaker Change: KPM continues to make strategic decisions designed to further this mission, such as their holistic brand-building approach with clients.
Speaker Change: We expect a long runway for growth, which will be supported by continued innovation in growth in our digital sales [inaudible]
Speaker Change: Health and Wellness delivered solid sales results, gaining momentum in the second half of the year as strong vaccine performance in the second half helped offset margin pressures from growth in GOP 1 sales.
Speaker Change: Last month, we announced a new agreement with Express Scripts, which will provide ESI customers access to prescription medications and health services at Kroger Pharmacies.
Speaker Change: Well, exiting this relationship in 2022 is a difficult decision. We are pleased to renew this relationship under a fair and more equitable contract which enables us to operate on a sustainable basis and keep prices low for customers.
Speaker Change: As our teams begin to welcome these patients back into our stores, we know it will take time to build the ESI business back up.
Speaker Change: As a result, our 2025 guidance does not assume any benefit from our recently signed agreement with ESI.
Speaker Change: Improving productivity is a core competency for Kroger, and essential to our value creation model.
Speaker Change: We are focused on productivity initiatives which preserve and enhance both the customer and associate experience.
Speaker Change: For example, we introduced a virtual AI-powered assistant for associates last year.
Speaker Change: Today, almost 70,000 associates engage with this tool for more than 70 use cases.
Speaker Change: It provides personalized service to associates for common HR and associate interactions, including training and onboarding. It also provides leaders real-time and convenient access to labor data, ensuring Foley staff stores.
Our efforts to improve strength.
Speaker Change: Provided another example where productivity improvements directly connect to our strategy.
Speaker Change: and Improved Customer Experience. Last year, we launched a new generative AI-powered cell-through tool that uses real-time sales and shipment data, and it powers associates to better manage fresh and sinister inventory. As a result, our products are fresher, we prioritize cell-through and that that optimizes both sales and margins.
Speaker Change: I'll now walk through our financial results, beginning with the fourth quarter.
Speaker Change: We achieved identical sales without fuel growth at 2.4%. These results reflect positive momentum in our grocery business, along with strong pharmacy and digital sales growth. [inaudible]
Speaker Change: Our Brands had another strong quarter with sales outpacing national brands led by growth in our most premium brand, Private Selection. Encouragingly, our positive sales trends were broad-based across many of our food categories during the quarter.
Speaker Change: The FIFO gross margin rate, excluding rent, depreciation and amortization, fuel, and the 53rd week of 2023, increased 54 basis points in the fourth quarter, compared to the same period last year.
Speaker Change: The improvement in rate was primarily attributable to the sale of Kroger Specialty Pharmacy and Lower Strength, partially offset by Lower Pharmacy Marges.
Speaker Change: The operating general administrative rate, excluding fuel, adjustment items in the 53rd week, increased 16 bases points in the fourth quarter, compared to the same period last year.
Speaker Change: The increase in rate was primarily attributable to the sale of Kroger's specialty pharmacy.
Speaker Change: Increased incentive plan costs, and investment in associate wages, partially offset by the continued execution of cost savings initiatives. [inaudible]
Speaker Change: After adjusting for the effect from the sale of Kroger Specialty Pharmacy, our OG&A rate improved this quarter, demonstrating our ability to leverage expenses when achieving our long-term sales
Speaker Change: Our Adjusted FIFO Operating Profit was $1.2 billion. We had a life of a charge for the quarter of $30 million compared to a credit of $18 million for the same period last year.
Adjusted EPS was $1.14
Speaker Change: which is flat, compared to the same period last year, excluding the 53rd week. [inaudible]
Alman walked through our full year 2024 results [inaudible]
Kroger achieved identical sales without fuel growth at 1.5%
Speaker Change: Digital sales grew 10% compared to last year excluding the 53rd week, and delivery solutions led sales growth with an 18% increase.
Speaker Change: Demand across our Carter delivery network continued to be strong, with an increase in both households and traffic. Customers enjoy the premium experience of our delivery service reflected by consistently strong net promoter scores.
Speaker Change: Thank you for watching. I hope you enjoyed it. I'll see you next time.
Speaker Change: Health and Wellness was also a strong driver of sales this year, led by growth in GLP once.
Speaker Change: The five-foot gross margin rate, excluding rent, depreciation, and amortization, fuel, and the 53rd week of 2023 increased 32 basis points.
Speaker Change: The improvement in rate was primarily attributable to the sale of Kroger Special D Pharmacy. [inaudible]
Speaker Change: Our Brands Performance and Lower Strength, partially offset by Lower Pharmacy Marges.
Speaker Change: The Improvement in FIFO Gross Margin Rate reflects progress on our long-term margin enhancement strategies.
Speaker Change: Going forward, we continue to see more opportunity for improvement through our brands growth and alternative profits utilizing technology through our supply chain enhancing our product mix suits fresh and improving digital profitability. And we will continue to see more opportunity for improvement through our products and alternative profits.
Speaker Change: The OGNA rate, excluding fuel, adjustment items, and the 53rd week of 2023, increased 31 basis points.
Speaker Change: The increase in rate was driven by the sale of Kroger Specialty Pharmacy.
Speaker Change: Increased Incentive Plan Costs, and Increased In Costs Do The Severity of General Liability Clans The Severity of General Liability Clans
Speaker Change: and Investment and Associate Wages, partially offset by the continued execution of cost savings initiative.
Speaker Change: Our adjusted FIFO operating profit was $4.7 billion. Our LIFO charge for the full year was $95 million compared to LIFO charge of $113 million last year.
Adjusted EPS was $4.47 per diluted chair.
Excluding the 53rd week in 2023, EPS declined 2% [inaudible]
Speaker Change: Fuel is an important part of Kroger's strategy and offers an important way to build loyalty with customers through the fuel rewards in our Kroger Plus program.
Speaker Change: Fuel sales were lower this quarter compared to last year, attributable to pure gallons sold, and lower average retail price per gallon
Speaker Change: Fuel Prophetability was also behind the same period last year as a result of fewer gowns sold and lower sense for gallon margin [inaudible]
Speaker Change: On both the fourth quarter and four year basis, fuel was a headwind to our results . . .
Speaker Change: I want to provide a brief update on inflation expectations
Speaker Change: Association of 2024 increased throughout the year and was in line with our expectation.
Speaker Change: And as we look ahead to 2025, we expect inflation to be 1.5%, 2.5%, which does not include the effects from tariffs announced earlier this week.
External factors continue to pressure certain fresh commodities, including eggs.
Speaker Change: Notably, the AVM flu resulted in egg inflation of approximately 70% during the quarter. [inaudible]
Speaker Change: Inflationary Pressors are not new to our business, and we're confident in our ability to navigate any inflationary environment.
Speaker Change: We won't remain focused on keeping prices low on our customers [inaudible]
Speaker Change: I'd like to take a moment to talk about our associates.
Speaker Change: We respect and reward our associates because their success enables the success of the company.
Speaker Change: and sharing their successful means improving wages and benefits, focusing on associate well-being and developing talent to create for fully careers.
Speaker Change: Disapproach improved retention as our store and enterprise retention rates reach record level this year.
Creating a better social experience has benefits for our business.
Speaker Change: When associates stay longer, they're better operators and deliver a better customer experience. In 2024, we raised the bar on our customer experience metrics and our associates exceeded those higher expectations to deliver an exceptional customer experience that drove sales growth.
Speaker Change: These associated investments include associate wage increases in 2024, resulting in an average hourly rate of more than $19 an hour.
Speaker Change: and a rate of more than $25 with comprehensive benefits factored in. Over the last seven years, Kroger has increased wages by 38%.
Speaker Change: Kroger means committed to supporting our associates with investments in wages and comprehensive benefits that are sustainable and will allow us to keep prices low for our customers.
Speaker Change: Some more investments in Associates are incorporated in our 2025 guidance and long-term growth model.
Speaker Change: During the fourth quarter, we ratified several new labor agreements, including our Fred Meier Alaska Stores.
with the UFCW. [inaudible]
Speaker Change: I'd like to now turn to capital allocation of financial strategy. Our strong balance sheet and free cash flow provided significant financial flexibility to invest in our business and drive returns for our shareholders.
Speaker Change: At the end of the fourth quarter, Kroger's net total debt to adjusted even the ratio was 1.79 compared to our net total debt to adjusted even the target ratio range 2.3 to 2.5 [inaudible]
Speaker Change: Our capital allocation priorities remain consistent and are designed to accelerate our value creation model to deliver on total shareholder return at 8 to 11% of a time.
Speaker Change: We are focused on investing in projects that will maximize return on invested capital over time while remaining committed to maintaining our current investment-grade rating, growing our dividend over time, subject to board approval, and returning excess capital shareholders.
Speaker Change: In 2024, we announced our plans to significantly increase our investment in major storing projects [inaudible]
Speaker Change: including news stores to accelerate sales growth and improve share while supporting our long-term growth model. [inaudible]
Speaker Change: We delivered on that commitment in 2024, completing 29 major storing projects focused in higher growth geographies that have a track record for generating strong cash flows and returns.
We expect to complete 30 major storing projects in 2025.
Speaker Change: We also expect new story to continue to be a meaningful contributor to our long-term growth model and would expect new story openings to accelerate beyond 2025.
Thank you. Thank you. Thank you.
Speaker Change: In December , we delivered on our commitment to return access capital to our shareholders as we announce the new $7.5 billion repurchase authorization.
Speaker Change: Under this authorization, Kroger entered into an accelerated Sherry Purchase Program for $5 billion of common stop.
Speaker Change: During the fourth quarter, Kroger initially purchased 65.6 million shares as part of the ASR.
Speaker Change: The ASR program is expected to be completed by no later than the third quarter of Carbors Fiscal 2025.
Speaker Change: After completion of the ASR, we expect to resume open market sharing purchases under the remaining two and a half billion dollar authorization that will further enhance shareholder value.
Speaker Change: Last year, Kroger issued $10.5 billion in new debt financing, of which $4.7 billion was redeemed when the merger terminated, leaving Kroger with $5.8 billion of new debt. This year, Kroger was redeemed when the merger terminated was redeemed when the merger terminated was redeemed
Speaker Change: Given this higher debt load, we expect interest expense to increase in 2025.
Speaker Change: Assuming current interest rates, we expect full-year net interest expense to be between $650 million and $675 million and $70 million.
Speaker Change: The net impact of our financing and the share reduction from ASR created one center of accretion to adjusted net earnings per diluted share on the fourth quarter. [inaudible]
Thank you. Thank you. Thank you.
Turning now to 2025, guidance. [inaudible]
We expect to achieve identical sales without fuel of 2-3% [inaudible]
Speaker Change: A justifiable operating profit of between $4.7 billion and $4.9 billion and adjusted net earnings for her to looted share of $4.60 to $4.87.
Speaker Change: We expect a LIFO charge to be approximately $130 million, assuming inflation is in line with current expectations. [inaudible]
Speaker Change: In terms of quarterly cadence, we expect identical sales without fuel to be consistent throughout the year, building slightly as the year progresses as we continue to improve our volumes.
Speaker Change: We expect first quarter adjusted net earnings per deluded share to be similar to last year, and we expect quarter two through quarter four to be consistently above each quarter compared to the same periods of last year.
Speaker Change: In terms of margin rates, we expect FIFO gross margin and OGNA rates excluding fuel and adjustment items to be relatively flat on a year-over-year basis after excluding the effects of our sale of Kroger specialty pharmacy business. [inaudible]
Speaker Change: Imclosing, we're happy to deliver another year of solid results, which reflect the strength of our monolith [inaudible]
Speaker Change: Investments made a diversifier model has strengthened Kroger, positioned as well to deliver now and invest in the future
Speaker Change: We're a more diverse business and we are excited about the opportunities across our business to deliver future growth. [inaudible]
Speaker Change: The strength of our model and the momentum in our business support our confidence in achieving our 2025 guidance and our ability to continue delivering for our customers investing in our associates and generating attractive and sustainable returns for our shareholders.
I will now turn it back to Ron.
Thanks, Todd [inaudible]
Ron Sargent: As you heard from us today, Kroger operates from a position of strength
and I'm very optimistic about our future.
Ron Sargent: We delivered solid results in 2024 and our performance improved throughout the year.
Ron Sargent: Looking to 2025, we have aggressive plans to build more stores and improve our share of results, attract new households and increase loyalty, which will accelerate growth and create shareholder value.
Ron Sargent: We continue to have a strong balance sheet which positions us well for the future, allowing us to invest in our business for growth while remaining disciplined on returning cash to shareholders.
Ron Sargent: Given our ongoing search for a CEO , Kroger has postponed his planned investor day in April of 2025.
Ron Sargent: We will update investors at a later date when it has been rescheduled.
Ron Sargent: In the interim, Robert remains committed, as always, to being accessible and updating you on our strategic priorities.
Speaker Change: Before we open up for any questions, I want to take a moment to welcome David Kennerley.
Speaker Change: He'll be joining us next week and he will succeed Todd as Chief Financial Officer on April 3rd.
Speaker Change: David is joining us from PepsiCo Europe and brings broad and extensive financial experience.
Speaker Change: We're confident that David's expertise and leadership will help us to continue to deliver on our strategic and financial priorities
Speaker Change: We'll now open it up for questions, and as you might imagine, Todd will handle questions related to strategy and results.
Speaker Change: Thank you. As a reminder, if you like to ask a question, please press star. I'll flood by one on the test. Thank you, Pad.
Speaker Change: Please let me yourself to just one question at a time. Thank you
Speaker Change: Our first question for today comes from Simeon Gutman of Morgan Stanley . Your lines are open, please go ahead.
Simeon Gutman: Thanks, good morning everyone. So, my question at the highest level, if you look at the 25 guidance.
Simeon Gutman: It looks like EBIT is expected to grow in the low single digits two to three percent?
Simeon Gutman: Within that, can you share how much is coming from the core business versus alternate and then one follow up? I don't know if we're able to ask Ron questions but it's good to hear from you Ron I wanted to ask as you and the board approaches the succession of CEO . [inaudible]
Simeon Gutman: You're obviously sitting on a treasure 12 of great operators within the organization.
How are you looking at an outside perspective?
Simeon Gutman: because the traditional supermarket channel, not just Kroger, has had mixed market share results over time, and that's obviously becoming more complex and the stakes are growing. So thinking about looking at outside talent versus the treasure trove of folks that you're sitting on internally. Thank you.
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Ron Sargent: Yeah, thanks Simeon. Appreciate that question. Let me talk about the guide first and then I'll turn it over to Ron for your CEO . Succession question. I'll turn it over to you.
Thank you.
Speaker Change: Yeah, the operating profit growth estimates. You look at the middle of the range. It's it's [inaudible]
Speaker Change: You're right, it's Foley in the 3% range, and we see growth both from the core business and from our alternative profit business again we talked in the comments where we didn't quite hit our expectations for alternative profit but we do expect that to continue to contribute back in advance of what we saw in 2024 next year. [inaudible]
Simeon Gutman: But, you know, Ronald alluded to it. I alluded to it on the call. We do have momentum in our core business and do expect solid growth in our operating process. Come from the core part of the business. [inaudible] we're going to, we're going to, [inaudible]
Simeon Gutman: across the store, both center store, pharmacy to expect a little bit of growth and alternative profit to contribute to that. [inaudible]
well. So Ron, I'll turn it over to you.
Simeon, great to work with you again.
I'll tackle the succession planning question.
Speaker Change: Um, just to give you a little to background, the board updates are specs for a CEO every year. It's just part of our annual succession planning process. And the reason we do that is because, you know, our business changes every year and the, you know, environment we operate in changes every year as well. [inaudible]
So, we are in the process of updating that again.
Speaker Change: and in terms of the process, the board has formed a search committee. We have begun the search process, we have hired a nationally recognized firm.
Speaker Change: We are going to be looking at both the internal candidates as well as external candidates [inaudible]
Speaker Change: But I think most importantly, we're focused on identifying the right leader to drive Kroger's growth and enhance a shareholder value.
Speaker Change: I am proud to serve in this role for as long as needed but I am absolutely confident that our board will select the right next CEO whether from inside the company or outside. [inaudible]
Thanks everyone, good luck. Thanks Simeon.
Speaker Change: Thank you. Our next question comes from Leah Jordan of Goldman Sachs. The lines are now open, please go ahead.
Leah Jordan: Good morning. Thank you for taking my question. I just wanted to dig into digital a little bit. It sounds like it continues to be a strong channel for you and profitability improved, notably this quarter. You know, just looking a bit longer term over the next couple of years, senior people could provide more detail on the path of improvement from here. And I guess how much more can lower costs in the retail media growth that seems to be accelerating here can offset other ongoing investments you're making like price investments in the channel. Thank you.
Yeah, thanks, Leah.
Leah Jordan: I'll start with the digital piece. Again, you're right. We were really pleased to see the sequential improvement in our profitability of the digital channel.
Leah Jordan: in the fourth quarter, and it was really in both of the key elements. We saw it in pick up. We continue to make progress in improving. We continue to make progress in improving.
Our cost to serve.
Leah Jordan: with In Our Stores, and we also saw it in the delivery channel. We've talked a lot over time about some of the things that we're doing inside our sheds and in the last mile relative to our sheds in conjunction with Ocado and working with them to improve that. And so again, we saw it in both spots. [inaudible]
Um...
Leah Jordan: We're not where we want to be. We've alluded to that. We're not where we need to be. But I think, you know, the green shoots that we have seen prior to the quarter and the progress we made on those during the quarter, I think.
Leah Jordan: puts us on our two-jectory that if we can maintain that consistently and string a few quarters together, I think that'll help get us where we want to be over the long term. So again, we're encouraged and I think we're on the right path to string a few of those quarters together to be where we want to be long term.
I don't know, I don't know. I don't know.
Speaker Change: Your other question, if I call it correctly, was around how we generate value in the business to continue to be able to invest so.
Speaker Change: We've talked a lot about the levers that we have and the way we go about our strategy [inaudible]
Speaker Change: We have as many levers or probably more levers today than we've ever had to try to drive that value in the business We talk about margin enhancement initiatives like alternative profit and again the consistent meaningful growth that it provides to us.
Speaker Change: Our brand is a margin enhancer, and particularly in this environment around where all customer cohorts are looking for value, we've talked about how successful that has been for us over the last several quarters. [inaudible]
Speaker Change: and we continue to find opportunities in productivity in all elements of our business. There's productivity in store, but we're such a vast business with so many opportunities, whether it's in our supply chain business in the DCs or transportation. . . . .
Speaker Change: We continue to unlock opportunities to create that value and that's essential to our model to be able to invest in price.
Speaker Change: and to continue to invest in associates. And so every year and 25 is no different than the years in the past, our level of investment in both the prices and associates is pretty consistent with what we've seen year to year, but that that commitment remains because it's essential.
Speaker Change: to be able to deliver key prices to our customers and invest in our associates. Our associates are the ones that deliver that amazing shopping experience and connect with those customers in all realms. So we still see a very meaningful runway from all of the opportunities that we have and the levers to create value.
John Heinbockel, John Heinbockel,
Great, thank you. Thanks, Leah.
Thank you.
Speaker Change: Thank you. Our next question comes from Michael Lasser of UBS. The lines out open, please go ahead.
Thank you.
Michael Lasser: Good morning. Thank you so much for taking my question. Ron, it's been too long. My question is that...
Speaker Change: If we look at your ID sales guidance for this year, you're basically assuming that volumes are flat to probably even down given that your inflation expectation, along with what will likely be outperformance from your health and wellness business, doing part to GLP ones.
Speaker Change: So, A, why is that? Is there anything that you can do now that you're in the CEO seat?
Speaker Change: Just to address, maybe some of the shortcomings of the business that you observed as a board member, and just a quick, logistical question Todd, what is driving EPS to be flat year over year in the first quarter? Thank you very much. Thank you very much.
Speaker Change: Great. Michael, let me touch on those. I think I can fit on each of the pieces that you have.
Speaker Change: The ID Guide. I think you have fundamentally have the pieces right when you look at.
Speaker Change: You know our inflation expectations for next year and relative to volumes. When you look at the whole year and think about it flat and maybe slightly up I think that's the right way to think about it. Obviously coming into the year we're still slightly negative but we're driving off what's been. [inaudible]
Speaker Change: You know, continued sequential improvement, quarter to quarter, and that trajectory is why we expect that during the year we'll flip that over to positive. So I think the combination of those two when you think about the business without pharmacy. The, um.
Speaker Change: It gets us to nice growth in the core business, and then when you do layer of pharmacy on that, I think that's what puts us right into the middle of the range. So I think you're thinking about those pieces. [inaudible]
Speaker Change: consistently, and then I'll talk to you about quickly the flat in Q1 to that part of your question.
Speaker Change: Really what we saw in Q1, it was a couple of things. One we had some OG&A items when you look at a year-over-year comp that is really driving that. There were a few there, but the biggest. [inaudible]
Speaker Change: I think the call out is around some union pension relief that we had a year ago, where we had almost like a pension holiday last year, where now we're back to more normal cadence of union pension expenses and so we're kind of back on normal case and I think that's a piece of it.
Speaker Change: You know, again, there were a few other puts and takes around that, but I think that's when you looked at that and if you go, if you did apples and apples on that, I think the growth that we have in the first quarter would be similar and approximate what we're seeing for the rest of the quarters. [inaudible]
Speaker Change: Michael, great to talk to you again, great to work with you also. You know, at this point, you know, in the year, you know, our 20-25 plans are really nailed down. They've been approved by the board. We spend a lot of time in January as a board going through the. We'll see you next time.
Speaker Change: The Strategy, and I can assure you at this point that Kroger's go-to-market strategy remains unchanged.
Speaker Change: We will remain focused on creating long-term shareholder value and on a more personal basis of CEO , you know, I'm going to be focused on making sure our, you know, our experience and our really talented management teams and I've really seen that [inaudible]
are able to continue to execute with clarity, with speed.
Speaker Change: and with consistency on those existing strategic objectives. But Michael, you know me for a long time. I certainly don't plan to be a status quo CEO , but on the other hand, our plans are really solid for 2025, and I'm looking forward to being a part of that.
Thank you.
Thank you very much and good luck. Thanks Michael.
Thank you.
Speaker Change: Thank you. Our next question comes from John Heinbockel or Guggenheim. Your lines are now open. Please go ahead.
Speaker Change: It taught a couple of things on digital. When you think about growth going forward, particularly in 25, you think it ends up being very similar to 24 in total and in delivery. And then when you think about improving the losses.
Speaker Change: One of the biggest bucket or two, right, is throughput through the sheds. How do you look at that versus delivery density? Right, I think those are two of the biggest buckets. Let's go ahead and see what we can do.
Speaker Change: And then lastly, when do you guys think about you'll be at a place where you want to re-accelerate shed openings?
Speaker Change: from a profit standpoint, you can now go ahead and do that.
Yeah, a great question, John , appreciate that.
Speaker Change: Yeah, when you look at 25, we do expect to see a continuing improvement in 25 and again particularly given the results we saw in the fourth quarter that's nice momentum going into the year. [inaudible]
Speaker Change: and when you really talk about whether it's throughput in the Shads or delivery density, I think it's a little bit of everything. We've talked a lot about there are a lot of pieces of that puzzle that we're working to get better. And every single piece of that is contributing. And again, it's what we saw on the fourth quarter. There wasn't one magical, it wasn't just cost to serve, it wasn't just the last mile.
Speaker Change: Every single piece of the puzzle continues to incrementally improve, and that's what we're seeing deliver. So over time, it's that trajectory, you know.
Speaker Change: I think we have several quarters to string together that look like the one that we had. We've talked about Sheds until we get profitability to where we need it and where we expect it to be one. And two, what comes along with that is making sure that when we open the next shed, we're able to do it at a volume level that chemical...
Speaker Change: He enables us to hit the ground running. And I don't think that was always the case when we open Sheds in the past. So the combination of starting in a volume that matters and at a scalable level of profitability based on what we've been able to execute in our existing Sheds, I think that'll be the point in time when we get there. Again, I don't think it's not imminent, John , but I think it's something that we have momentum towards and that we continue to work towards. Those will be the key factors that we look at in determining when we open that next Sheds. And I think that's the key.
John Schultz, John Schultz, John Schultz, John
Thank you, thanks John [inaudible]
Thank you. Thank you.
Speaker Change: Thank you. Our next question comes from Michael Montani of Evercore ISI. Do lines now open? Please go ahead.
Speaker Change: Yes. Good morning. Just wanted to see if you could unpack a little bit more the ID sales in terms of traffic versus ticket. What kind of inflation did you have in the quarter? And then also on GLP one, how much of an impact was that on ID sales? I don't know, I don't know.
I don't know. I don't know. I don't know.
Speaker Change: Great, thanks, Michael. And I presume some of your reference in back that's back to Q4.
Speaker Change: I think when we look at Q4, I think we had contribution from both at ticket and traffic during the quarter, and it might have skewed a little bit towards.
Speaker Change: The ticket side of it, because we did have a little bit of a tick up on the inflation side, but I do think both contributed to that. And GLP won, I think, you know, we haven't quantified what that looks like relative to GLP won, but I think there's been some...
Speaker Change: Talk about what the industry impacts have been on that, and I think our experience have been very similar to what others have talked about.
Thank you.
Speaker Change: Should we be thinking inflation at food at home levels of close to two, absent any more detail?
Michael Lasser: Yeah, I think we talked about in the script, Michael, about one and a half to two and a half percent inflation next year, and if you peel that down, maybe one layer.
You know, there are certainly some key commodities or categories where you're seeing some outside inflation. I think eggs are getting a lot of headlines. [inaudible]
There's a couple other fresh categories. Let's get started.
Michael Lasser: May be beef and some of the other protein categories where you're seeing that but really you take those. [inaudible]
Michael Lasser: kind of extreme or outlier inflation commodities and I think the vast . . .
Michael Lasser: Majority of our overall portfolio is pretty steady on inflation. We would expect that that kind of core of the portfolio to see a little bit of a tick-up in inflation for next year.
Michael Lasser: You know this year played out the way we kind of kind of thought and ended the year you know little north to 1% which is what we thought and I think that. [inaudible] you know you know you know
Michael Lasser: Moving up from there in 2025 is pretty much our expectation to get to that one and a half to two and a half and it'll just be those outsized categories. I think that maybe push us more towards the middle of that range.
I don't know. I don't know. I don't know.
Speaker Change: Thank you. Our next question comes from Rupesh Parikh of Oppenheimer. Your lands are open, please go ahead.
Rupesh Parikh: Good morning, and thanks for taking my question. Just on the tariff run, I know your guidance, or at least for inflation, doesn't include the impacts of the tariff, but since it's starting to happen now, just wanted to get a sense of exposure there, I'm guessing produce you have some exposure to Mexico, but just any color there, thank you.
Rupesh Parikh: Yeah, no great question. Certainly a high topic of late Rupesh, so appreciate you asking. And you're right. As a domestic retailer, I think we have last exposure to some of the international tariffs that some of our peers will see. Thank you.
Rupesh Parikh: You think of China? We're a really, really small single-digit exposure, I think from some of the things that we buy from China.
Rupesh Parikh: One category that maybe has a little bit of exposure in the terror space is our fresh business, particularly think about produce but even in that space when you think about some of the produce we might get from Mexico or Canada, those are still pretty kind of mid single digit effects so it's not a massive. [inaudible]
Rupesh Parikh: A massive impact. The one thing we are doing though, especially in that fresh space, in that produce space.
Rupesh Parikh: We're closely monitoring that and where we can with our merchandising and our sourcing teams.
Rupesh Parikh: We're trying to be proactive in looking in those commodities where we have the ability to diversify our supplier base.
Rupesh Parikh: maybe the suppliers that are in other geographies that won't be affected by tariffs or will be less affected by tariffs? [inaudible]
Rupesh Parikh: to do what we can and some of those commodities to keep it down, because being able to do that gives us the opportunity to keep prices low in our store. So the teams are being proactive, even though it's not a huge impact overall in our business, maybe certainly relative to our peers, it's a great opportunity for us to be proactive. Let's go.
And stay out front of it. [inaudible]
Thank you. Thank you. Thank you.
Speaker Change: Frankie, Arnex Cushing, Kills from Ed, Kelly of Wells Fargo. Your lines are open, please go ahead.
Ron Sargent: Yeah, hi, good morning everyone, Ron's good to hear from you [inaudible]
Thank you. Bye.
Speaker Change: A couple of questions where you're first is related to Sherri Poe and the balance sheet.
Ron Sargent: You know, as we've heard from you guys for a while now that there really is no good business reason to run
You know, below your leveraged target ratio, Ron Mkures, [inaudible]
Do you still agree with that? [inaudible]
Speaker Change: and then as we think about, you know, guidance this year, Todd, what specifically is in guidance this year for shared repo? If you could just clarify that please. And then the last, the second question after you're just around, you know, in the exposure you have the snap and what you've seen historically if there's been cuts there. Thank you.
Speaker Change: Thanks, Ed. I appreciate the question, but given my short tenure with the company, I'm going to defer to my good friend Todd. Yeah, no, thanks Ron.
Speaker Change: We obviously have the finalization of the accelerated sharing purchase in the plan, which we expect to wrap up in the third quarter.
Speaker Change: We do have that incremental $2.5 billion authorization on top of that, which we do continue to pick up and execute to open market purchases at the back part of the year. So depending on on that.
Speaker Change: You know, our volumes and presuming that our volumes are consistent with what the what the repurchases under the ASR are going to be we would expect to use the majority of that that two and a half at the back part of the year so that that's the case. [inaudible]
Speaker Change: Relative to our leverage ratio, obviously with the barrings that we took on for the ASR, we bumped that up around 1.8
Speaker Change: and gives us a little bit of flexibility there versus the top end of our range there at the 2.3 to 2.5. Keep in mind we do have that $2.5 billion of the share we purchased later in the year that some of that will be dedicated towards using some of the cash that we have on our balance sheet.
Speaker Change: and we also have a debt refinery of financial finance with that, so we do have some business uses for some of that cash.
Relative to your last comment on SNAP. Um, I-
Speaker Change: You're right, you know, it hasn't been that long since I think we had some snap pullbacks a few years ago.
Speaker Change: and typically when we see the impacts from snap in our business. Thank you very much.
Speaker Change: And especially coming out of the gate, we'll see the customers, you know, prioritized spending on essentials like food, initially coming out of the gate and you'll see more of the reduction and spend and more more discretionary.
Speaker Change: Categories, so as we keep an eye on what's going on and monitoring what's happening in that space.
Speaker Change: You know, we'll keep that in mind, but as we experienced two or three years ago when we had the snap challenges, you know, we just we have the ability to flex and pull the levers in our model to make sure we absorb that, but, but at this stage, there's I think a variety of proposals out there on exactly what. [inaudible]
Speaker Change: An Impact for Snap would be, if any. And so I think it's premature to, you know, project what's going to happen there, but I think we have our eyes on it and we'll lean on our recent experiences on what that might mean for our business when the time comes. [inaudible]
Thank you.
Speaker Change: Thank you. Our next question comes from Kenneth Goldman of JP Morgan. Your line is now open, please go ahead.
Thank you.
Ken Goldman: Hi, thank you. I appreciate the guidance on inflation and the details there. I wanted to broaden it out a little bit. You know what?
as we look, just it. [inaudible]
Ken Goldman: Fooded Home, Retail and Wholesale Pricing Trans CPI and PPI. Bye.
It certainly seems to some observers that the...
Ken Goldman: The industry, the food retail industry is holding back on maybe passing through [inaudible]
some of the wholesale. [inaudible]
Inflation, I realize that PPI is not a pure...
Ken Goldman: of Wholesale Prices, but I was just wondering what you guys are seeing out there in terms of. [inaudible]
It's a competitive environment.
Ken Goldman: You appear as price investments versus your expectations and how that kind of informs your decisions to pass along inflation this year. [inaudible]
Yeah, that's a good question. I can get a couple of thoughts.
Ken Goldman: Relative to most of our suppliers, we're not going to see in a ton of price increases come through yet. I think maybe we have seen some select price increases particularly again as I alluded to earlier in some of the fresh categories that you would expect like eggs and
Ken Goldman: and again, a couple of the proteins, we have seen that, but by and large across the broad portfolio, we're not seeing or hearing a lot of chatter about those price increases at this stage. So, and that's reflected in some of the thoughts that we gave relative to our inflation guidance and whatnot for later in the year.
Ken Goldman: As far as, again, relative price investments and whatnot, it's a great question. I mean, the way the customers are thinking about value, we talked about that earlier, competitive pricing is as important as it's ever been.
Ken Goldman: And, you know, you've heard us say before, we always assume the next quarter in the next year is going to be more competitive than the last season. [inaudible]
Typically the way that it plays out, but um...
Ken Goldman: But we do continue to monitor where our pricing is at relative to our competitors and where those gaps are at because we're always striving to keep our prices low . . .
Ken Goldman: We had nice progress in the fourth quarter. We did improve our gaps with our competitors in the fourth quarter, and we continue to monitor that, and our strategy is to continue to drive those investments in price to narrow those gaps. So I think we've had nice momentum in that space over the past couple of quarters. [inaudible]
Thank you. Thank you.
Speaker Change: Thank you. Our next question comes from Karen Short of Melius Research. The line is now open. Please go ahead.
Thank you.
Karen short: Hi, thanks for taking my question and going to speak to you. So just on that last comment, I wanted to clarify.
Speaker Change: Where you think your price gaps are now versus where they were, say, 10 years ago because the Kroger Haydays, you were within 5% to 8% of your largest big box competitor, unlike for like items. The Kroger Haydays, the Kroger Haydays, the Kroger Haydays,
Speaker Change: Um, and then my second question is just when you look at your operating profit.
and obviously we can see the contribution from alternative streams.
Speaker Change: How do you think about the four-wall operating profit? And I know it's getting increasingly hard to separate the two, but four-wall operating profit versus the alternative because four-wall obviously needs to grow as...
Does The Alternative?
Speaker Change: Yeah, thanks, Karen, great questions. On the first relative, the Price Gaps,
Speaker Change: You know, we measure it at two or three different levels. There's obviously a price gas that are observable by looking at shelf tags. Thanks.
Speaker Change: And let me even take a step back from that. My comments around being able to narrow those price gaps that I just made, applies to each of the scenarios that I'll describe. But we look at that level at the shelf tag level with the customer we're seeing looking at the shelf. Um, um.
Speaker Change: But the other one that we look at because of our promotional offerings, our loyalty offerings, our fuel rewards, we'll look at kind of that all in price that our customers get. Thank you very much.
Total Value from Kroger and...
Speaker Change: What we see when you look at that all-in level, it's favorable to the 5 to 8% range that you used earlier. So we continue to look at that and look at it on an all-in level and measure how we're able to continue to reduce that gap. So let's move on to the next one.
One of the things that we're...
Speaker Change: Paying attention to you there is that's based on our measurements and what we see . . .
Speaker Change: But we continue to work and make sure that our customers and what our customers perceive our values are and our price breads are [inaudible]
Speaker Change: More closely matches to what that actual value is. And I think we've got some feedback. I think we have some opportunity there from our customers.
Speaker Change: Russell, really trying to focus on being a little more simpler in the promotions that we put out there so it's-
Speaker Change: So it's very clear to them and they give us the credit for the value that we deliver to them so make sure that they understand that so that's that's an important part of of what we're doing to that [inaudible]
Speaker Change: And then relative to operating profit, a great question on four-wall and-
Speaker Change: versus operating profit in a very astute observation that they do, they are very intertwined, especially the way that we operate our model.
Speaker Change: But I think that we see growth in both of those and I think it's a pretty even balance when you think about when we look at our operating profit growth, both are contributing, I think in a reasonably similar range to our overall operating profit growth, particularly as we look at 2025.
Thank you very much.
Chuck Cerankosky: Thank you. Our next question comes from Chuck Cerankosky of North Coast Research. Please go ahead.
Chuck Cerankosky: Good morning, everyone. Can you talk a little bit about accelerating your new store opening?
Chuck Cerankosky: Conventional retail food industry has lost market year over the last few years, but Kroger is definitely sounding more aggressive than the rest of the industry. And can you talk about the strategic thoughts behind that, please? [inaudible]
Yeah, no, great, great, great call out Chuck.
Thank you.
Chuck Cerankosky: One of the, one of the reasons as we think about, there's a couple pieces of that one. [inaudible]
Chuck Cerankosky: You know, three or four years ago, as we were ramping up our digital capabilities, some of our incremental capital went into building out those capabilities to get them where we are today, and we were pretty happy with how that's played out.
So...
Chuck Cerankosky: We're not done with that. We're in continual enhancement mode and maintenance mode to make sure we're delivering where the customers are at.
Chuck Cerankosky: But now that we've got to that mode, we're able to take that incremental capital and put it back into our story [inaudible]
Chuck Cerankosky: Because I think that's an area where when you look at some of our share and our opportunity for growth, I think building out that footprint is an important piece of what we're trying to do. So we talked about where we're at this year, where we expect to be next year and accelerating off of that.
Thank you. Thank you. Thank you.
Chuck Cerankosky: The two of those comments go hand in hand because more and more are most loyal customers and are most profitable customers are the ones that engage with us in both modalities those that engage with us digitally and those that and they also engage with us in store [inaudible]
Chuck Cerankosky: And so having the right balance between the two of those, I think gives us an opportunity to build loyalty with our customers, but I also think having those additional that additional physical footprint is a great lever for us to. [inaudible]
to drive our share. So the two go hand in hand, digital and physical footprint, but because we...
Chuck Cerankosky: Took a couple of years off there from some of that growth. I think it's an opportunity to get back in and build that out.
Thank you.
Thank you. Thank you. Thank you.
Speaker Change: Thank you. Our next question comes from Christina Katai of Deutsche Bank. If you want to know open, please go ahead.
Christina Katai: Hi, good morning. Thanks, Anna. Congrats on a good quarter. So I had a question regarding own brands. You launched more than 900 new items in 2024. Can you talk about your plans for the own brand business in 2025? How much newness should we anticipate for the year? What does that distribution look like across maybe opening price points versus your more premium items? And then just lastly, how do you anticipate that they will continue to contribute to growth margin in 2025? Thank you. Thank you.
Thank you.
Yeah, great question.
Christina Katai: We've talked a lot about our brands this year. Again, it's been a staple in what we go to market with because it hits so many sweet spots. It delivers great quality at a value to our customers, especially in this environment. That's huge. It's a margin enhancement. [inaudible]
Christina Katai: Mechanism for us because of the spread with national brands on all of those and it gives us the point of differentiation and distinction with the innovation.
Christina Katai: Grant, so I would expect to see us continue to innovate in that space.
Christina Katai: Again, when you talk about how much of that newness comes from opening price point or private selection or those kind of things,
Christina Katai: Our team does and continues to do deep dyes in each category because each category is a little bit different, but to make sure we understand where we stack up against national brands and where there's substitutability or replaceability relative to national brands. [inaudible]
Christina Katai: Where our brands might be able to be featured so it's hard to answer that you know specifically other than to say we've been doing these deep dives in on a category by category basis. .
Christina Katai: Really trying to understand where we need an opening price point or where we can introduce innovation in private selection, and we're probably...
Christina Katai: Maybe a third or 40% of the way through those category deep dyes, I expect those to extend to 2025 and beyond to be able to drive that growth. But I think it'll be an important pillar of what we do for years to come. And I even think we see opportunity in the right categories to really push to expand our penetration in those categories.
time, so it's a story you'll continue to hear us talk about.
Thank you very much.
Speaker Change: Thank you. Our next question comes from Joe Feldman of Telsea Advisory Group. The lines are open, please go ahead.
Joe Feldman: Yeah, thanks guys for taking some questions. I wanted to ask you about-
Joe Feldman: Is there anything, you mentioned the pension issue being in the first quarter? [inaudible]
Joe Feldman: Can you share a little more color on that for the rest of the year? And are there any other big pensions this year that you do have to negotiate? I feel like every year there's always one or two that come up, and I just wanted a little more color on that.
Joe Feldman: Thanks. Yeah, sure, Joe. Yeah, I wouldn't even call it a pension issue. Actually, it was an opportunity.
Joe Feldman: from last year, where based on contributions that we had made up to that point in time, we didn't have the need to make required contributions for an early part of last year. So last year, we didn't have contributions, and now we're kind of back on our normal cadence. So that's just created that Q1 comp that was a little bit different than what we expect to see for the remaining quarters. So that was a little bit different than what we expect to see for the remaining quarters. So that was a little bit different than what we expect to see for the remaining quarters.
Joe Feldman: Lee, or so it was actually an opportunity from last year as opposed to a concern or an issue.
Thank you.
Speaker Change: Thank you. Our next question comes from Kelly Bania of BMO. Your lines are open. Please go ahead.
I don't know. I don't know. I don't know.
Kelly Bania: Hi, thanks for taking our question. I had a couple wanted to ask just about...
Speaker Change: kind of underlying growth margin. It's had pretty solid expansion really for the last few years. I think this quarter and this year even came in ahead of plan, but it sounded like this year's planned flat. So just curious if you could talk about what's maybe different about this year versus the last couple of years and I guess. Um, um,
Speaker Change: Mark, if you can incorporate kind of your plans for your alt profit growth, sorry if I missed that, but what you're planning on that for this year. [inaudible]
Yeah, good question. I think when you look net as... [inaudible]
Thank you.
Speaker Change: Specialty Pharma for this quarter, I think it was about, it was about 13 basis points ahead so it was it was a little bit ahead
Speaker Change: in the quarter. And I think that was that too is reflective of the year. I think what we saw this year, which was good, we've been doing a lot of work in the shrink space.
Speaker Change: this year, and because we've talked for years, the pressure with organized crime and some of the other issues that we've had.
Speaker Change: from a macro space and the strength space. This year was a year where a lot of our efforts in that space have really paid off, not only in, in...
Speaker Change: Strategies around organized retail crime, but you heard us talk in the prepared script about the way we're using technology.
Speaker Change: to drive self through and help us reduce strength. And so I really think the answer to your question on...
Speaker Change: You know, why was this year such such a benefit the budget? I think I think shrink was one of those we've talked a lot about our brands and whatnot I still think we have a little bit of runway in the strength space, but I think we'll probably start to cycle that as we as we get into the middle of the year and whatnot and we continue to
Speaker Change: Invest in Price and whatnot, and we use those barge in expansion opportunities to continue to invest in price there. And then the second part of the question that I might have missed.
Um...
I'm getting cast a second more, but...
Speaker Change: Oh, sorry, and the all-profit growth. Yeah, we don't specifically guide the all-profit, but we do expect 2025 to see better than what we had
through in 2024.
Thank you.
Ron Sargent: Thank you. At this time we'll take no further questions, so I'll hand back to Ron for any further remarks.
Thank you. Thank you. Thank you.
Speaker Change: Okay, thank you, Alex. Thanks for all your questions this morning. They're really much appreciated and it's also great for me personally to reconnect with some old friends this morning.
Speaker Change: as you know, before we conclude our earnings call, we'd like to take the time to share just a few comments with our associates who are listening in.
Speaker Change: I'd first like to send a message of encouragement to all of our associates [inaudible]
Speaker Change: The CEO , I will keep our company focused on retail fundamentals.
Speaker Change: Running great stores and online delivery, while taking great care of our customers.
Kroger Steadie
because of you
The work you do everyday matters.
Speaker Change: and it is what keeps customers coming back and makes Kroger the place they trust.
Kroger Strong
Speaker Change: And we have great momentum going into 2025. Thanks everybody for joining us today. It's great to be back home and I look forward to our future together. Thank you very much.
I don't know. I don't know. I don't know. I don't know.
Speaker Change: Thank you all for joining today's call. You may now disconnect your lines.