Kroger 2Q17 Earnings Call Notes

Rodney McMullin

We’re doubling down on digital

“we’re doubling down on digital; and we’re leveraging new and ongoing partnerships to deepen our connection with customers and drive revenue.”

Really too soon to say any impact of the Amazon WFM purchase

“In terms of the impact, obviously, it’s way early, but there isn’t anything that would cause you to develop any point of view at all, in terms of changing trends, but it’s only been a week and a half. So, I would caveat it a million different ways.”

Private label plant is currently operating at capacity

“In terms of our plant capacity, if you asked our manufacturing team, they would probably tell you they’re at almost capacity. I’ve always found and we’ve always found that we always figure out ways to produce incremental product and do it very efficiently. So, in terms of capacity, it is one of the great things about knowing how to operate plants, we could easily expand capacity, either through process change or additional expanding plants, things like that, whether is needed.”

Customers look for total experience

“The biggest thing that the 84.51° insight shows us is the customer decides where to shop based on their total experience. And obviously that total experience is what’s the shopping environment like, so what’s how the associates treat the customer. What kind of rewards do you have, what type of personalized offers are you making, which is very hard for anybody to see that other than each one of us as a customer individually. And then, obviously from fresh product standpoint having great produce, meat, deli, dinner tonight, these kind of things. So, the thing that’s really important is the all of that together, the price, the specific price items, really each one of us would have different items that are in our biggest hot button.”

Mike Schlotman

Have product cost inflation for the first time since 2015

“Another positive sign is that we had overall product cost inflation for the first time since 2015. As you know, the change from inflation to deflation and back again is one of the toughest environments to operate in for our stores, and we’re proud of our team’s ability to manage through it.”