The Kroger Co. Investor update

Good morning, everyone, and welcome to Kroger's 2026 Investor update. I'm Rob Quast, Vice President of Investor Relations. It's great to be together here in New York and see so many familiar faces, while also welcoming those that are new. I'd also like to welcome everyone joining through the webcast. Thank you for taking the time to be with us. Today, you'll hear directly from our leadership team about how we are building America's favorite grocer, and how we're achieving that ambition with a clear set of priorities and a stronger financial framework. We're excited about Kroger's future. We believe we have the right strategy, the right team, and a clear path to create meaningful and sustainable value for our shareholders. Our presentations will begin with our CEO, Greg Foran, who will outline Kroger's strategy and path forward.

Our leadership team will then take you through our priorities for driving profitable growth, delivering value, and modernizing operations. Finally, our CFO, David Kennerley, brings it all together with our long-term financial outlook and capital allocation priorities. Following the presentations, we'll have an opportunity for Q&A with members of the leadership team. Before we get started, I have a few housekeeping items. We'll take two breaks during today's program. First, we will follow Mary Ellen's Win with the Customer section, and the second will come just before David's financial update. I'd also like to remind everyone that today's presentations 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.

The Kroger Co assumes no obligation to update that information. During this presentation, we may discuss certain non-GAAP financial measures. Kroger is unable to provide a full reconciliation of the GAAP and non-GAAP measures used in its guidance without unreasonable effort, because it is not possible to predict certain adjustments without a reasonable degree of certainty. Now, before I turn it over to Greg, let's take a look at Kroger today and the opportunities ahead.

Every week, more than 20 million people choose Kroger. Not out of habit, out of trust. Because they could shop anywhere, but they choose to shop with us. That's why we're building our future around them. It starts with more than 400,000 associates who do more than sell food. They serve their communities, their neighbors, and their friends. From thousands of stores and communities across the country, bringing the most delicious food to the table at the absolute peak of freshness, all while reducing our costs so the savings get passed along to the customer. Because affordability is bigger than a campaign. It's a promise Kroger keeps every single day. Whether the trip is in-store or online, we are there handling their orders with the same freshness and value they've trusted since 1883, delivered straight to their front door. Fresh, fast, affordable, friendly, and made for our customers.

This is how Kroger becomes America's favorite grocer. One experience built around the customer, their needs, their wants, and their lives, 20 million times a week.

Good morning, everyone, and welcome to Kroger's 2026 Investor update. First of all, I want to thank you for being here in New York, and thank you to our associates, our suppliers, and our customers, because frankly, you are what makes this company great. I also want to recognize the members of the board who are here with us today. A special thanks to our Chairman, Ron Sargent. Good morning, Ron. Who, as you know, has played and continues to play such an important role in Kroger's success. So thank you, Ron. Our ambition at Kroger is simple, to build America's favorite grocer. Today, you're going to hear us talk about our plan to do that as we strengthen our core advantages, our scale, our store network, strong local banners, deep customer relationships, powerful brands, and digital data and media assets. I've been in retail my whole life.

I can tell you when I was considering my next professional move, Kroger was the best job on the planet. I saw an incredible opportunity to build on this strong foundation to create America's favorite grocer, and a tremendous opportunity to deliver what customers need and want. I took on the role 250 days ago, and I still believe that today. Now, we have a focused plan to do that by winning with the customer, by driving profitable digital growth, and modernizing how we operate. We have the best team in retail to execute that plan. A team that's excited to deliver. In turn, we're going to drive outcomes for our shareholders and value for our customers. Now, why am I confident that we can do all of this? Well, let's start with why we win. Supermarkets done well are a fantastic business.

They deliver value, they deliver convenience, and they hold a trusted relationship with their customers. I've lived and worked in six different countries, and the supermarket is still the dominant format in food retail. We see that as our opportunity as well. People want fresh food, they want it close to home, and they want it at a price that works for them. Increasingly, they know they can get this experience when they walk into a store or open an app. Digital is changing how people shop for food. Scale, local density, and the insights that come from high-quality data matter more than ever. Now, at Kroger, we are a scaled grocer focused on food. We operate a store network across 35 states with strong local banners, deep customer relationships, powerful brands, and digital data and media assets that very few in retail can match.

As a team, we are bringing our assets together to execute with more focus, more discipline, and more urgency. We have what we need. Now we execute. That is how this creates value for our customers, our associates, and our shareholders. When we execute, we grow sales, we expand the margin, and we improve returns. You will see the numbers behind that today. As we look at the opportunities ahead of us, of which there are many, we have already made progress, but there is a lot more work to do. We are focusing our attention and investing resources behind the things that matter most. We are prioritizing our core grocery, e-commerce, store, and media assets. We are stepping away from non-core activity and complexity that does not improve the customer experience or earn an attractive return. We are also changing how we work. Try things, move quickly. When something works, scale it fast.

When it does not, end it fast. These are not easy decisions, but if we are asking the organization to move faster, we cannot keep work, assets, and layers that distract us from building America's favorite grocer. You can see it in the way that we are optimizing our footprint, our focus on item-level merchandising, and store standards and simplified roles. You can see it in the launch of the Kroger Capability Center. The point is simple. We are focusing resources closer to the customer and where we see the best returns, value, service, digital, customer experience, stores, and supply chain. Americans spend approximately $2.5 trillion every year on food, including over $1 trillion on food at home. Food at home remains fragmented, and we have got a clear opportunity here to lead because grocery matters, because scale matters, because local presence matters.

What gives us confidence is not simply our size, it is how the industry is evolving. As more grocery spending moves online, our combination of store density, digital capabilities, and our fulfillment network creates advantages that few supermarkets can match. As household budgets come under pressure, we are leveraging our scale more effectively to strengthen our value proposition and provide more reasons for customers to choose Kroger. As consumers increasingly look for convenience and healthy choices, we have an opportunity to capture more food occasions through fresh foods, prepared meals, and Ready to Eat offerings. Scale gives us more ways to drive value, serve customers, and win share. We are already leading many grocery competitors, and we are proud of that. Our banners have long-standing relationships in the communities they serve.

Our divisions and store teams know their customers and competitors, and we know how to serve customers however they choose to shop in store or online. The good news is we already have what we need. We have approximately 2,700 stores across 35 states, a roughly $18 billion e-commerce business, and a $40 billion Our Brands business, large-scale manufacturing and supply chain assets, and around 95% of sales tied to a Kroger loyalty card. These assets, they work together. Stores give us proximity and enable pickup and delivery. More digital engagement gives us better data. Better data strengthens personalization and our retail media business. Compelling fresh products, Our Brands, convenient fuel stations, and highly qualified pharmacists give households more reasons to shop with us. Let me be clear, the ingredients to win are already inside Kroger.

Our job is to bring the teams together and execute our strategy consistently and with excellence to unlock the full potential of what we have. Before I talk about the path forward, let me give you my assessment of how we got here. First, execution became inconsistent. The store experience varied too much. Since I joined, I have walked stores nearly every week, usually with a team from the support center. In the best ones, the entrance is inviting, the sight lines are right, the produce is fresh, the shelves are full, and the checkout is fast. That is the standard, and our best stores hit it every day. Others are not there yet. But we know what great looks like, and we know how to get there.

With well-defined standards, stronger accountability, and hands-on support from our division and support center teams, we are creating a more consistent experience for our customers across every store. Second, operating costs grew faster than sales. That reduced our ability to invest in the customer and protect margins at the same time. Third, our value position did not keep pace. The promotions became overly complicated. Customers had to work too hard to take advantage of them, and the perception of our price position weakened. Finally, we made capital investments that did not produce the returns we expected, and we did not build enough new stores at a time when much of the industry was expanding quickly. The result is we lost share. We own that. The good news is that Kroger can address these issues. Here is the bridge from this year to the targets that you will see today.