Good morning, and welcome to the Kroger Co. Fourth Quarter 2017 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Kate Ward, Director, Investor Relations. Please go ahead.

Thanks, Gary. Good morning, and thank you for joining us. 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, but Kroger assumes no obligation to update that information. Both our fourth quarter press release and our prepared remarks from this conference call will be available on our website at ir.kroger.com. After our prepared remarks, we look forward to taking your questions. [Operator Instructions] I will now turn the call over to Kroger's Chairman and Chief Executive Officer, Rodney McMullen.

Thank you, Kate. And good morning, everyone, and thank you for joining us. With me to review Kroger's fourth quarter and full year 2017 results is Executive Vice President and Chief Financial Officer, Mike Schlotman. At our investor conference in October, we discussed the need for retail companies to constantly reinvent themselves in order to remain relevant, and Kroger is right in the middle of such a reinvention. We are proactively addressing customer changes, and we've made strategic decisions to invest in a seamless digital experience, technology, associate wages and low prices. Combined, these efforts come together in Restock Kroger, our plan to create shareholder value by redefining how people eat. Our vision is to serve America through food inspiration and uplift. Restock Kroger has 4 main drivers: redefine the grocery customer experience, expand partnerships to create customer value, develop talent and live our purpose. Combined, these focus areas will create shareholder value. We announced Restock Kroger 6 months ago while also in the middle of one of the most complicated years in our history. Throughout 2017, we continue to challenge our team to deliver our revised identical sales and earnings guidance from June. We are proud to share today that we delivered on those revised commitments for the year, finishing 2017 with strong sales and business momentum. In 2017, we also grew digital sales by more than 90% and expanded ClickList to more than 1,000 locations. We gained market share for the 13th consecutive year, achieved $16.7 billion in annual natural and organic sales, including $2 billion in Simple Truth sales. We launched Zero Hunger | Zero Waste, our commitment to end hunger in the places we call home and eliminate waste across our business by 2025, and created 10,000 new American jobs in our supermarket locations across the…

Thanks, Rodney, and good morning, everyone. Over the next 3 years, Restock Kroger will be fueled by cost savings that we will invest in associates, customers and infrastructure. Our goal is to continue generating shareholder value even as we make strategic investments to grow our business. We expect Restock Kroger to generate $6.5 billion of free cash flow over the next 3 years. This is before dividends and considers the benefit of the tax plan. If you recall at the conference, we talked about $4 billion after dividends. This has been converted to a more conventional free dividend free cash flow calculation, so we're trying to be a little more conventional in the number we talk about. As you know, we've already reprioritized the way we invest capital over the next 3 years by both reducing the amount we spend and optimizing our capital allocation process. We now look first for sales-driving and cost-savings opportunities across brick and mortar and digital platforms. Second, we will continue to make sure our logistics and technology platforms keep pace with and scale to these demands through continued investment. Finally, we will allocate capital to storing activity. This process has allowed us to use less free cash flow for capital investments. We're aggressively managing OG&A costs and implementing new programs to reduce our cost of goods sold. A big focus will be on store productivity and waste. Both of these will benefit from the $9 billion in capital investment over the next 3 years. For example, store productivity will improve with the scheduled launch of Scan, Bag, Go in 400 new locations this year, and we are also pleased that Shrink continued its steady improvement throughout the year with good results in the fourth quarter. We plan to generate $400 million of incremental operating…

Thanks, Mike. We're proud of how our team finished 2017, ending the year with positive momentum in sales and the overall business. We delivered the revised sales and earnings guidance we promised, gained market share for the 13th row -- year in a row, continued to grow our natural and organic food sales, grew digital sales by more than 90% and now offer a seamless digital experience to more than 40 million customers in America. And of course, we relaunched Restock Kroger. As we embark on our first full year of implementing Restock Kroger, we are committed to continuing this great momentum. And we will only accelerate our efforts to redefine the grocery customer experience through investments in digital, technology, pricing and convenience; to expand partnerships to create customer value by forming meaningful alliances with partners who share our commitment to putting the customer first; to develop talent by investing in our associate wages and education; and to live our purpose through our purpose and promise and Zero Hunger | Zero Waste commitment. We are focused on these key drivers of Restock Kroger because we know when we execute them well, we will create shareholder value. We are encouraged at the start of 2018 and confident in our ability to deliver on both our plan for the year and our long-term vision to serve America through food inspiration and uplift. Now we look forward to your questions.

[Operator Instructions] Our first question comes from Edward Kelly with Wells Fargo.

So Rodney and Mike, I guess, the first thing I want to start with is on the gross margin because obviously that's the point, I think, that investors were probably most disappointed with this quarter. Can you just provide more color on what happened here? I mean, theoretically, you would have gotten a full quarter of the vendor initiative in Q4. Comparisons seemed a bit easier. It does seem like pockets of the country -- you're sort of hearing about things being at a minimum, not getting more promotional but actually probably getting a little bit better. Was the ramp in the price investment as aggressive as it looks? What's the thought process behind it? And then how do we think about all this for next year? Should we be extrapolating this gross margin down sort of like the way we saw in Q4?

Well, relative to the last portion of your question, I think I would answer that the same way we answered the increase in the gross margin in the third quarter, that you should never really take any particular quarter and extrapolate it over any period of time other than that particular quarter. As I said in the prepared comments, yes, we were down 30-something basis points in the quarter but only 19 basis points in the year, which is a fairly normal kind of a reduction in investment in gross margins for us. I think that's more normal. We've been very open since October with Restock Kroger. When you look at the recent finds in the customer shopping experience key, that the investment in that key is going to be more than the dollars we generate from that, and that's going to be funded by other parts of it. There was a chart back in October that delineated how we expect to invest in the business and how we expect to generate revenue or EBITDA from those investments and leading to the $400 million increase in operating profit margin, just giving you a little more background than you maybe wanted of the journey we've been on since October. The short answer is you should expect gross margin to decline somewhat in 2018. We aren't giving guidance on the individual amounts. We've talked about the fact that 1/3 of the tax savings will be invested in the business, 1/3 will be invested in our associates and 1/3 will go to our bottom line. Obviously, those are below gross margin or operating -- that benefit to EPS is below the line, if you will. But again, we always try to balance to our annual expectations.

And one other -- a couple of things I would add to Mike's. Mike mentioned it, but we really focus on the gross margin overall for the year. When you look at the year and the work that we've done on Restock Kroger, we worked -- we are consistent with what we thought we would do with Restock Kroger. As I've said before, we're not going to lose on price, but we're not out there trying to lead the market down. And as you know, as part of Restock Kroger, we committed to improving operating margin dollars by $400 million over the next 3 years. And we remain, as Mike said, to that expectation of ourselves and we would continue to expect to grow going forward. The way we will finance that is continuing to take costs out of the business through cost of goods, through process changes. Mike mentioned the improvement that we had on Shrink, for example, as well.

Okay. And just a follow-up as it pertains to reinvesting the tax since we're on that topic. Ever since I can remember from following you guys, the narrative has always been that your cost structure is uncompetitive because of unionization. Now it appears that the nonunionized players have to catch up. The thought process is maybe you should be spending a little bit less than what they are, but this actually doesn't seem to be the case. So could you just help us understand why your investment around the labor side actually kind of seems to be at a similar magnitude of what we're hearing around the rest of retail?

If you look at -- by far, and Mike mentioned it, the majority of our investment in labor has been in starting wages. And in the past, we've always had people very easily would come for a job and make it a career and understand, over time, there's wage progression. Over time, as jobs became very plentiful, that starting wage became more important. So we've meaningfully increased starting wages across the company. And a big chunk of the increase is there and the other huge chunk is the investment in labor that we're making on ClickList and the aggressive expansion and rollout of ClickList. I don't know, Mike, anything you want to add to that?

Yes. And those 2 combined to be about half of the increase in the OG&A in the quarter.

The next question comes from Karen Short with Barclays.

I just wanted to clarify, first of all, did you give a tax dollar benefit amount before I ask my question? Because you didn't give one -- you didn't refute one on CNBC this morning, and it was $200 million. And I thought the dollars you were going to get was higher than that.

Well, I will say that on CNBC this morning, that was a little bit all over the board. It didn't focus very much in the quarter. I actually didn't have a chance to respond to their number of $200 million, but it is higher than that. As we said in the prepared comments, we expect to invest 1/3 in the business, 1/3 for our associates and 1/3 in the bottom line. So in total, Karen, it's about $0.36, $0.37, somewhere in that range. So it's -- at the new tax rate, it takes about $11 million to pretax to have $0.01 a share. So it's somewhere around $400 million of benefit, and we're investing that 1/3, 1/3, 1/3.

And the investments we're making we've talked about in the call, we truly expect to return. And what it does -- what we did was accelerate some of the key parts of Restock Kroger.

Yes. And we're moving some of them up so we can get the benefits sooner, and then the latter years won't be burdened by these investments because we've already taken care of them.

Okay. So I guess that matters as it relates to your EPS. So when you look at your EPS guidance and you back in to EBIT, I guess, the numbers I get for EBIT for fiscal '18 or calendar '18 could be any -- down anywhere from 22 -- well, 15% to 22%. So I guess the first question I had on EBIT, is it fair to say that you'll be much more kind of at that low end in the first half given the accelerated D&A and then, I guess, the second half hopefully a little bit better? And then, I guess, what matters is what the core is doing because we can all take this $400 million and pay 2/3 of it, right? So 2/3 of that is part of the EBIT decline as opposed to the core decline, if that question makes sense. Is that the way to think about it?

Yes. I'm not going to get into giving guidance on what our EBIT's going to be. If you notice in our 8-K, we didn't give guidance on our operating profit margin, primarily because of the conversation you're having, Karen, trying to predict exactly where it's going to be when that's up above and I'm paying for some of my investments with tax savings dollars down below. We are balanced to try to make the numbers we talked about, and our incentive plan will only kick in, in a big way if we make the numbers we talked about relative to our earnings per share guidance. I mean, we've been talking since way back in September. We said it again in November and I've -- or in December, and I've said it multiple times when webcast since that we didn't see anything for this year that would cause us to be below $1.80 and we were striving to be equal or slightly above on adjusted 52-week year. Well, a 52-week year is the $1.95 and then above that plus the $0.12 is -- so we did the $1.95 as the anchor rather than the $1.80. And then the $0.10 to $0.12 from the tax savings plus being slightly above it is how we got to the $2.15. Estimates out there, it's probably the widest range that I can ever remember. This morning when I looked, the range of estimates for next year were from $1.84 to $2.40. So there's clearly confusion about exactly what the number was going to be and how the tax savings dollars were going to fall.

Okay. But it is fair to say, though, the first half, you have a much higher D&A, right? So the decline will be greater in the first half, all else equal, than it will be in the second half? And I guess, then the other question is on the investments in price or wages, is any of that front-end loaded? Or is it pretty evenly distributed?

The depreciation for book won't be affected by the immediate deduction availability under the Tax Act. That would add -- we'll deduct -- if I buy a 7-year piece of equipment for book, I'll depreciate it over 7 years. For tax, I get it immediately. So that won't grow my deferred tax liability balance back up after I reduced it. So the D&A -- immediate expensing of D&A is only for tax, not the book.

The next question comes from Ken Goldman with JPMorgan.

Question on what you've talked about in terms of tax reinvestment. I think you mentioned that some of it will go to educating employees. And if I'm hearing you right, it sounds like the implication is that maybe you have a pool of money that's going toward your associates, some of it toward cash bonuses and some of it toward this education. And I get that from a long-term perspective, right? I'm just curious in a tight labor market, do you have data that really shows you the right move to sort of not spend all of that on bonuses or on raises? I'm just curious, you talked about some markets being $10 or $11 per hour. I think Costco said the average wages of their employees is over $22. So just thinking about that balance and any data you have that can help us understand that would be helpful.

Yes. In terms of our average wage, it is significantly higher than any of the numbers that we've talked about. And the other thing, I think, always to remember is that in addition to our average wage, we also provide health care and pension benefits to associates after -- as a general rule full time or when they haven't been -- after they've been here for a little while. We were very focused on not having something that was a onetime bonus but what were the things that our associates told us that's important to them and what are the reasons that they come to work for us. And when you look at people earlier in their career, the ability to have flexible hours and the ability to continue with an education was something that they give us feedback that was very important to them. So we really view that, that is an important part of investing in our associates. And it's something that we believe, as our associates gain skill, they will be more productive in terms of their day-to-day influence on Kroger and also help them move from a job to a career with us. So for us, it was really important for it not just to be a onetime headline number, but what is something that our associates view as incredibly valuable and helpful over time, and that was an area where associates told us they were important. As all of us know, people are increasingly worrying about college debt and the debt they take on, and this in a small way will be helpful for our associates as well.

So Ken, to be clear, none of our 1/3 -- of tax-saving investment in our associates will be in the form of a bonus. We just don't think that's long lasting and drives retention or drives employee morale over the long term. We think that's temporary, gets a big headline and is somewhat fleeting. And we're trying to make our investment in things that will drive retention and morale over the longer term.

That's very helpful. Can I just ask a quick follow-up? Mike, I appreciate you not wanting to give some of the guidance items that you typically in the past would have given. But there are certain items that maybe are unaffected by tax, fuel gross profit per gallon assumption, LIFO assumption, maybe some color on the current quarter. Any help you could give with that would be appreciated.

Yes. I don't think we've typically given -- I guess we've given a range of margin per gallon. It's one of those things, Ken, we did make a conscious decision to skinny down the individual items we give guidance on. Because then every time it's -- the result's a little different than what you expect, that becomes the only talking point versus our promise is to deliver on Restock Kroger over the 3 years, to deliver the $6.5 billion of free cash flow, to deliver the $400 million in operating profit growth over the next 3 years; and as it relates to 2018 specifically, to have ID sales between 1.5% and 2% and earnings per share from $1.95 to $2.15. Every time we have to change one of those numbers in the 8-K, it becomes the talking point and sometimes the forest gets lost for the trees.

The next question comes from Ben Bienvenu with Stephens Inc.

Mike, I want to follow up on some comments -- or it could have been Rodney, some comments you made on the pull-forward of investments as it relates to Restock Kroger. My inference from the comment is that there's not also an associated pull-forward of the operating margin growth benefits that you would see as a result of those investments. So is it a correct interpretation of what you said to think that those benefits would accrue in years 2 and 3 of the plan versus concurrent with the pull-forward of investments in 2018? And to what extent is that to be reflected in your guidance?

Yes. If you look at the way we even started talking about Restock Kroger back in October, it was always designed when you start looking at the numbers that -- and we have been giving guidance that our 2018 way back in September when we talked about not less than $1.80 and hopefully and we would strive to be flat to slightly above this year, the report of '17 numbers, it's pretty easy to assume that we weren't expecting operating margin dollar expansion with an earnings per share range like that. We've obviously updated it with the final results for this year, the final business plan for 2018 now completed as well as really good clarity on exactly how we're going to invest the tax savings dollars. The shorter answer is, yes, operating profit margin dollars will likely be down in 2018, and we're going to pull dollars forward out of '19 and '20 where the margin dollars should be higher. And we will pay for that for known, the known being the tax savings that are real dollars. And we are working diligently to deliver the savings dollars. We're pulling these dollars forward with real savings dollars that we effectively already have in the bank because of the lower tax dollars we're going to have to spend. This isn't designing a plan that's going to reduce Shrink by 10 basis points in 2018 and hope that -- I hate to use the word hope. I always quickly try to find a different one, but believing that we're going to be able to do that 10 basis point reduction and that was going to pay for our investments. From a cash flow standpoint, from an after-tax cash flow standpoint, we were absolutely neutral doing it this way. And it's going to benefit 2019 and 2020 when we make some of those investments this year, can still deliver the earnings per share growth and after-tax cash flow that we think we can deliver out of the plan.

And Ben, I don't know if this helps you. But one of the numbers Mike outlined in October was we expect cost reductions and savings of $4,450,000,000 over the next 3 years. That savings is what we would still expect. We have not included tax savings in that $4,450,000,000. And then if you look at what we plan to invest, the $4,450,000,000 that Mike talked about in October, our investment plan would still be the $4,450,000,000. We've just accelerated some of that into 98 -- or '08 where before it was an '09 or '10.

'18 and '19. We moved it forward to '18 instead of '19 and '20. It's still -- we're still targeting the same numbers. We're still targeting the same operating profit margin growth at the end of 3 years, and we're still expecting the same free cash flow. And if you remember, on free cash flow, in fact, I talked about $6.5 billion. If you take what I talked about in October, it was $4.5 billion but that was reduced for $1.5 billion of dividends over the 3 years. So we've increased that by $500 million for some of the tax savings flowing into free cash flow.

Okay. So just to summarize that, there's a pull-forward of the operating margin investments into this year versus what would have been over -- more steadily over 3 years, there's not a pull-forward of the operating growth, but it will be heavier in years 2 and 3 and paired with less operating margin investment in years 2 and 3? Is that the right way to think about it?

Correct. And from an earnings per share standpoint, we're paying for that with a known increase in earnings per share from the lower tax rate. So we have to go out and figure out a lot of way to save. We know we're going to be able to pay for that from an earnings per share standpoint and a cash flow standpoint because these are real cash dollars with a lower tax payment.

Awesome. And then a quick follow-up on freight. I didn't hear it mentioned in your comments. It's been a thematic touch point across the retail landscape over the last reporting period. To what extent is that impacting your gross margins? And how do you think about that cost pressure going forward?

Yes. We're pretty well protected on freight. Obviously, we have our own captive fleet that delivers products from our warehouses to our stores. We have a little bit of third-party there, but they're under contracts. A lot of our inbound freight is under contracts that are being honored, and those folks typically have a good supply of drivers. There is a little bit we do on the spot market, and we're subject to some of the disruptions in a somewhat minor way on that. Relative to third party, the CPG companies, there are a few of them that are having disruptions in some of their freight. We've been pretty firm and pretty much still invest there as it's not our issue because we agreed to pay a certain price for the product and their obligation is to get it to us for that price. And we'll see how that evolves over the rest of this year.

The next question comes from John Heinbockel with Guggenheim Securities.

So Rodney, a question. Tactically, the 1/3 that you're going to invest in people, how do you do that in the context of the unionized business and contracts, right? So contracts that might be up next year, the year after, is most of the investment in contracts coming up this year? How do you deal with the contracts that have yet to expire in terms of wages or benefits?

In some cases, you may end up doing a contract early. But as Mike mentioned, like in the Cincinnati contract, that was -- part of what was negotiated was to increase starting wages and increase the progression during the first year. And we've been doing that as contracts have been coming up during 2017. But it's a -- your question is a great one, and it's one of those where you actually sit down with each local and have that conversation. And you target those conversations with places where your starting wage needs to be adjusted. We don't have where the starting wage needs to be adjusted across every part of the country, just parts of the country.

And the 1/3 that you would invest in the business, how much of that is price or promotion? And when you think about the draw forward on some of these investments, is the comp outlook -- in your mind, is the comp outlook better in '19 and '20 versus what it would have been if you hadn't done this? And you probably want to quantify that, but how much better?

If you look -- I'm going to broaden my answer a little broader than just your question. Certainly, as we look out to 2019 and 2020, we increasingly see opportunities for the business to grow in a reasonable way. And if you think about our investments that we've been making in our digital and seamless experiences, on a year-on-year basis, that continues to be a headwind. At some point, late next year or early 2020, that will end up becoming something that's a tailwind because of process changes that we've made on reducing the cost of doing stuff and the growth in the customer in terms of what they spend with us. So when you look at all the pieces that we have together, we really see that we're positioning the company to start growing again as you start looking out to '19 and '20 and starting it out proactively, doing it in a position of strength as well.

The next question comes from Vincent Sinisi with Morgan Stanley.

Wanted to ask -- just in terms of margins for 2018, just to be sure, in terms of freight, what level -- or do you have some cushion baked in for -- I know you said you're relatively protected with what you own and a lot of the contract that's not so much on the spot market. But do you have some level of an increase in freight costs baked in there? And then also just on the vendor negotiations, which was obviously more of a topic last quarter, should we look at that as a potential for ongoing opportunities? Or was it just because maybe more kind of came due at once last quarter and, over time, you really haven't seen any notable changes there?

Yes. I would say the performance -- the only time performance hasn't moved dramatically, defined amount was about the same in the fourth quarter as the third quarter. Relative to -- I won't get specific on transportation as a subset of my margin number. But as you can imagine in a company our size, pretty much everything we do is talked about in ranges. And then when we go to do our internal business plan, we pick a point estimate somewhere within that range. So pretty much everything has a range around it, just like transportation would be. And then you make a point estimate and put that into the model and you build everything else around it. And you move and tweak things to get to what we think is the right answer to strive for as a point estimate for the year. It's the reason we do earnings per share in a range. All of those kinds of things would result in the kind of range you see.

Yes. In terms of our team and the way we're partnering with our CPG partners on the vendor negotiation, there wouldn't have been any change in the fourth quarter versus the third quarter. And from a talent standpoint and the way we've -- what we're negotiating, we've supplemented our team by some talent that we recruited from outside of the company. So we feel really good about where we are. We really do continue to view our CPG relationships as partnerships, but we will use our data to make sure that we understand the strength of each brand and each brand within a category and, as we're renegotiating, use that as part of the negotiation. And in all the backdrop is our own brands, the strength of them continues to improve, and we have very high ratings on net promotability index on it as well.

Okay. All right. That's helpful. And then just one quick follow-up, if I can. For the C-store sale, I'm guessing at this point, nothing's really kind of specifically incorporated into your '18 outlook. But of course, we do know as you said kind of repurchases and debt paydown are the main priorities with the use of proceeds. Should we think of it as more of kind of, all right, those kind of begin in 2Q and kind of incrementally are spread, let's say, evenly across the future quarters? Or should we expect kind of more early on? Just any comments on that would be helpful.

I know it would be helpful, but I won't explain exactly what our strategy is for repurchasing shares. I did have the opportunity to read a couple of the quick analyst reports that came out as the release crossed the wire. And one thing I want to clear up is our guidance range that's out there of $1.95 to $2.15 is with or without the C-Store sale. We will use the proceeds to reduce shares, to replace the EBITDA that goes away with that transaction. I'm not going to talk about the EBITDA level right now. And we will use a portion of those proceeds to reduce debt to balance our net total debt-to-EBITDA ratio out. So we built the plan so that whether we kept the C-Stores or sold the C-Stores, we would offset the lost EBITDA for the year by buying in shares, and then we'll use the rest to -- and other free cash flow to reduce debt to get our net total debt-to-EBITDA ratio in balance.

And that question will come from Rupesh Parikh with Oppenheimer.

Maybe first on the guidance. I'm guessing you probably won't answer, but we're getting a lot of questions in terms of how to think about the seasonality of EPS growth this year. So anything you can qualitatively give us color in terms of how you think about first half or second half EPS growth.

Yes. It's -- I would go back to the earlier question on margin per gallon of fuel and where we think that might be and things like that. We really do run our business over the course of a year. And frankly, we try to run it a little bit -- over a little bit longer time frame than a year. But we do try to make sure that we have guidance out there that's relevant and meaningful to investors. My long-winded answer is I'm not going to give you a quarterly cadence. We are in this for the long haul. A quarter is 12 weeks long most times; the first quarter, 16 weeks long. And trying to say every quarter is going to be exactly X or exactly Y, I can tell you they rarely wind up exactly at X or exactly Y. And that's why we make modifications throughout the year. Sometimes we may need a little more. Sometimes we have a little extra, and do we take some to the bottom line? Do we invest some more? And we're constantly balancing that throughout the year. And we really try to do that on a rolling year basis, not just when I get midway through the year, I'm only worried about the second half. We're already thinking about the first half of next year.

Okay, great. Then I guess, my real question for the call, so as you look at home delivery -- I know you guys recently expanded your partnership with Instacart at Ralphs. I was curious how that was going. And then just given some of their competitive developments out there, do you feel that as you look at where you guys are currently doing home delivery, that you need to accelerate your investment in this area going forward?

Well, as you know, if you go back a little over a year ago, we did home delivery almost in no stores, and now we're up to almost 900 stores. We would continue to look at home delivery as part of our offering. What we find is some customers like delivery, some customers like to have pickup and some customers like to go in store. And probably the most common thing is we find customers actually do all 3. And it just depends on what's going on in their life and whether they have a soccer practice to get to or from or whatever. So for us, you should expect to see us continually expanding the way customers can engage with us and do that digitally and with the mobile app. And we'll continue to make investments in those areas. Hopefully, from Mike's and my comments and stuff, you can tell that we're incredibly excited about the future of Kroger. And when you look at Restock Kroger, the pieces of Restock Kroger are coming together exactly the way we would have hoped and get excited about. Our customers continue to tell us we're doing a better job, and our associates tell us that they're having more fun serving our customers. So all those pieces are coming together, and we continue to invest for the future in terms of the way we think customers will want to engage in a retailer 5 years from now, not just today. So hopefully, you could feel that excitement from our comments. The other thing I'd like to do is just share a few additional comments with our associates listening in. Today, it's very fitting that it's International Women's Day. Kroger is proud to join organizations across the world to support and celebrate the social,…

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