Kroger Co Earnings Call Insights: Under-Indexing and Share Gains Outlook

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Kroger Co (NYSE:KR) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.

Under-Indexing

John Heinbockel – Guggenheim Securities: So, guys, two things. One, when you look at that 50% share of loyal households when you talk to those customers and get a sense of why they are not spending a larger piece with you, what do you typically hear from them? And then secondly, I know you don’t want to get too much detailed here but where do you think there are particular opportunities where you’re way under-indexing with those loyal customers in certain product categories?

W. Rodney McMullen – President and COO: If you look at why they are not shopping with us, it’s kind of interesting, when we talk to them, they’ll tell us they are giving us more business than they give us. And it’s really a mixture of two things; one, things that they don’t put on their Kroger list and they just for the last several years have put it on another retailer list. And the other part would be when they are out taking their kids to soccer practice or some other type of event, they’ll just stop by and pick up a few items somewhere else, in most times, people pick up a few extra things. The big opportunities, the easiest way to answer it, there are certain categories where we’ve significantly improved what we offer from a variety and a price standpoint that those customers don’t realize that we’ve changed and it really is trying to make sure that customers realize the improvements that we’ve made, would be the biggest opportunities that I could answer your question without giving a tremendous amount of detail. Obviously, there’s a lot of detail behind that statement.

John Heinbockel – Guggenheim Securities: But is it safe to say that the things that they might think of first at another retailer whether it’d be paper, cleaning, HBA, I would think those roll areas where you probably under-index as opposed to food, correct?

W. Rodney McMullen – President and COO: That would be correct. Anything that’s not food related we would probably under-index on…

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