Kroger Conference Call Highlights

reported its Q3 earnings. Shares of the company are up 3 percent. Below are some key highlights from its conference call.

• Kroger continues to deliver consistently remarkable results. • We are well on our way to achieving our 10th consecutive year of lowering costs and reinvesting those savings in our people, products, pricing and improved store experience, which together are driving our growth. • Few can deliver this level of sustainable high performance. • After a while, it can be easy to take this consistency and reliability for granted. • So it's important to keep in mind that these results are possible only because 375,000 associates engage with our customers every single day. • In the third quarter, we achieved our 44th consecutive quarter of positive identical supermarket sales growth, excluding fuel. • We exceeded our goal to slightly expand FIFO operating margin without fuel on a rolling for quarter basis and we continued to gain market share. • Our third quarter financial results were driven by strong sales and core business performance, which was better than we expected. • Higher fuel margins drove our results above our previous guidance range. • Our guidance range for the full year assumes fuel margins will not be as strong in the fourth quarter as they were in the third quarter. • How our customers are doing today depends on the stability of their family finances. • Overall, our customers continue to spend a little more as confidence in the economy improves over time. • While inflation is apparent in certain commodities, fuel prices have been going down, which helps all customers, especially those on a budget. • We try to help those customers stretch their food budget and a variety of ways. • Our weekly promotions and fuel rewards help, along with price investments. • We continue to make natural and organic foods affordable and accessible to all customers, especially with Simple Truth. • Our expensive corporate brands offering is resonating with customers seeking high-quality food at very good prices. • In fact, our corporate brands had their best performance in several years in the third quarter. Our ability to deliver this combination of value sets us apart. • Low household growth is an important measure of our business because it lets us know how well we are connecting with our best customers. • Corporate brands an outstanding third quarter representing 27.3% of total units sold and 25.8% of sales dollars excluding fuel and pharmacy. • A key driver of Kroger's sustainable growth is customer first innovation.

• Year-over-year percentage comparisons are affected as a result. In the third quarter. • Our net earnings totaled $362 million or $0.73 per diluted share. • This includes a $0.04 benefit in the third quarter due to certain tax items. • Excluding these items, Kroger's adjusted net earnings were $345 million or $0.69 per diluted share for the third quarter. • We view these tax benefits as nonrecurring so as you begin to think about 2015, please note that we will not be growing off of that next year. • Net earnings in the same period last year were $299 million or $0.57 per diluted share. • Last year's third quarter net earnings per diluted share benefited from certain adjustments totaling $0.04 per diluted share. • Excluding these adjustments, last year's third quarter net earnings were $0.53 per diluted share. • Kroger's strong financial position allowed the company to return more than $1.8 billion to shareholders through share buybacks and dividends over the last four quarters. • During the third quarter, Kroger repurchased 600,000 common shares for a total investment of $29 million. • All $500 million of the buyback authorization granted in June remains available. • For the fourth quarter of fiscal 2014, Kroger expects identical supermarket sales growth, excluding fuel, of approximately 4% to 5%.