Fellow Shareholders,

A long career in the retail industry has shown me that while customers' needs change, the fundamentals for running successful stores remain the same. My time as Kroger's Chairman and CEO – about eight weeks as I write this – has only deepened my conviction about what it takes to be a great retailer.

Our strong go-to-market strategy is rooted in our strategic priorities of Fresh, Our Brands, personalization and eCommerce. We have a proven and experienced management team, including incredibly strong division leaders. And most important, our dedicated frontline associates provide customers with friendly service and exceptional value. As I spend more time with associates at all levels of our business, I am confident we have the right people to drive our continued success.

Together, we are reaffirming our commitment to grow Kroger's core business, to support our associates and to strengthen our communities.

Growing the core

Putting the customer at the center, and streamlining our priorities are key ways we will support our continued success. It can be easy to get distracted with projects that pull focus from the basics of running excellent stores. Our teams are making decisions faster, ensuring their day-to-day work improves sales, and walking away from any projects or programs that do not provide customers with fresh products at the best prices. Our customers need access to affordable food now more than ever, and we are holding ourselves accountable to delivering for them.

Because our best customers shop both in store and online, we are bringing more balance to our capital investments across brick-and-mortar stores and eCommerce. In 2024, we built more new stores and engaged in more large-scale store renovations than in the previous five years, and we will continue that momentum this year. At the same time, we have established a dedicated eCommerce business unit to better align all teams who touch the digital experience.

These decisions bring us even closer to our customers and their needs, drive better accountability, and improve our understanding of how to deliver a best-in-class shopping experience.

Our customers tell us they want to shop fresher, trendier foods. So, we are moving items through our supply chain faster. And the Our Brands teams continue taking a new approach to their work, introducing 900 new products in 2024 alone. When we bring those fresher, more interesting products to our shelves, more customers will shop with Kroger. A bigger customer base translates into more opportunities for alternative profit streams to grow, and as a result, we can keep bringing prices down.

One thing is clear, our competition is changing faster than ever, which means we need to move faster. An outstanding grocery store has the food customers want at prices they can afford, and we are working to deliver on both.

Supporting our associates

Great retail businesses are built by great people. Whether in stores, distribution or manufacturing centers, fulfillment facilities or offices, we respect and appreciate our associates and will continue the historic investments Kroger has made in the past five years to grow wages and improve benefits.

During my time on Kroger's board, I got to know the senior leadership team well. They always impressed me with their strategic approach, clear vision and belief in our associates. As I spend more time in our divisions and meeting more team members, I see the depth and breadth of talent our organization has. Our division teams know their communities better than anyone. Our manufacturing and Our Brands teams are experts at making great food that customers love. Our supply chain and distribution teams move product with precision. I am confident in the strong bench of talent at Kroger and what we are capable of achieving.

Strengthening communities

We understand the important role a grocery store plays in a community. We offer employment opportunities that range from first jobs to career-defining roles, and we give back to those in need. With Zero Hunger | Zero Waste at the center, a Kroger in your community typically means millions more meals feeding hungry families. In fact, since 2017, the Company donated more than 3.4 billion meals to communities across the country.

And when a crisis hits, Kroger aims to be among the first to help. Earlier this year, our business supported thousands of families impacted by the Los Angeles wildfires. And alongside amazing organizations like Feeding America, the USO and Red Cross, we ensure our neighbors have the fresh foods they need to thrive.

Looking to the future

Kroger's foundation is strong, and our company is well-positioned for continued growth. I am committed to serve as Chairman and CEO for as long as needed while our Board conducts a thorough search for Kroger's next leader. While in this role, I plan to move the company forward with an eye toward building to the future.

With all of this in mind, I keep returning to one question: What does Kroger look like in eight years when we celebrate our 150th anniversary? I am proud to lead this company as we answer this vital question together.

Thank you for the trust you are placing in me to lead Kroger to an even brighter future.

Ronald L. Sargent
Chairman and Interim CEO, The Kroger Co.