Categories Consumer, Earnings Call Transcripts

Kroger Co. (KR) Q2 2020 Earnings Call Transcript

KR Earnings Call - Final Transcript

Kroger Co  (NYSE: KR) Q2 2020 earnings call dated Sep. 11, 2020

Corporate Participants:

Rebekah Manis — Director of Investor Relations

W. Rodney McMullen — Chairman and Chief Executive Officer

Gary Millerchip — Senior Vice President and Chief Financial Officer

Analysts:

Spencer Hanus — Wolfe Research — Analyst

Michael Lasser — UBS — Analyst

Ken Goldman — JPMorgan — Analyst

Rupesh Parikh — Oppenheimer — Analyst

Karen Short — Barclays — Analyst

Robby Ohmes — Bank of America — Analyst

Edward Kelly — Wells Fargo — Analyst

Kelly Bania — BMO Capital Markets — Analyst

Presentation:

Operator

Good morning and welcome to The Kroger Company Second Quarter 2020 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Rebekah Manis, Director of Investor Relations. Please go ahead.

Rebekah Manis — Director of Investor Relations

Thank you, Gary. Good morning and thank you for joining us. Before we begin, I want to remind you that today’s discussions 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 assumes no obligation to update that information.

Both our second quarter press release and our prepared remarks from this conference call will be available on our website at ir.kroger.com. This is obviously an unprecedented time and we are taking the additional step of providing more details on current business trends this quarter, so our prepared remarks may run a little longer than normal.

After our prepared remarks, we look forward to taking your questions. In order to cover a broad range of topics from as many of you as we can, we ask that you please limit yourselves to one question and one follow-up question if necessary. Please mark October 27th on your calendar for a brief business update from Rodney McMullen and Gary Millerchip on our performance against Restock Kroger goals and how the pandemic is shaping our business model.

Given the travel restrictions that are still in place, this meeting will be conducted virtually and we plan to host a full Investor Day in spring 2021 hopefully in-person to share more on the business outlook and key drivers of our long-term growth model. Further details will be shared soon and we hope you will join us.

I will now turn the call over to Kroger’s Chairman and Chief Executive Officer, Rodney McMullen.

W. Rodney McMullen — Chairman and Chief Executive Officer

Thank you, Rebekah. Good morning, everyone and thank you for joining us. With me today to review Kroger’s second quarter 2020 results is Chief Financial Officer, Gary Millerchip. Each day I’m inspired by the work our incredible associates do to bring to life our purpose to feed the human spirit. I am proud of our dedicated associates who are serving our customers when they need us most. Our top priority is to provide a safe environment for associates and customers and as the pandemic continues, we know that Kroger will continue to rise to meet the challenge.

Six months into the pandemic, while there is still much we cannot predict, we still — we have a greater clarity in many areas across the business. Since March, we have invested more than $1 billion to both reward our associates and to safeguard them and our customers through implementation of dozens of safety measures.

The Company’s total COVID-19 incident rate continues to track meaningfully below the rate in surrounding communities where we operate. We have learned and continue to learn a lot while keeping our stores and supply chain open and serving America during the pandemic. We continue to play a key role in addressing the critical need to expand COVID-19 testing. The Kroger Health team facilitated more than 150,000 COVID-19 tests at walk-up and drive-thru locations across the country. Recently Kroger Health announced the expansion of COVID-19 testing offerings at more than 220 little clinic [Phonetic] locations.

As the nation prepares to enter the flu season, testing will become even more critical to help diagnose COVID-19 amidst potential similar symptoms. We announced earlier this week a comprehensive flu shot program designed to help Americans get their recommended vaccines during the COVID-19 pandemic. Despite the pandemic-related challenges, we delivered extremely strong results in the second quarter. Customers are at the center of everything we do and as a result we are growing market share. Kroger’s strong digital business is a key contributor to this growth as the investments made to expand our digital ecosystem are resonating with customers.

Our results continue to show that Kroger is a trusted brand and our customers choose to shop with us because they value the product quality and freshness, convenience and digital offerings that we provide. While we delayed certain cost saving initiatives in the first quarter, as of the close of the second quarter, we are back on pace to achieve them.

I continue to be proud of the way our associates have adapted and adopted to the new ways of working during the pandemic to continue to achieve strong results. We are more certain than ever that the strategic choices and investments made through Restock Kroger to execute against our competitive moats, Fresh, Our Brands, Personalization and Seamless have positioned us to meet the moment. We are also positioned to deliver 2020 and beyond for our customers, associates and shareholders as we believe a number of impacts of COVID will be structural and lasting.

Our data insights show customers are rediscovering their passion for cooking at home and have an aspiration to eat more healthy foods as a result of COVID. When we talk to our customers they tell us they plan to continue to prepare and eat more meals at home. As children return to school many families are telling us they plan to make breakfast in the morning and prepare lunch for their children to take school.

As we talk to other companies across America, we believe return to work will look very different with many employees working part of the week from home. And finally, while the full economic impact of COVID-19 is yet understood, our data shows that during the periods of lower economic activity, we see a structural shift from food consumed away from home to food consumed at home. All of these factors combined lead us to believe there will be more meals eaten at home or prepared at home for the foreseeable future.

Now I’d like to walk you through some examples of how our competitive moats have positioned us for growth in the short and long-term. Even before the pandemic, our digital business had become a tailwind. The pandemic certainly has accelerated customer preference for seamless offerings. Our customers are increasingly turning to our e-commerce solutions for their grocery and household essential needs. Many of our customers are ordering groceries online for the first time as a result of COVID-19 and the majority of them tell us they plan to continue to do so in the future.

Kroger began investing in digital several years ago to build a seamless ecosystem that would deliver anything, anytime, anywhere. As a result, we have over 2,100 pickup locations and 2,400 delivery locations reaching 98% of our customers with a seamless customer experience that combines the best of our physical stores with digital. Kroger was the first to integrate pickup and delivery into one seamless experience. These investments were, especially, timely as customer adoption of pickup and delivery has grown significantly during the pandemic.

Kroger’s digital ecosystem continues to expand and customers are increasingly engaging with us. For example, Home Chef is growing incredibly fast, no doubt accelerated by the food at home trend that we believe is a structural change. We also announced that Kroger Ship will expand to offer an extended ship-to-home assortment through a marketplace offering of third-party sellers. We will continue to expand our ecosystem over time. The Kroger technology and digital team continues to create innovative experiences that are changing the way we serve customers across America and was recognized for the third consecutive year as the best place to work in IT by Computerworld. This recognition is awarded to companies that have innovative, industry-leading workspaces offering a great customer associate experience.

As a result of the pandemic, we continue to see a slow return to normal from the shutdown period resulting in fewer customer visits, but increased basket size. Customers across the country are still staying home and cooking at home that is now part of their new routine. This makes our leadership position in Fresh, an even more important sales driver for Kroger. Customers rank our Fresh departments higher than all of our big box competitors and our Fresh departments generated strong identical sales in the second quarter and gained market share.

Our Brands is also a key competitive moat for Kroger. We continue to meet the diverse needs of our customers with significant growth across the three largest brands. Our customers are eating more at home, and we are seeing some customer segments trade up to the larger pack sizes as well as more premium quality foods and natural and organic foods.

Our larger sized big pack platform is up well over 50%. Private Selection is up over 17% and Simple Truth is up over 20% in the second quarter. Our Brands continues to tap into emerging trends and evolving customer needs, delivering new flavors and innovative new items like the new plant-based Emerge grinds and patties, which launched in late 2019.

A recent third-party industry study reconfirmed that Simple Truth is the most loved natural and organic brand in the US. Simple Truth significantly outperformed competitors on strength of brand, which is a combination of awareness, willingness to recommend and strength as the driver of store selection. In continuing to exceed our customers’ expectations of value and quality, while also consistently delivering innovative new items our customers love, our brands remain one of our most powerful competitive advantages.

Finally, Personalization and data remains one of Kroger’s key and core competitive moats. We use our data to understand what is most important to our customers and continue to offer promotions throughout the quarter. And we think it is an important component to continue to support, as the pandemic continues and government stimulus benefits have expired. Many of our customers are experiencing some form of financial hardship that we expect to impact discretionary purchases and eating out. This is one of the unique capabilities of the Kroger ecosystem, we can deliver for both customers on a budget and customers who are trading up to premium products and/or larger sizes.

Turning now to partnerships. While COVID-19 has not necessarily changed how we think about our approach to e-commerce, it has accelerated our thinking about how our full evolution of seamless strategy, inclusive of Ocado. Ocado is a strategic partner of choice delivering innovation and best-in-class experience and economic advantage through efficient fulfillment.

We are confident the future of our ecosystem will incorporate a mix of capabilities and facilities ranging in sizes and our network will flex as demand matures and the optionality will allow us to fulfill same day or next day delivery or pickup and customers or store replenishment. Ocado’s model incorporates state-of-the-art automation and AI to expand Kroger’s products to a larger footprint, and our model to deliver to customers is significantly less costly than our existing model. We are on track to open the first two sites in the spring of 2021.

Developed talent is a driver of Restock Kroger and we work extremely hard to ensure that we have the right talent, teams and structure and the right focus areas in our core supermarket business and our alternative profit businesses. We are focused on both developing, training and promoting internal talent and hiring external executives both food industry and technology, which together drives our retail supermarket business and all of our businesses.

Kroger has been investing to raise wages of our frontline associates for the last several years. As part of Restock Kroger announced in 2017, over the period of 2018 to 2020 Kroger will have invested an incremental $800 million in associate wage increases and that is $300 million more than the original plan. As a result of this continuing investment, Kroger has increased its average hourly rate to over $15 per hour. And with our comprehensive and best-in-class benefits, including healthcare, paid time-off and retirement plans, our average hourly rate is over $20.

As the largest traditional grocery retailer in America, Kroger is committed to being a force of good in the communities we serve. Our purpose to feed the human spirit continues to guide how we operate our business, care for our communities, and deliver value to all of our stakeholders. Last month, we released our 2020 ESG report, highlighting progress toward our sustainability goals. We are committed to continuing to integrate ESG metrics into our business strategy, driving shared value for our associates, customers, communities, and Company. We recently made the decision to contribute an additional $20 million split evenly between The Kroger Co. Foundation and the Zero Hunger Zero Waste Foundation. We also added $5 million to a fund created to support the advancement of racial equity and justice.

We believe that it is vitally important to get resources to our communities as they continue to face hardships related to the pandemic, the economic downturn and racial injustice. Under Restock Kroger, we have made significant investments to establish a seamless digital ecosystem, strengthen our brands and our personalization capabilities and to enhance product freshness and quality. These investments combined with how our associates have responded to the pandemic and customers eating more meals at home, give us confidence that Kroger’s performance in both 2020 and 2021 will be even stronger than previously anticipated.

I will now turn it over to Gary for more details into the quarter financials. Gary?

Gary Millerchip — Senior Vice President and Chief Financial Officer

Thanks, Rodney and good morning, everyone. Before getting into our business results, I wanted to echo Rodney’s comments from earlier, and saying how extremely proud I am of our associates for continuing to serve our customers and communities throughout the pandemic.

We remain committed to investing to ensure a safe environment for our associates and customers, and we will also continue to use our customer insights to invest in delivering greater value for customers in ways that are most relevant today and to build future loyalty. Results for the second quarter were strong and reinforce the strategic investments we have made over the last several years as part of Restock Kroger. The quarter turned out much better than we previously expected.

This was due to several factors, including stronger sales results and disciplined balance between cost savings and investments while also managing cost inflation volatility in key fresh categories. Additionally, fuel performed better than predicted and we were very pleased with our alternative profit results, which rebounded from COVID-19 impacts more quickly than anticipated.

Now I’d like to provide further detail on second quarter performance. We delivered an adjusted EPS of $0.73 per diluted share, up 66% compared to the same quarter last year. Kroger reported identical sales without fuel of 14.6% during the second quarter.

Sales momentum continued from the first quarter with identical sales without fuel in June and July trending in the mid-teens. During our final period of the quarter, which runs from mid-July to mid-August, identical sales without fuel were 12.5% as we saw reduced government stimulus and SNAP funding and lower back-to-school activity.

Digital sales grew 127% and contributing 4.4% to identical sales without fuel. New customer engagement and with our pickup and delivery services continued to grow, and we continue to invest in the customer experience. This included offering fee-free pickup to provide more value for our customers in ways that are most relevant at this time.

Also Read:  Usa Technologies Inc. (USAT) Q4 2020 Earnings Call Transcript

Our digital sales growth was profitable on an incremental basis and we were pleased with the progress we made to improve profitability by reducing the cost to fulfill a pickup order during the quarter. We see a clear path to further improve digital profitability by leveraging our personalization tools to improve sales mix, continuing to reduce cost to fulfill an order via process improvements and automation, and accelerating growth in media revenue generated from digital sales.

Adjusted FIFO operating profit for the second quarter was $894 million up 43% compared to the second quarter of 2019. We were pleased with the overall pass-through rate achieved from the elevated sales in the quarter which including the impact of digital growth and incremental costs associated with COVID-19 was approximately 10%.

COVID-related cost investments in associate depreciation, cleaning, safety and supply chain totaled approximately $250 million in the quarter. Gross margin was 22.8% of sales for the second quarter. The FIFO gross margin rate excluding fuel increased 5 basis points, primarily driven by sourcing efficiencies, sales leverage related to shrink, transportation and advertising costs, plus growth in alternative profit streams. This was partially offset by price investments as we continue to invest in delivering greater value for customers and mix changes from lower relative sales in higher gross margin categories such as deli bakery.

The OG&A rate excluding fuel and adjustment items decreased 61 basis points due to sales leverage and execution of Restock Kroger initiatives partially offset by ongoing COVID-19 related costs mentioned earlier to protect the health and safety of our customers and associates. Rent and depreciation excluding fuel decreased 27 basis points due to sales leverage.

We were very pleased with the progress on our Restock Kroger savings initiatives in the quarter and now expect to achieve the targeted $1 billion of savings in 2020. Fuel remains an important part of our strategy to drive customer loyalty. Compared to the first quarter and consistent with market trends, the decline in gallons slowed to around 15% in the second quarter.

We remain well positioned with our markets due to our fuel procurement practices and market-leading reward program. The average retail price of fuel was $2.14 this quarter versus $2.71 in the same quarter last year. Our cents per gallon fuel margin in the second quarter was $0.37 compared to $0.35 in the same quarter last year. While fuel operating profit was $30 million lower than the same quarter last year, this was better than expected.

For the remainder of 2020, we expect fuel profitability will continue to be a headwind compared to prior year as we cycle margins from 2019 and gallons continue to be impacted by COVID. Kroger’s alternative profit model is built on a platform of leveraging supermarket traffic and data with media and Kroger Personal Finance representing the largest contributors to growth in 2020.

Thanks to our team’s responsiveness to the challenges COVID has presented to our alternative profits portfolio. These businesses rebounded strongly in the second quarter and we now expect growth approaching $100 million for the fiscal year 2020. We continue to believe alternative profit will be a major accelerator of our model in the future and COVID-19 has not changed the long-term profit expectations previously shared as part of Restock Kroger.

Kroger precision marketing drove tremendous acceleration in our media business in the second quarter. On the strength of growth in digital sales, digital customer engagement and new inventory, revenue growth doubled compared to the first quarter.

In-store media also bounced back as stay-at-home orders were lifted in many of the communities we serve. Kroger Personal Finance experienced higher transactions in the second quarter compared to the first quarter as customer activity improved in gift cards lottery and money services. While trends at KPF are improving, we continue to expect KPF profit will be lower than our original expectations for 2020 due to COVID-19.

We continue to invest in our associates as a key part of Restock Kroger in a variety of ways including investments in wages, training and development. As you know for the last decade or more, Kroger has sought opportunities to address the funding challenges facing the pension plans in which our associates participate. We believe challenges related to pension funding can be mitigated if plans are reviewed and addressed over time. Consistent with this effort, last month, we announced a tentative agreement to improve security of future retirement benefits of over 33,000 Kroger family of company associates across 20 local UFCW unions with an investment of nearly $1 billion.

Ratification of this agreement is still expected to occur in the third quarter of 2020. We ratified new labor agreements with the UFCW covering associates in Roadie [Phonetic] during the second quarter. We are currently negotiating with the UFCW for contracts covering store associates in Las Vegas, Little Rock, Houston, Dallas and Charleston, West Virginia.

Looking ahead towards the end of this year, we will be negotiating with the UFCW for Fry’s stores associates in Arizona. Our objective in every negotiation is to find a fair and reasonable balance between competitive costs and compensation packages that provide solid wages, good-quality affordable healthcare and retirement benefits for our associates. We strive to make our overall benefit package relevant to today’s associates.

Our financial results continue to be pressured by healthcare and pension costs, which some of our competitors do not face. We continue to communicate with our local unions and the international unions, which represent many of our associates on the importance of growing our business in a profitable way, which will help us to create more jobs and career opportunities and enhance job security for our associates.

Turning now to financial strategy. Kroger’s financial model has proven to be resilient throughout the economic cycle. We continue to generate strong free cash flow and maintain strong liquidity. We are committed to investing in the business to drive profitable growth, maintaining our investment-grade debt rating and returning excess free cash to investors via share repurchases and the growing dividend over time.

We remain confident in our business model and our ability to achieve consistently attractive total shareholder returns. We will provide more color on our future approach to capital allocation and the use of excess cash during our March 2021 Investor Day. In 2020, we are being disciplined in how we deploy capital and all aspects of our capital plan are being evaluated to make sure that our investments will deliver strong returns and position Kroger for long-term success post COVID-19. We now expect total capital expenditure to range between $3 billion and $3.4 billion in 2020. We have widened the range of our guidance, due to the uncertainty on timing of when spend will occur, because of COVID-19.

Kroger’s net total debt to adjusted EBITDA ratio is 1.7 compared to 2.46, a year ago. This is below our target range of 2.3 to 2.5. Kroger held temporary cash investments of approximately $2.4 billion as of the end of the quarter, reflecting improvements in operating performance, significant improvements in working capital, and delayed tax payments, as a result of the CARES Act. We expect working capital to improve for the year although not to the level experienced year-to-date, which is inflated by sales growth due to COVID-19.

During the quarter, Kroger repurchased $211 million of shares under its $1 billion Board authorization announced on November the 5th, 2019. On September 11, 2020, the Board of Directors authorized a new $1 billion share repurchase program replacing the prior authorization. In June, Kroger increased the dividend by 13% marking the 14th consecutive year of dividend increases.

Turning now to guidance for the remainder of 2020. As we shared last quarter, the COVID-19 pandemic has changed the outlook for food retail, and we continued to monitor, evaluate and adjust our plans to address the impact to our business. While there are clearly still many unknowns as Rodney shared in his opening comments, we now have greater clarity in many areas of our business and the drivers of food at home consumption.

As a result of our strong performance in the first half of the year, the expectation of sustained trends in food at home consumption and confidence in our ability to execute against the Restock Kroger strategy, we are updating our full year 2020 guidance.

For the full year 2020, we expect total identical sales without fuel to exceed 13%, and we expect to achieve adjusted EPS growth of approximately 45% to 50%. We are providing a wider range on guidance than we would normally provide at this point in the year to account for the variety of outcomes that could materialize as a result of the pandemic.

In the second half of 2020, we expect identical sales excluding fuel to continue at elevated levels, although tapering from the level we’ve experienced so far this year. Our guidance contemplates continued investments in the customer and ongoing COVID-19 related costs to protect the safety of our customers and associates balanced with continued execution of cost-saving initiatives and growth in alternative profits. We expect fuel profitability will be a headwind for the remainder of 2020.

Finally, relative to delivering on our total shareholder return growth targets as shared at our November 2019 Investor Day, these factors also lead us to believe that our 2021 business results will be higher than we would have expected prior to the COVID-19 pandemic. As the operating environment continues to evolve, we will be transparent and communicate any important changes that could impact our outlook.

I’ll now turn it back to Rodney.

W. Rodney McMullen — Chairman and Chief Executive Officer

Thanks, Gary. We provided specific guidance to help you understand how we see the business today. While there are still a lot of uncertainties, we are confident in our team’s ability to navigate through this. We are laser-focused on winning with the customer and our true measure of success internally will be growing market share sustainably over time.

As Rebekah said earlier, we have scheduled a call on October 27. We will provide a business update relative to our November 2019 business commitments as well as our overall ESG commitments. We value the impact of an in-person meeting with you and have made the decision to reschedule the timing of our traditional Investor Day to spring of 2021. We remain incredibly confident in both our business model and TSR model, and believe that not only 2020 will be strong, but as Gary mentioned, 2021 will be even stronger than we previously anticipated.

Now we look forward to your questions.

Questions and Answers:

 

Operator

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Greg Badishkanian with Wolfe Research. Please go ahead.

Spencer Hanus — Wolfe Research — Analyst

Good morning. This is actually Spencer Hanus on for Greg. My first question is just, can you talk about the comp trends that you guys are seeing quarter-to-date? And then, we’ve seen ticket growth outpacing traffic growth as consumers combined trips. When do you think ticket and traffic trends get more normalized?

W. Rodney McMullen — Chairman and Chief Executive Officer

In terms of where we are quarter-to-date, we would still be slightly ahead of double digits. And if you look at — when traffic returns to normal, it’s kind of fascinating. As you look at markets where COVID incident rates are lower or less severe, what we find are people start visiting the store more often, but they don’t spend as much. But if you look at overall, the trends are pretty similar. That’s probably really the only insight that we have at this point. We do find everything that we can tell people are enjoying, cooking at home enjoying eating as a family. And those are things that we believe will last past COVID. I don’t know Gary anything you’d want to add to that?

Gary Millerchip — Senior Vice President and Chief Financial Officer

No. I think you covered it well, Rodney. I think we are seeing some gradual sort of, I guess, this return to patterns that customers get comfortable with in a COVID environment as — continue to see large basket sizes and fewer trips, but we’ve been encouraged certainly in the second quarter by well categories like Deli, bakery would be significantly lower than the heightened levels of sales we’d have seen in the last quarter or so from categories like grocery and meat and produce. Deli, bakery is positive again, which I think shows that customers are starting to at least return to some of those behaviors and certainly in areas like specialty cheese and floral. It’s really encouraging to see those categories turning to sort of low to mid single-digit ID sales as well.

Spencer Hanus — Wolfe Research — Analyst

That’s really helpful. And then in your prepared remarks, I think you mentioned that digital sales were profitable on an incremental basis. Can you provide some more color on that comment? And then how do you expect the launch of a marketplace with Kroger Ship to impact the profitability of the online business?

Gary Millerchip — Senior Vice President and Chief Financial Officer

Yeah. Thanks for the question. So the way we think about digital profitability is — I know we’ve shared some of this color before, but essentially we track very closely how a customer behave themselves when they’re engaged digitally and we see a significant level of incremental sales overall in the customer relationship. Obviously, you have to offset that against the incremental costs that we incur in filling the order for the customer. And in addition to that, then of course we’re now seeing tremendous growth in digital media revenue that’s generated off of a customer spending dollars with us digitally, because we can then truly personalize the communication to the customer and we can close the loop for a CPG partner in understanding whether that advertising led to a sale with the customer themselves.

So when we look at the overall impact of the incremental sales, the cost to fill the order and the media revenue, we see a profitability pass-through if you like in terms of the transaction from a digital perspective. It’s obviously at a much lower level than you would see in the store channel but we are seeing that profitability flow through on an incremental basis.

We believe that there’s significant opportunities, as I mentioned in my prepared comments to continue to improve that profitability. The first would be improving sales mix and we believe there’s a lot of opportunity using our personalization tools to do that. Marketplace would be a good example of that — well also opportunity to do that as well. So that would be a part of that component where we think continuing to improve the basket size and the type of products the customer has in the basket is definitely going to be a driver of bridging any gap between store and digital profitability.

Beyond that, we also believe there’s significant opportunity to improve profitability by continuing to reduce the cost to fill an order through automation and process improvement and continuing to grow those digital media dollars. In the short term, we have plans on those areas today. And then of course as Rodney shared on the call earlier, Ocado would also be a significant accelerator of those drivers by further improving the customer experience to improve mix and continuing to take more cost out of the model through automation and AI.

W. Rodney McMullen — Chairman and Chief Executive Officer

Just to add a little bit and everybody’s heard me say this before, but when you look at digital overall, we’ve always viewed our first job is to make sure we don’t lose the customer. And obviously with our teams, they’ve done a fantastic job of supporting amazing growth and that’s our technology team, our digital team, our store teams and warehouse.

Also Read:  ADF Group Inc. (DRX) Q2 2020 Earnings Call Transcript

We can now see a clear path to profitability of that. And one of the insights that Gary just shared in terms of the incremental is one piece of that path to profitability. Obviously, all the things that we’re working on together, what we’re expecting of ourselves is we will get to the point where we’re indifferent if a customer connects with us digitally or a physical store. And everything that we can see, the customer actually will do both. And we made great progress on reducing cost to serve on a per customer basis. And then if you look at some of the other pieces of our digital offering like Home Chef, Home Chef had an incredible quarter both sales growth and profitability as well.

Spencer Hanus — Wolfe Research — Analyst

Thank you.

W. Rodney McMullen — Chairman and Chief Executive Officer

Thanks.

Operator

Our next question is from Michael Lasser with UBS. Please go ahead.

Michael Lasser — UBS — Analyst

Good morning. Thanks a lot for taking my question. So Rodney, you mentioned you took share in fresh. How do you think your share in other categories trended? And can you give us more detail behind your decision to reengage in price investments during the period? I think that was something that — or at least promotions were put on hold in the prior period. It sounds like the overall environment has gotten a bit more competitive in the most recent period. Is that fair?

W. Rodney McMullen — Chairman and Chief Executive Officer

No. I would say a little differently. We’ve promoted throughout the pandemic. Now we did change what we promoted, because obviously, you want to promote what you have, so we would have not promoted paper towels and toilet paper and certain meat items and things like that, because just the availability of supply. But we’ve had promotions throughout the pandemic and it’s really on the things that matter.

We continue to invest in price and we think it’s really important that we think customers will look at it reflectively that we’ve been there to support them throughout to help them stretch their budgets. So the — as Gary mentioned, waiving the pickup fee, continuing to invest in promotions, continuing to invest in price, all of those are things that we believe will pay off. Our customers will reward us for what we’re doing over time. On market share, I specifically talked about Fresh, but we continue to gain share in the center store fresh and all areas of the store and our own brands continue to gain share as well.

Michael Lasser — UBS — Analyst

Okay. And so you mentioned the final period of the quarter was — IDs were up about 12%. It sounds like it slowed a little bit in the most recent period. Would you attribute that to some of the change in unemployment benefits in staff and continued pressure from back-to-school? And how does that back-to-school pressure manifest? Thank you very much.

W. Rodney McMullen — Chairman and Chief Executive Officer

Yes. If you look at the back to school, there’s a lot of moving parts and we think that’s part of it. We also think, if you look at the holidays, people celebrate holidays differently. If you look at some of the sporting events, people are celebrating those differently. So there’s a lot of moving parts, so I think it’s hard to say the specifics. I don’t know, Gary anything you’d want to add to that?

Gary Millerchip — Senior Vice President and Chief Financial Officer

Yeah. I think, it’s an interesting time right now to Rodney’s point because, we look at the trend in markets where we try and correlate results to higher levels of COVID cases and it’s become a lot more difficult to really track those trends. There’s certainly a small level of correlation, it seems like between the higher markets with COVID cases and the differentiation where you’ve got states and markets that have smaller levels of cases. But that being said, it seems like to Rodney’s point, I think more of the trends are being as customers are now adapting to some level of a new normal. And so as you mentioned Michael things like back to school certainly impacts for a period of time. I think the government’s now followed in the market. We would say we saw a change there in the final period of the prior quarter and a little bit in this quarter.

But then, it’s like what’s the next trigger. So, as now we’re coming through the back-to-school campaign, what will happen in the final part of the year as maybe customers are less willing to eat out at restaurants in the cold and if capacity is still constrained in restaurants, I share that just because, I think there’s going to be almost different triggers that it’s less in some ways, what we’re seeing in the trends around, what’s happening with COVID cases, but more about how our customers are adapting to what’s the new theme and the new event that causes them to change shopping behavior. I think there’s multiple different factors that are going on with the customer. And I think that the combination of all those of what led to I think the slightly different trajectory compared to the first two parts of quarter two.

Michael Lasser — UBS — Analyst

Okay. Thank you, very much.

Gary Millerchip — Senior Vice President and Chief Financial Officer

Thank you.

Operator

The next question is from Ken Goldman with JPMorgan. Please go ahead.

Ken Goldman — JPMorgan — Analyst

Hi, good morning, thank you.

W. Rodney McMullen — Chairman and Chief Executive Officer

Good morning.

Ken Goldman — JPMorgan — Analyst

Hi. Two for me. First, I wanted to see, if you’ve seen any notable changes in your product sales mix since the stimulus checks have run out. At least in the scanner data that we can see store brands are still losing a lot of share within the measured grocery channel. But I’m not sure, if that sort of corresponds with exactly what you’re seeing. I might have expected store brands to do a little bit better right now overall. But I’m just curious, if maybe you’re seeing anything that’s changing in there more recently.

W. Rodney McMullen — Chairman and Chief Executive Officer

Ken, I wouldn’t say that we’re seeing anything that’s massive type trends. If you look at during the quarter, we would have seen better sales growth in CPG brands than own brands. But if you look at own brands overall, they continue to gain share relative to the market. The — you continue to see behavior changes based on what’s going on in people’s lives, but you still see people aggressively — alcohol sales are very strong, beer and wine is very strong. If you look at big pack, sales are strong. If you look at premium products, sales are strong. So, you continue to see people trading up in places where they want to. If you look at as Gary mentioned, deli, bakery continue to make progress. So, it’s — I love the question, but I think, it’s still hard to give a specific answer.

Ken Goldman — JPMorgan — Analyst

No, I understand. Thank you for that. And then, my follow-up, your FIFO gross margin ex-fuel in the first quarter was up I think 46 basis points year-on-year. It was up still this quarter, but to your point, it was up less, I think five was the number. Gary, I think you were very clear highlighting price investments as one of the reasons for that deceleration. I just would love to get a sense of what you’re looking at for that number going ahead, whether we should be sort of thinking about in our models something closer to the first quarter or something closer to the second in terms of year-on-year. And I know, there’s all sorts of puts and takes and that’s a very difficult one to answer. I’m just trying to sort of poke around a bit and see what you might think about that.

Gary Millerchip — Senior Vice President and Chief Financial Officer

Yeah. I think — thanks for the question, Ken. I think, as we’ve shared kind of consistently, our goal is really to be balanced in the business model and continue to balance the investments we’ll be making in supporting the customer which is certainly our continued intent with the savings that we achieved through sourcing benefits and then of course alternative profit being accelerator of gross margin as well. In the quarter itself where a lot of the focus for us was as Rodney mentioned the fee-free pickup is an important part of value for the customer. And we believe our digital sales relative to the more traditional grocery sector is pretty high. And so that’s a bigger influence in our numbers and we believe we gained market share in digital as well during the quarter. So that I think influences the level of investment for one thing.

I think the second part is fresh department’s inflation was pretty volatile during the quarter and we saw certainly a mean time inflation and in meat produce and deli, bakery cost inflation would have been higher than retail as we were investing in supporting the customer through the volatility in price and making sure we were building long-term loyalty. So I think we continue to be expecting to invest where it makes sense for the customer, but we feel very confident in our ability to balance those investments with cost savings through Restock Kroger sourcing benefits and continuing to see leverage in things like shrink warehouse and transportation and advertising. So I think the key message from us would be balanced and very consistent with the long-term growth model that we shared.

Ken Goldman — JPMorgan — Analyst

Thank you.

W. Rodney McMullen — Chairman and Chief Executive Officer

Thanks, Ken.

Operator

The next question is from Rupesh Parikh with Oppenheimer. Please go ahead.

Rupesh Parikh — Oppenheimer — Analyst

Good morning. Thanks for taking my question.

W. Rodney McMullen — Chairman and Chief Executive Officer

Good morning.

Rupesh Parikh — Oppenheimer — Analyst

So I want to start off, I guess with just your capacity on click-and-collect. I was just curious where you guys are today from meeting all the demand out there for click-and-collect. And then related to that I was also curious whether you think the removal of the pickup or the temporary removal of pickup for you is contributing to some of the share gains you’re seeing?

W. Rodney McMullen — Chairman and Chief Executive Officer

Yes. In terms of capacity, we’re constantly adjusting the capacity during the day because as people get used to the new normal, the times they want pickup slots constantly change. It’s one area where I’ve been super proud of our teams both stores and our data and technology and operations team in that constant adjusting and incrementally hiring people. There are stores now where we’re aggressively investing a little bit of capital to be able to expand what’s available within that store and when we do that that will allow us to add slots as well.

So I would say the constraints on slots would be a slight opportunity, but I think the teams have done a great job of continuing to expand. The removal of the fee for a pickup, the temporary removal is we look at it more in terms of trying to help a customer stretch their budget and try to be helpful in this environment. Customers still tell us the reason they like our pickup experience is really the freshness of our products and the quality of that and the assortment that we offer. So it probably helps, but I think it’s more driven by the experience in the fresh side than waiving the fee.

Rupesh Parikh — Oppenheimer — Analyst

Great. And then I guess one quick follow-up for Gary. What’s the right way to think about COVID expenses in the back half of the year?

Gary Millerchip — Senior Vice President and Chief Financial Officer

Yeah. I think we wouldn’t get into specific numbers, but obviously we did give you some color on the expense that we saw in Q2. Certainly we would expect to be able to continue to optimize our operating plan, so we’d expect to provide continued efficiency in some of those plans that we execute on and certainly that was the case if you think about our investment in Q1 to Q2 as we’re transitioning through the year and learning more and able to optimize our approach.

That being said one of the reasons that cost would have been probably a little bit higher than we originally thought in Q2 was that during the quarter if you recall many states if not all the states we now operate in are mandating masks and we decided to adopt that proactively before it happened in many states to really reinforce the importance of safety in our stores and providing the inventory for masks to make sure that during that transition all of our customers were able to have access to a mask as a new cost if you like that we incurred.

So we’re being very dynamic in the way we’re managing those costs to make sure that we’re first and foremost maintaining safety, and then secondly obviously being as efficient as we can be. But we feel very confident in our ability to manage and balance those costs with the incremental cost savings that we’re achieving in our original model. And as I shared in the prepared comments, we’ve been — the team has done a phenomenal job in really adapting and adjusting our cost saving plans in light of COVID. And whereas in Q1 we announced that we may have some headwinds on the original $1 billion. We feel confident now, we can achieve those. So overall, there’ll certainly be those ongoing investments. But we feel confident in our ability to be able to manage them.

Rupesh Parikh — Oppenheimer — Analyst

Great. Thank you.

W. Rodney McMullen — Chairman and Chief Executive Officer

Thank you.

Operator

The next question is from Karen Short with Barclays. Please go ahead.

Karen Short — Barclays — Analyst

Hi. Thanks very much. Just actually on the gross margin, I had one quick follow-up and then I had a bigger question. Can you just give a little color on, selling gross margins? I know that’s not a topic that we’ve — you’ve talked about on a consistent basis. But I think it would just help from the context of — you said, it drives customer loyalty to continue to promote during this time period. And a lot of your competitors are not promoting. So I was wondering if you could give a little color on selling gross margins this quarter versus the first quarter.

Gary Millerchip — Senior Vice President and Chief Financial Officer

Well. Certainly, Karen, thanks for the question. It would have been an investment. As you are aware from what we shared in the first quarter, we saw significant benefit in expensing gross sales leverage across warehouse and transportation across shrink and also, across advertising. And while sales obviously tapered in Q2 versus Q1, we would continue to have seen selling — expecting growth, I’m sorry leverage on our overall sales results.

So to be at 5% basis point improvement, overall on gross margin, that would reflect the fact we invested in our selling growth rate, during the quarter. In the areas that I mentioned around continued acceleration of digital pickup particularly in the fresh categories to make sure we’re delivering, value for our customers. And then, there would also be I think an element that’s important to mention mix. And the fact that with deli bakery being a lower factor in the overall sales growth would also have brought down the selling growth rate, somewhat as well.

Also Read:  Coupa Software Incorporated (COUP) Q2 2021 Earnings Call Transcript

Karen Short — Barclays — Analyst

Okay. And then, I wanted to just shift gears to digital for a second. So it looks, — I mean you can kind of back into e-com being around the 7%-ish of sales range now. So first is that accurate? And then, I was wondering if you could provide, a little bit of a split or a split between what pickup is and versus delivery within that? And then, I was wondering if you could give a little more color in terms of basket on each of the different like, in-store versus pickup versus delivery? And then last portion of that is, just any color on the new customers that you’re gaining with respect to digital?

W. Rodney McMullen — Chairman and Chief Executive Officer

If you look at — our percent of sales would be a little bit higher than your estimate. If you look at mix between pickup and delivery, it’s still predominantly pickup. And we find, customers find pickup incredibly flexible on their schedule, much more so than delivery. And that’s the reason why they continue to like pickup, in a good way. If you look at basket size, basket size would be significantly bigger on pickup versus in-store. And pickup and delivery would be pretty similar.

On new customers, we’re finding — we’re getting a lot of new customers both in-store and digital both. And probably, the biggest change for both of those groups. We — in the past, a new customer would have to earn their right to start getting loyal customer mailings, and digital offers and things like that. During this, we’ve started treating customers as loyal shoppers immediately, rather than waiting for them to engage with us for a period of time. And what we’re finding is we’re having success on retaining those customers and repeat purchases as well.

Karen Short — Barclays — Analyst

Okay. That’s helpful.

Gary Millerchip — Senior Vice President and Chief Financial Officer

Maybe I can help you with that Karen on the comment about, pickup and delivery. As Rodney mentioned, pickup is a significantly larger portion of the overall volume. I would say both of them are growing triple-digits. So we are seeing very strong growth in both. But there isn’t like a major change in the mix if you like. Both have continued to grow significantly, in the COVID period.

Karen Short — Barclays — Analyst

Great. Thank you.

Gary Millerchip — Senior Vice President and Chief Financial Officer

Thanks.

Operator

The next question is from Robby Ohmes with Bank of America Global Research. Please go ahead.

Robby Ohmes — Bank of America — Analyst

Hey. Thanks for taking my question. Hey, Rodney, I was hoping as a follow-up to Karen’s question, can you give us more color kind of on, what you’re doing with Ocado versus the original plan? And maybe a little more color on, kind of signposts, we should be looking for in the back half and into next year on Ocado? And then just a separate question. Can you guys just give us color on what happened Labor Day weekend for you guys and how that was or was not similar to last year etc.?

W. Rodney McMullen — Chairman and Chief Executive Officer

Yeah. I’ll answer Ocado and Gary I’ll let you talk about the Labor Day weekend. When we have our investor meeting in March, we’ll get into a lot more details on Ocado. If you look at obviously, the first initial part of the two first sheds that we’ll open in Monroe, Ohio and in Florida, we’ll be just scaling it and the assortment that customers have a desire for in that offering versus some other offerings. Those are two key parts.

We will get into specific signpost in terms of how to hold us accountable. We’re using the learnings from Ocado in terms of what they have in the UK. obviously in Canada and France. And it will be taking all of those learnings and then making sure we manage the cost of the start-up as well. So we’re excited. We can’t wait and we wish they would have opened a year ago.

Gary Millerchip — Senior Vice President and Chief Financial Officer

And then Robby on your second question, I would say probably the broader comment I would make is like Rodney shared, we’re still trending in double-digit sales in the early part of the current quarter. It’s a pretty difficult period to read actually. It’s probably the most important point I would say because the Labor Day weekend changed by a week, but we’re also cycling weather from last year and then having some weather in this year. So it’s been a really interesting I would say ride for the first four weeks of the new quarter and trying to interpret what’s going on.

If we look at the cycling and adjusting for the weeks, I wouldn’t say we really saw anything materially unusual out of Labor Day except for some of the weather events in certain markets adding some complexity to the data. But overall as we’re coming out the other side of that as Rodney mentioned trending in the low double-digit early part of the quarter.

Robby Ohmes — Bank of America — Analyst

That’s helpful. And then one quick just follow-up on digital in those markets where people are coming back into stores. Is it — do you see a significant falloff in digital? And would it be coming more from delivery or more from pickup?

W. Rodney McMullen — Chairman and Chief Executive Officer

The mix between pickup and delivery is more driven by available slots. We do not — the growth it’s still triple-digit growth, but it would be a little bit slower growth, but it’s still meaningful growth.

Robby Ohmes — Bank of America — Analyst

Got it. Thanks so much.

W. Rodney McMullen — Chairman and Chief Executive Officer

Thanks, Robby.

Operator

The next question is from Edward Kelly with Wells Fargo. Please go ahead.

Edward Kelly — Wells Fargo — Analyst

Hi, guys. Good morning. And good quarter by the way.

W. Rodney McMullen — Chairman and Chief Executive Officer

Thank you.

Edward Kelly — Wells Fargo — Analyst

I feel for you guys on the gross margin by the way and I wanted to follow up on this because I think there’s been some criticism in the market that your gross margin was not up as much as the sell side was modeling. But you’re probably doing what you should with this windfall right? You’re investing in price still delivered a large EPS beat. Others are not investing. So I’m kind of curious what are you seeing from a price gap standpoint in the marketplace currently both versus like bigger discount players like Walmart, but also your conventional players who maybe seem to be taking advantage of the current environment?

Gary Millerchip — Senior Vice President and Chief Financial Officer

Yeah. Thanks for the question, Ed. I think you summarized it well. From our perspective, we believe it’s very important that we continue to deliver value for customers and we’re staying very true to that plan. And when we look at prices as we’ve shared a couple of examples on the call for us, it’s not just about every day low price, but it’s about the promotional plan, it’s about the investment in digital. And we feel like we’re on a very clear path to deliver value for the customer that will drive long-term loyalty.

The way that our customers when we talk to them and how we look at our data and measure value, we feel very good about the position that we’re in and our customers tell us we’re delivering strong value to them. And we believe really kind of linked a little bit I think to Rodney’s comment about how we think about setting up 2021 and making sure that we’re winning long-term market share and growing our business. So that the — as things cycle through the pandemic, we end in a stronger position than we would have done prior to COVID-19 is really the journey that we believe we’re on to make sure that we continue to connect more deeper with customers and drive value. We feel good about the journey and the results that we’re achieving. We feel it’s setting us up for the ability to be able to sustain that long-term growth in the future and as Rodney commented.

Edward Kelly — Wells Fargo — Analyst

Can I just follow up, Gary, by the way, when you look at the gross margin, we have heard from one of your peers that the end of May, June period was tougher because there was inflation in some of your categories particularly protein. Was there anything about the cadence of the gross margin this quarter that was notable? Was it softer earlier on?

Gary Millerchip — Senior Vice President and Chief Financial Officer

It certainly — there’s been a lot of dynamic changes in some of those fresh categories as I mentioned earlier ahead that we have to manage through. And I think the team did a phenomenal job in doing that and making sure that we help our customers navigate through that. So certainly the — we would just experience some of those same elements to manage during the early part of the quarter, which would have impacted at that point. But, I think your — I think your initial question is the more important one of how we are thinking about balancing and investing in the business to make sure that we’re delivering long-term growth. I wouldn’t say that it affects how we think about how we’re managing the business for the future.

W. Rodney McMullen — Chairman and Chief Executive Officer

To me overall, Gary’s last point is the critical one. We really are looking at everything in terms of what will connect us with the customer and position us best for sustainable growth overtime and continue to gain market share. And we’re — and that’s what we’re doing. Obviously, we were able to continue to manage expenses very well as well which gave us the capacity to invest as well.

Edward Kelly — Wells Fargo — Analyst

Great. Thanks, guys.

Gary Millerchip — Senior Vice President and Chief Financial Officer

Thank you.

Rebekah Manis — Director of Investor Relations

And we have time for one last question.

Operator

And that question will come from Kelly Bania with BMO Capital Markets. Please go ahead.

Kelly Bania — BMO Capital Markets — Analyst

Hi. Good morning. Thanks for taking my questions. Was curious if we could talk a little bit about just price inflation mix and tonnage. I know there’s been a lot of comments about traffic and basket. But I think, the way that you guys tend to look at it is more tonnage. And so just curious if you can help us understand how that’s played out in the quarter and what you’re thinking about into the back half as you think about that kind of high single-digit ID outlook there between price inflation and tonnage.

W. Rodney McMullen — Chairman and Chief Executive Officer

We — tonnage would continue to be strong. We have — we’re still continuing to — if you look at our supply chain, our team has done a nice job of identifying other sources of capacity. And we are — have access to warehouses both that we manage on a temporary basis and others that continue to support and manage the tonnage.

For me, the thing I find exciting about the tonnage is it’s across the whole store. So tonnage growth is strong, in center store, it’s strong, in produce it’s strong, in meat, in all areas. So — and obviously in terms of the guidance that Gary gave for the rest of the year, we would expect that to continue. We continue to expect cost inflation will be a little bit more than retail inflation. And those are categories where it’s more driven by short-term things. If you look at meat, we would expect meat inflation to be more normalized and as it more normalizes then you would see our balance between the two very close.

Gary Millerchip — Senior Vice President and Chief Financial Officer

Just maybe add to Rodney’s comments on tonnage, it ties a little bit back to Rodney’s comments on market share as well that we’re certainly focused on as Rodney mentioned our most important measure of success on sales growth is, obviously, market share. We look at that very closely through tonnage and units as much as we do through dollars because of the — again making sure that we’re investing in the customer and we’d be certainly pleased with our tonnage market share growth as well as the dollar market share growth during the quarter.

And then as Rodney mentioned, Kelly we’ve — I think, you’ve heard us say this before, but we generally build our model off of the 0.5% to 1% inflation. We’d certainly be running a bit ahead of that when you think about cost inflation as Rodney mentioned earlier with meat in particular being high but grocery would be probably a little bit north of 2% as well right now based on some of the trends that we’re seeing.

Kelly Bania — BMO Capital Markets — Analyst

Okay, that’s very helpful. And then if I can just ask two quick follow-up ones related to digital. I think I heard you mention regarding the pickup fee that that was a temporary removal. And I guess I was just curious under what circumstances or time frame would you consider bringing that back or is that a market-by-market specific thought process? And also maybe just thoughts on membership, obviously a lot of competitive developments with membership and in terms of digital whether pickup or delivery. So, just curious if you’re in any way thinking of evolving into something like a membership program over time.

W. Rodney McMullen — Chairman and Chief Executive Officer

Yeah. On the digital fee, it really — at the moment, we put it in place just trying to help our customers and especially customers on a budget to help them stretch their weekly spending. And what we would do over time we — at this point, we really haven’t decided, but it’s part of the overall value equation that we’re providing to customers.

On membership, as you know, we continually and have been for a while testing various types of membership programs. And when we find a membership program that really works you’ll see us continuing to be more aggressive with it. As everybody on the call knows we’ve had a membership program in terms of fuel rewards for years. Now, customers don’t have to pay for that and they get the rewards incrementally for free obviously and that’s something that’s been very successful and very successful on sharing value with customers and creating additional customer loyalty which is something that we’ve done for several years. So, thanks, Kelly for your questions and thanks to everyone for your questions.

Before we close today, I’d like to start with just a moment of silence and remembrance of the lives lost during the tragic events that occurred on September 11, 2001.

Thank you. As you know I usually take time before we end our call to share a few final comments directed toward our associates. The COVID-19 pandemic continues to challenge and change our country, not the least of which is the loss of lives in America and around the world. I appreciate our associates for doing their part to keep our customers and each other safe, especially for leading by example by consistently wearing masks. We are incredibly confident in terms of the future and the things that we do to take care of our associates and customers and together we will get through COVID-19. Thank you for your time today and have a great weekend.

Operator

[Operator Closing Remarks]

Disclaimer

This transcript is produced by AlphaStreet, Inc. While we strive to produce the best transcripts, it may contain misspellings and other inaccuracies. This transcript is provided as is without express or implied warranties of any kind. As with all our articles, AlphaStreet, Inc. does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company’s SEC filings. Neither the information nor any opinion expressed in this transcript constitutes a solicitation of the purchase or sale of securities or commodities. Any opinion expressed in the transcript does not necessarily reflect the views of AlphaStreet, Inc.

© COPYRIGHT 2020, AlphaStreet, Inc. All rights reserved. Any reproduction, redistribution or retransmission is expressly prohibited.

Most Popular

Costco (COST) Q4 earnings, revenue top expectations

Retail giant Costco Wholesale Corporation (NASDAQ: COST) reported higher earnings and revenues for the fourth quarter of 2020, reflecting a marked increase in merchandise sales. The results also topped analysts’

Can Cintas (CTAS) take forward virus-driven shift in sales trend?

The disruption caused by coronavirus has affected almost all sectors except business service providers like Cintas Corporation (NASDAQ: CTAS), which is busy helping clients maintain hygiene and safety during the

Rite Aid’s (RAD) loss narrows in Q2 2021

Rite Aid Corporation (NYSE: RAD) reported a narrower loss in the second quarter of 2021. Net loss shrank to $0.25 per share in the recently ended quarter from $1.49 per

Top