Kroger to Close 60 Stores Following Leadership Changes

Kroger, a major grocery chain with over 1,200 locations, is planning to shut down 60 stores. This decision follows the recent ousting of its CEO and the failure to merge with rival Albertsons.

The company has indicated that it expects to incur $100 million in impairment charges due to these closures, as stated in a revenue announcement issued on Friday.

Looking ahead, Kroger anticipates that these closures could lead to “conservative financial gains” amounting to approximately 5% from the affected locations.

According to the company, “Kroger is committed to reinvesting these savings into the customer experience,” ensuring that the full-year guidance won’t be impacted.

Employees at the affected stores will be offered opportunities to transfer to other Kroger locations.

Details on the specific stores to be closed haven’t been disclosed. The announcement comes after the abrupt dismissal of Kroger’s longtime CEO, Rodney McMullen, who resigned in March following an investigation into his personal conduct, as noted in government filings.

After his resignation, McMullen was also asked to step down from the board of VF Corporation, a company based in Denver that focuses on apparel and footwear.

Kroger has opted not to elaborate on the circumstances surrounding McMullen’s departure.

Currently, the company is grappling with legal challenges in its attempt to merge with Albertsons, as a federal judge recently blocked the merger due to antitrust concerns.

Interestingly, while Kroger had postponed its annual review of locations during the merger discussions, interim CEO Ron Sargent mentioned, “not all of our stores provide the sustainable results they need.”

There seems to be a growing trend of cautious consumers who are “eating more meals at home,” Sargent noted. This shift has prompted Kroger to raise its full-year sales projections, increasing from an earlier estimate of 2% to 3%.

In the first quarter, fuel-free sales increased by 3.2%, with the rise attributed to price reductions on 2,000 products, alongside a broader promotional campaign for Kroger’s private label items.

Sargent commented that sales from its private brand products have outpaced national brands for seven consecutive quarters. To further capitalize on this trend, Kroger plans to introduce 80 new high-protein products in the upcoming months.