Closures follow failed merger with Albertsons
Kroger announced Friday it will shut down around 5% of its grocery stores—approximately 60 locations—over the next 18 months. The move comes after the collapse of its proposed merger with rival Albertsons and amid an ongoing legal dispute between the two grocers.
In its latest earnings release, Kroger said it is taking a $100 million impairment charge related to the closures but expects a “modest financial benefit” from the move in the long term. The company did not disclose which stores would be affected.
Employees offered new roles as company pivots
Kroger noted that impacted employees will be offered positions at nearby stores. Savings from the closures will be redirected toward enhancing the “customer experience” at its remaining roughly 1,200 stores across 16 U.S. states.
Interim CEO Ron Sargent said in an earnings call that the decision follows a lapse in the company’s usual annual store performance review due to the merger negotiations. “Not all of our stores are delivering the sustainable results we need,” Sargent said.
Boost from at-home dining and private labels
Despite the closures, Kroger raised its full-year sales forecast, citing stronger consumer demand for at-home dining. The company reported growth in sales of its private label products, which outpaced national brands for the seventh consecutive quarter.
It also cut prices on 2,000 items and plans to launch 80 new high-protein products to meet consumer demand. “Our customers are eating more meals at home,” said Sargent, who became interim CEO in March following the resignation of former CEO Rodney McMullen amid a personal conduct investigation.
