Kroger plans to close roughly 5% of its grocery stores—approximately 60 locations—over the next year and a half, the company announced in its latest earnings report. The decision follows the collapse of its proposed merger with rival grocery chain Albertsons, which has since led to ongoing legal disputes between the two companies.
In the report released Friday, Kroger disclosed a $100 million impairment charge tied to the upcoming closures. Despite the short-term cost, the company expects these moves to deliver modest financial benefits over time. It has not yet revealed which specific locations will be affected and declined to offer additional details beyond the earnings statement.
Kroger noted that affected employees would be given opportunities to transfer to nearby stores. The company plans to reinvest savings from the closures into improving the customer experience at its remaining stores. Currently, Kroger operates around 1,200 stores across 16 states.
Amid changing consumer behavior, Kroger said it is seeing increased demand as more people eat at home instead of dining out. As a result, the company raised its sales forecast for the year. Interim CEO Ron Sargent commented during an earnings call that the shift in eating habits has helped boost the company’s performance.
Sales were further supported by lower prices on about 2,000 products and heightened marketing efforts for Kroger’s private-label items, which are generally more affordable than name-brand goods. According to Sargent, private-label sales have outpaced national brands for seven consecutive quarters. To meet growing demand for high-protein foods, the company also plans to introduce 80 new protein-focused products in the near future.
Regarding the store closures, Sargent explained that “not all of our stores are delivering the sustainable results we need” and added that a routine annual review of store performance was delayed due to the now-defunct merger process.
Sargent stepped in as interim CEO in March following the sudden resignation of former CEO Rodney McMullen, who left the company amid an internal investigation into his personal conduct.
Kroger’s stock (KR) closed nearly 10% higher on Friday following the earnings announcement.
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