Kroger ended a solid first quarter with total sales that were down slightly $45.1 billion, from $45.3 billion during the same period a year ago, though the company pointed out that the year-ago sales included 917 million from its now-sold Kroger Specialty Pharmacy business; with that factored out, sales were up 3.7 percent, the company said.
Same-store sales were up 3.2 percent, while e-commerce sales were up 15 percent for the period. Net income for the quarter was $866 million.
As Kroger reported its Q1 results, Kroger also announced what it characterized as “an impairment charge of $100 million related to the planned closing of approximately 60 stores over the next 18 months. As a result of these store closures, Kroger expects a modest financial benefit. Kroger is committed to reinvesting these savings back into the customer experience, and as a result, this will not impact full-year guidance. Kroger will offer roles in other stores to all associates currently employed at affected stores.”
Interim CEO Ron Sargent, who took over the role with the unceremonious departure of Rodney McMullen earlier this year, said that a search committee is in place to find a permanent successor, but that there are no “specific updates” at this time.
The Wall Street Journal writes that the results reflect a reality in which “consumers’ economic jitters are driving more shoppers to Kroger,” and “rising restaurant prices and concerns over tariffs and the economy are benefiting” all food retailers. Kroger is responding to the competitive situation by “stepping up promotions and marketing of its store-brand products, which tend to be cheaper.,” the Journal writes.
KC’s View:
Good, solid numbers from Kroger, which, it has to be said, is in a transitional period. The Albertsons deal fell through (though it still gets to experience the bitter aftertaste of resultant lawsuits), and it has to find a CEO who can lead – not just manage – the company.
But that’s not what I am thinking about.
Am I wrong to immediately wonder what will happen to those 60 stores? Will they sit empty until their leases have run out? Will neighborhoods now have less access to fresh food than they did before? Or, will other food retailers have the ability to come in and see if they can make those locations work with differentiated offerings?
Fast Company writes that “Kroger’s newly announced closures are likely to attract further criticism of the company in some impacted communities. Although the retailer says all employees affected by the closings will be offered roles at other locations, many cities are already struggling with so-called food deserts, and the loss of even a single grocery store can sometimes create additional hardships for residents.”
I’m thinking about those residents and neighborhoods right now, and hoping that food deserts wont be created or worsened by this news.
The post Kroger Ends Q1 By Retooling Store Count For the Future appeared first on MNB.
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