Kroger cuts ties with 60 underperforming stores, leaving hundreds of workers in limbo as the grocery giant abandons locations failing to deliver “sustainable results” amid a turbulent period of CEO scandal and a failed $24.6 billion merger.
Key Takeaways
- Kroger is closing approximately 5% of its locations (60 stores) over the next 18 months after a strategic review identified underperforming outlets not contributing to company growth.
- The closures come on the heels of CEO Rodney McMullen’s resignation following a personal conduct investigation and the failed $24.6 billion Albertsons merger blocked by federal regulators.
- Despite taking a $100 million impairment charge in Q1 2025, Kroger maintains its full-year guidance and promises all affected employees will be offered positions at other locations.
- The company plans to reinvest modest financial benefits from the closures into enhancing customer experience, focusing on private-label products and 80 new high-protein offerings.
Strategic Streamlining During Corporate Turbulence
Cincinnati-based Kroger, one of America’s largest grocery retailers, announced plans to shutter 60 stores nationwide as part of a strategic initiative to improve operational efficiency. The closures represent approximately 5% of the company’s locations and follow a comprehensive review identifying stores that fail to align with Kroger’s long-term growth objectives. This decision comes during a period of significant corporate upheaval, including the recent departure of CEO Rodney McMullen and the collapse of Kroger’s attempted $24.6 billion merger with Albertsons after federal regulators blocked the deal on antitrust grounds.
Interim CEO Ron Sargent framed the closures as a necessary business decision during the company’s first-quarter earnings call. The company recorded a $100 million impairment charge related to the planned closures, but maintains that the strategic realignment will ultimately yield modest financial benefits. Kroger employs nearly 410,000 associates nationwide, and while the closures will impact numerous communities, the company has pledged that all affected employees will be offered positions at other Kroger locations, potentially requiring relocation for some workers.
Performance Challenges and Financial Outlook
“Unfortunately, today, not all of our stores are delivering the sustainable results we need,” Sargent said on Friday. “To position our company for future success, this morning, we announced plans to close approximately 60 stores over the next 18 months,” said Ron Sargent, Director.
First-quarter 2025 sales totaled $45.1 billion, showing a slight decrease from $45.3 billion in the same period last year. However, when excluding fuel sales, the company actually saw a 3.2% increase, driven by strategic price cuts and promotions designed to attract inflation-weary shoppers. The closures coincide with significant leadership turmoil, as former CEO Rodney McMullen resigned after an internal investigation into his personal conduct, forfeiting $11.2 million in unvested stock options. Despite these headwinds, Kroger is maintaining its full-year guidance, suggesting confidence in its adjusted strategy.
Consumer Trends and Growth Initiatives
Kroger is capitalizing on a key consumer trend as inflation-battered shoppers increasingly prepare meals at home rather than dining out. The company has seen its private-label products outperform national brands for seven consecutive quarters, reflecting consumer preference for value during uncertain economic times. This shift has encouraged Kroger to double down on store-brand offerings, with plans to launch 80 new high-protein products to meet growing consumer demand for affordable nutrition options.
“Kroger is committed to reinvesting these savings back into the customer experience, and as a result, this will not impact full-year guidance,” said Kroger.
The company specifically noted that savings generated from closing underperforming locations will be channeled directly into enhancing customer experience across remaining stores. This reinvestment strategy reflects the intensifying competition in the grocery sector, where retailers must continuously innovate to maintain market share against rivals including Walmart, Target, and rapidly expanding discount chains. The strategic retrenchment demonstrates how even major retailers must adapt to shifting economic conditions and consumer preferences under President Trump’s administration.
