Major grocery chain Kroger plans to close 60 underperforming stores following the ouster of its CEO and failed merger with rival Albertsons.
The chain, which operates more than 1,200 stores, said it took on a $100 million impairment charge related to the planned closures in the first quarter, Kroger said in an earnings release on Friday.
It expects a “modest financial benefit” from the closures – which will hit roughly 5% of locations – in the long term, the company added.
“Kroger is committed to reinvesting these savings back into the customer experience, and as a result, this will not impact full-year guidance,” the company said.
Workers at the shuttered locations will be offered roles at other Kroger locations.
Kroger declined to comment on which specific locations will be shuttered.
The closures, slated to take place over the next yeat and half, come soon after Kroger suddenly ousted its chief executive and its plans for a $25 billion merger dissolved into legal chaos.
Longtime CEO Rodney McMullen abruptly resigned in March after a probe into his personal conduct, forfeiting a whopping $11.2 million in unvested stock and options, according to government filings.
He was later forced to step down from the board of VF Corporation, a Denver-based apparel and footwear company, as well.
Kroger has declined to comment on the specific conduct that led to McMullen’s resignation.
Meanwhile, the company has been fighting a legal battle against Albertsons after a federal judge blocked their merger over antitrust concerns.
The company delayed its usual annual review of locations during the merger process, but has since found that “not all of our stores are delivering the sustainable results we need,” said interim CEO Ron Sargent.
Things are looking up for Kroger, though, which is profiting from an increasingly wary consumer who is cutting back on dining out and “eating more meals at home,” according to Sargent.
Kroger hiked its full-year sales without fuel forecast to growth of 2.25% to 3.25%, up from previous guidance of 2% to 3%.
Its sales without fuel increased 3.2% in the first quarter thanks to price cuts across 2,000 products and a larger promotional sweep across Kroger’s private label items.
Sales of its private-label products have grown faster than national brand items for seven quarters in a row, Sargent said.
To further boost sales, Kroger plans to launch 80 new high-protein products over the next few months to capitalize on growing demand.
