Kroger’s drastic move to close 60 stores nationwide signals a major restructuring plan that comes on the heels of CEO Rodney McMullen’s sudden resignation and a failed $24.6 billion merger with Albertsons.
Key Takeaways
- Kroger plans to close approximately 60 underperforming stores (about 5% of its locations) over the next 18 months to boost efficiency.
- The company took a $100 million impairment charge related to these closures in the first quarter of 2025.
- Despite store closures, Kroger has committed to offering affected employees positions at other locations.
- The restructuring follows former CEO Rodney McMullen’s resignation after a personal conduct probe and a blocked merger with Albertsons.
- Kroger plans to reinvest cost savings into enhancing customer experience and is launching 80 new high-protein products to meet consumer demands.
Strategic Store Closures to Boost Efficiency
Kroger, the Cincinnati-based grocery giant that employs nearly 410,000 associates nationwide, has announced plans to shutter 60 underperforming stores over the next year and a half. This strategic decision comes after a comprehensive review of the company’s portfolio, identifying locations that no longer align with its future growth strategy. The closures represent approximately 5% of the company’s total store count and are expected to streamline operations while allowing Kroger to focus resources on more profitable locations.
“Unfortunately, today, not all of our stores are delivering the sustainable results we need,” said interim CEO Ron Sargent on Friday. “To position our company for future success, this morning, we announce plans to close approximately 60 stores over the next 18 months,” said Interim CEO Ron Sargent.
Financial Impact and Employee Considerations
In its first-quarter earnings statement for 2025, Kroger reported taking a $100 million impairment charge related to the planned closures. Despite this initial cost, the company expects to see modest financial benefits from the move in the long term. First-quarter sales were $45.1 billion, showing a slight decrease from $45.3 billion in the same period last year. However, sales excluding fuel actually increased by 3.2%, driven by strategic price cuts and targeted promotions that have resonated with budget-conscious shoppers.
“While the report said the company’s profits ‘exceeded our expectations,’ Director Ron Sargent said in an earnings call that the company reviewed areas not meaningful to its future growth and determined that closing the stores ‘will make the company more efficient, ‘” said Ron Sargent, Director.
Demonstrating commitment to its workforce, Kroger has pledged that employees at the affected locations will be offered positions at other stores. This approach aims to minimize job losses while allowing the company to redistribute talent to more profitable locations. The company emphasized that the closures will not impact its full-year financial guidance, as savings will be reinvested to enhance the customer experience rather than simply boost short-term profits.
Corporate Turbulence and Future Direction
The store closure announcement comes during a period of significant corporate turbulence for Kroger. The company recently experienced the shock ouster of CEO Rodney McMullen following an investigation into his personal conduct, which resulted in his forfeiture of $11.2 million in unvested stock options. Additionally, Kroger is currently engaged in a legal battle with Albertsons after a federal judge blocked their proposed $24.6 billion merger over antitrust concerns, dealing another blow to the company’s expansion plans.
“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.
Despite these challenges, Kroger is adapting to changing consumer behaviors. The company has noted that Americans are increasingly “eating more meals at home,” a trend that has prompted Kroger to increase its sales forecast. Private-label products have grown faster than national brands for seven consecutive quarters, reflecting consumer preference for value during persistent inflation. Responding to evolving consumer preferences, Kroger plans to launch 80 new high-protein products to capitalize on growing demand in this category, demonstrating its commitment to innovation even amid restructuring.
