Kroger to close 60 stores over 18 months

CINCINNATI — The Kroger Co. is planning to close 60 stores in the next 18 months, while telling investors to expect stronger sales growth from stores that remain.

The company declined to identify which stores will close, but a spokesperson said “we do not expect any store closures in Cincinnati at this time.”

Kroger announced in its first-quarter earnings release that its results include “an impairment charge of $100 million related to the planned closing of 60 stores.” It expects a “modest financial benefit” from the closures, which it will reinvest “into the customer experience.”

Kroger also said it will offer jobs at other stores to employees who now work at stores slated for closure.

Kroger has about 2,700 stores nationwide. While closures are announced periodically, they rarely happen in large numbers at one time.

But the company has been cutting back since the surprise resignation of former CEO Rodney McMullen in March, for reasons that have yet to be fully explained. His resignation followed a board investigation into “personal conduct” that a company press release called “inconsistent with Kroger’s policy on business ethics.”

Days after McMullen’s departure, Kroger laid off 200 employees from its downtown-based data analytics unit, known as 84.51. That was part of a larger restructuring of its e-commerce efforts that also led to about 200 job reductions in February. In April, Kroger closed two of its three Kitchen 1883 restaurants. In May, it shut down an online marketplace, known as Ship.

Interim CEO Ron Sargent has talked about refocusing the company on the performance of its stores, an effort that seems to be working, based on Q1 results. It posted an $866 million profit on sales of $45.1 billion. Despite the planned closures, Kroger lifted its sales guidance for the full year, telling analysts to expect identical store sales growth of up to 3.25% instead of 3%.

“Kroger delivered solid first quarter results, with strong sales led by pharmacy, eCommerce and fresh,” Sargent said. “We made good progress in streamlining our priorities, enhancing customer focus, and running great stores to improve the shopping experience.”

In a conference call with analysts, Sargent said the closures will be spread “around the country. It’s kind of ones and twos by division.” But they’ll be accompanied by 30 new store openings and remodels this year and more than that in 2026.

“New store openings are the biggest driver of market share gain,” Sargent said. “We are probably going to favor areas of the country that are growing faster than others. We’re going to look at where we have competitive opportunities or growth within cities.”

Sargent told analysts he wants Kroger to focus on the core, which he defined as “things that exist in our company that are dedicated to serving our customers. It would certainly include stores. It would include e-commerce. It would certainly include all the alternative revenue streams that those generate.”

But focusing on the core won’t keep cuts from being made, not even in e-commerce. It grew 15% during the quarter but has yet to turn a profit.

“We are seeing improvements in profitability at an increasing rate,” Sargent told analysts. “But to be clear on the profitability, we’re not at this point. And we must become profitable in our e-commerce business. We got a lot of work to do.”

Investors seemed to like Sargent’s commentary. Kroger shares jumped more than 9% Friday, likely in response to the improved sales guidance.

“He’s certainly not behaving like an interim CEO,” said Scott Beck, a Xavier University professor who previously worked for Kroger’s data marketing division. “He’s taking the company back to its roots … Taking a look at every component of the organization to say, ‘What fits now? What fits longer term? What’s making money? What isn’t?'”