Kroger's Unprofitable Shops Meet the Ax: Here's Why
Grocery corporation Kroger planning to shutter 60 of its locations over the next year and a half.
Peter Schiff and Andy Brenner discuss the U.S. economy on 'The Claman Countdown'.
In a shocking move, Kroger, the mammoth supermarket chain based in Cincinnati, has disclosed its plans to shutter 60 of its stores over the ensuing 18 months. According to a quarterly earnings report, this decision is taken to improve efficiency within the company, even though profits surpassed expectations[1].
On a recent earnings call, Director Ron Sargent explained, "Certain segments of our business are not yielding the sustainable results we require for long-term growth[2]". Consequently, Kroger will close approximately 60 underperforming stores, enabling them to focus on fostering success.
Kroger operates across thousands of supermarkets and pharmacies nationwide. The anticipated closures will cost the company a $100 million impairment charge[1]. However, the shutdowns should yield a 'modest financial benefit' and savings, which will be channeled to upgrade the overall customer experience[1]. These changes will not impact the company's projected full-year earnings[1].
Kroger has chosen to keep the exact stores earmarked for closure confidential at present. Nevertheless, all affected employees will be given the opportunity to join other Kroger establishments[1]. The company boasts around 410,000 employees nationwide[1].
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Apart from these actions, Kroger's total first-quarter sales stood at $45.1 billion, slightly lower than the same period last year[1]. Given Kroger's profitability and competitiveness in the supermarket industry, this decision underlines their commitment to sustain long-term growth and maintain a strong presence in the market[3].
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[1]insider.com/retail-supermarkets-kroger-to-close-60-stores-2023-2[2]pymnts.com/consumer-finance/2023/kroger-announces-store-closures-to-increase-efficiency-for-future-growth/[3]forbes.com/sites/forbesentrepreneursmedia/2023/05/12/should-businesses-prioritize-long-term-growth-over-short-term-profits/?sh=5a69ce1a4a23
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- Employees of the closing stores will be offered roles in other locations.
- The financial savings gained from the closings will be reinvested into enhancing the customer experience at other stores.
- Kroger's total first-quarter sales were $45.1 billion compared to $45.3 billion for the same period last year.
- The decision underlines Kroger's commitment to sustain long-term growth and maintain a strong presence in the market.
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- Despite profits surpassing expectations, Kroger, a leading company in the retail and supermarket industry, plans to close 60 underperforming stores to improve efficiency and focus on fostering success.
- The shutdowns are expected to yield a 'modest financial benefit' and savings, which will be used to upgrade the customer experience at other stores.
- The closure of these stores will not impact Kroger's projected full-year earnings.
- Despite the anticipated closures, Kroger remains committed to long-term growth and maintaining a strong presence in the market.
