Kroger announced a new plan to redefine the grocery shopping experience in America and part of this plan is the potential sale of their 784 convenience stores.
The Plan has four main parts, which are to Redefine the Food and Grocery Customer Experience, Expand Partnerships to Create Customer Value, Develop Talent, and Live Kroger’s Purpose. According Kroger’s press release, the Restock Kroger Plan will be fueled by capital investments, cost savings and free cash flow.
Kroger said it is exploring strategic alternatives for its convenience store business, including a potential sale, as part of its Restock Kroger plan.
Kroger said in a press release that their convenience store business generated revenue of $1.4 billion in 2016, which only reflects the inside sales. Including fuel, Kroger’s convenience store business generated $4 billion in total sales last year.
“Our convenience stores are strong, successful and growing with the potential to grow even more,” said Mike Schlotman, CFO and Executive Vice President of Kroger. “We want to look at all options to ensure this part of the business is meeting its full potential. Considering the current premium multiples for convenience stores, we feel it is our obligation as a management team to undertake this review.”
Kroger Has 68 Franchise Operations
Kroger’s business includes 784 convenience stores located across 18 states, as well as 68 franchise operations under the banner names of Turkey Hill Minit Markets, Loaf ‘N Jug, KwikShop, Tom Thumb and QuickStop.
“Our convenience store management and associates are an important part of our success. They put our customer first every day. We value what they do and thank them for what they will continue to do as we conduct this evaluation,” Schlotman said.
Kroger shares jumped more than 6 percent on the news.
Investors applauded the idea of a sale, sending the shares up as much as 7.3 percent before they retreated to close up 1.2 percent at $20.78 in New York, reported Bloomberg Markets.
The Kroger Co. has 450,000 associates that serve nearly nine million customers daily in 2,793 retail food stores under different banner names in 35 states.
With information from The Kroger Co. and Business Wire