Kroger wants to win back shoppers through lower prices and better value, and deliver faster profit growth through cost savings at the same time.
That's a tall order. The supermarket chain faces aggressive pricing competition from larger rivals, while rising transportation costs and cautious consumer spending continue to pressure profitability.
Kroger announced a three-year strategic plan at its investor day that targets annual adjusted earnings-per-share growth of 7% to 11% from 2027 through 2029. Kroger is also aiming for 3% comparable-sales growth in 2029, excluding fuel and pharmacy.
The targets don't include its pending acquisition of Giant Eagle, a regional supermarket chain from Pennsylvania that Kroger agreed to acquire in July.
Shares of Kroger were flat in midday Tuesday trading. The stock remains about 18% below its 52-week high reached in March.
The plan is part of CEO Greg Foran's push to revive the grocer's sluggish sales amid intense competition from Walmart, Costco, and discount chains such as Aldi.
Foran, who took the helm at Kroger in February after previously leading Walmart's U.S. operations, believes making Kroger more price-competitive is crucial to attracting customers. He previously said the company planned to lower prices on thousands of items.
During the June earnings call, Foran said Kroger's promotions had become too complicated and its pricing had fallen behind competitors. He emphasized Kroger wasn't seeking to be the lowest-price retailer, but aims to offer customers better, more consistent value.
At Tuesday's investor day event, Kroger management said they plan to invest $5 billion to improve customer value by 2029, primarily by lowering everyday prices and simplifying promotions. The strategy is expected to reach approximately 250 stores by the end of 2026, with another 450 stores targeted for 2027.
Kroger said stores that have implemented the changes for at least a year have achieved sales growth that was 2.3 percentage points higher than the company overall.
Beyond pricing, Kroger plans to strengthen its fresh-food and prepared-meal offerings, expand its private-label business and Boost membership program, and grow its e-commerce and retail advertising businesses. The company also expects artificial intelligence and technology investments to help it improve efficiency.
"Kroger has a clear opportunity to unlock our full potential and build America's favorite grocer," said Foran.
To fund those investments, Kroger is targeting $4 billion in annualized cost savings by 2029. The company plans to buy more products directly from growers and manufacturers, negotiate better deals with suppliers, and reduce corporate expenses.
Last week, Kroger disclosed plans to eliminate approximately 3,000 corporate positions, representing more than a third of its corporate workforce, over three years, according to an internal memo from Foran reviewed by the Wall Street Journal.
The coming years will test whether Kroger can turn cost savings into stronger sales and higher profits, without losing ground in an increasingly competitive grocery market.
Comments