The Kroger Co. is considering a sale of its convenience store business, following a review of assets that may be of more value outside rather than within the company.
In 2016, the business generated $1.4 billion in inside revenue, which rose to $4 billion when including fuel. The business unit has delivered 62 consecutive quarters of same-store sales growth.
Currently, Kroger’s c-store business includes 784 stores in 18 states, including 68 franchise operations. Loaf ’N Jug, KwikShop, Tom Thumb and QuickStop. Neither supermarket fuel centers nor Turkey Hill Dairy is included in the review.
“Our convenience stores are strong, successful and growing, with the potential to grow even more,” said Mike Schlotman, Kroger’s EVP and CFO. “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.”
A New Plan
The review of its c-store business is part of Kroger’s newly introduced Restock Kroger plan, intended to “redefine the food and grocery customer experience in America.” To be fueled by capital investments, cost savings and free cash flow, the plan was revealed at the Cincinnati-based grocer’s annual investor conference.
“When we serve America through food inspiration and uplift, we create value for our shareholders, customers and associates,” said Rodney McMullen, Kroger's chairman and CEO. “We understand that today’s marketplace is shifting rapidly. Kroger’s success has always depended on our ability to proactively address changes by focusing relentlessly on our customers.