Kroger Co. said Wednesday that it is eying a potential sale of its convenience-store operations, which include 784 c-stores operating under several banners across 18 states.
“Our convenience stores are strong, successful and growing with the potential to grow even more," said Michael J. Schlotman, executive VP and CFO of Cincinnati-based 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.”
The c-store business generated revenue of $4 billion, including sales from 1.2 billion gallons of fuel in 2016, the company said. It has posted 62 consecutive quarters of identical-store sales growth.
Kroger said it has hired Goldman Sachs & Co. to evaluate options for the c-store division, which operates under the Turkey Hill Minit Markets, Loaf 'N Jug, KwikShop, Tom Thumb and QuickStop.
Meanwhile Kroger also outlined a broad plan for revitalizing its business called the “Restock Kroger Plan” that revolves around four pillars: Redefine the Food and Grocery Customer Experience, Expand Partnerships to Create Customer Value, Develop Talent, and Live Kroger's Purpose. The plan was unveiled in advance of today’s meeting with analysts and investors.
It includes investments in data and personalization, enhancing the digital experience, space optimization, private label, pricing, technological innovation, alternative revenue streams and other initiatives.
“We know that 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. “Combining our food expertise and data analytics uniquely positions Kroger to create new and highly relevant customer experiences, delivered both digitally and in stores. Restock Kroger builds on our strengths and strategically repositions Kroger to accelerate our customer-centered efforts in order to create shareholder value.”
The company also reaffirmed its financial guidance for 2017, including ID supermarket sales growth of 0.5% to 1%, excluding fuel, for the remainder of the year, and net earnings of $$1.74 to $1.79 per diluted share, including an estimated $.09 for the 53rd week.
Update: Oct. 11, 2017 The total 2016 revenue in Kroger's c-store business has been clarified.