J. Michael Schlotman (left) plans to retire as chief financial officer of The Kroger Co. late next year and is slated to begin transitioning from the role prior to the spring.
Kroger said late Monday that plans call for Schlotman to retire from the company in December 2019, continuing in the CFO role through the end of the 2018 fiscal year and until April 3, 2019. After that, he will remain as executive vice president on the senior leadership team until Dec. 28 to support the company during the CFO transition.
Gary Millerchip (left), CEO of Kroger Personal Finance, has been named to succeed Schlotman as senior vice president and CFO of Kroger effective April 4, 2019.
"Consistent with Kroger's governance history of thoughtful succession planning, Gary and Mike have a deliberate and thorough CFO transition plan with a singular focus, a seamless transition to successfully deliver on the Restock Kroger financial commitments and then beyond in the role of Kroger's chief financial officer," Kroger Chairman and CEO Rodney McMullen said in a statement.
Schlotman has served as CFO at Cincinnati-based Kroger since January 2000 and as executive vice president since September 2015. He started his career at accounting firm Coopers & Lybrand in Louisville, Ky., before transferring to Cincinnati and then joining Kroger in 1985. He was appointed vice president and corporate controller in 1995 before becoming CFO five years later.
"Mike is one of retail's most respected executives and has served Kroger for over 30 years. Mike is also one of the chief architects of Restock Kroger, our plan to create shareholder value by serving America through food inspiration and uplift," McMullen commented. "He and I have personally worked side by side for several decades. I deeply value Mike's contributions, the credibility he has earned with the financial community, and his leadership as a key member of our most-senior management team."
Millerchip has been CEO of Kroger Personal Finance, which provides financial and retail services through the Kroger Co. stores, since April 2008. He is also responsible for several retail grocery divisions and leads the integration of Kroger's corporate strategic initiatives. The company noted that Millerchip “has been at the table” with senior management team for five years and played a key part in driving strategy and partnerships that have diversified Kroger’s business beyond grocery.
He joined Kroger from Royal Bank of Scotland (RBS) to lead Kroger Personal Finance. Before that, he oversaw the Royal Bank of Scotland Personal Credit Card business in the United Kingdom. During his career at RBS, which began in 1987, he held various leadership positions in multiple areas, Kroger said.
"Gary's deep finance and business background, coupled with a successful track record of creating long-term shareholder value for The Kroger Co., make him an excellent choice for Kroger's Chief Financial Officer of the future," according to McMullen.
At Kroger’s annual investor conference in October, executives said the company is looking to alternative profit streams to help reach its goal of $400 million in operating profit by 2020 under the Restock Kroger plan to redefine the customer experience. Though Kroger’s core grocery business will generate the lion’s share of profits, it’s expected to see little growth in the coming years, they said. Meanwhile, business through partnerships, media, CPG insights and Kroger Personal Finance is already expanding at a 16% compound annual growth rate in EBIT (earnings before interest and taxes) and is projected at 28% growth through 2020 and 34% to 2022.
Millerchip’s succession to CFO positions Kroger to fuel that growth, according to Jefferies analyst Christopher Mandeville.
“As alternative profit streams are the primary driver to [Kroger] Restock success, we find the promotion as an indicator of just how serious management is taking its business transition and goal of hitting $400 million incremental EBIT by 2020,” Mandeville said in a research note Monday. “And we appreciate the level of continuity to which Mr. Millerchip should be able to bring to the table to ensure success.”