Kroger Says Supermarket Sales Likely to Shrink

Kroger and Albertsons finalize divestiture plan with C&S Wholesale Grocers.

September 11, 2023

Kroger executives state that inflation, high interest rates and reduced government benefits are causing customers to spend less, as reported in the Wall Street Journal.

“Customers on a budget are under a lot more pressure than higher-income shoppers,” Kroger Chief Executive Rodney McMullen said. Lower-income consumers are buying smaller and cheaper products, and spending patterns are influenced by food stamp and payroll schedules, the Journal reports.

Over the past year, U.S. supermarket sales have surged as food makers raised prices, said the Journal. According to industry executives, sales growth is slowing as supply chain problems ease and inflation settles.

Kroger said its identical sales rose 1% excluding fuel for the most recent quarter. The Journal reports that the company expects its identical sales without fuel to be slightly negative in the second half of the year.

Kroger and Albertsons announced in a press release that they have entered a definitive agreement with C&S Wholesale Grocers for the sale of select stores, banners, distribution centers, offices and private label brands in connection with their proposed merger, previously announced in October 2022.

When the merger was announced, the companies stated their plan to make store divestures in order to gain antitrust approval.

“This comprehensive divestiture plan marks a key next step toward the completion of the merger by extending a well-capitalized competitor into new geographies,” stated Kroger and Albertsons. The divesture plan ensures that no stores will close as a result of the merger.

The $1.9 billion agreement includes 413 stores, eight distribution centers across 17 states and Washington D.C., as well as the sale of QFC, Carrs and Mariano’s banners, two offices and five private label brands. C&S will also the gain the right to license the Albertsons brand name in Arizona, California, Colorado and Wyoming.