- Kroger will close about 60 underperforming stores (roughly 2–5% of its base) over the next 18 months to improve profitability and concentrate on stronger markets.
- The plan follows the collapse of its $24.6 billion Albertsons merger, during which Kroger paused normal store performance reviews.
- Kroger will record a $100 million impairment charge, expects only modest net benefit, and will reinvest savings into the customer experience without changing full-year guidance.
- It will also open about 30 new stores, accelerate expansion in high-growth geographies, and offer transfers to affected employees.
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The move by Kroger to shut about 60 stores within 18 months marks a defensive and adaptive management decision in response to both internal underperformance and external regulatory disruption. Post-merger, Kroger faces a reset in its strategic roadmap, and this store closure program appears to be a way to regain control of its operating footprint while aligning with investor expectations.
The root cause driving this decision is the failed $24.6 billion merger with Albertsons, which was blocked in late 2024 by both federal and state courts. During the merger process, Kroger suspended its usual cadence of store performance reviews and deferrals on closing underperforming stores, building a deferred liability across its estate. Resuming reviews post-merger has revealed stores that no longer meet margin or competitive expectations, prompting the planned closures.
Kroger has indicated the financial impact will include a $100 million impairment charge associated with the closures. While the company projects the long-term benefit to be “modest,” the aim is to shift revenues from weak stores to stronger ones, improving overall profitability without changing guidance. This suggests the company believes it can enhance return on capital, reduce drag from underperforming units, and strengthen operating leverage.
Strategically, Kroger is not simply contracting. It is reallocating resources toward growth: aiming to open ~30 new stores in the current year, expanding further in high-growth geographies, doubling down on fresh foods, private labels, and digital/eCommerce channels. Employee transition plans are in place to offer transfers rather than layoffs, which, in unionized operations, may help mitigate labor disruption risk.
Open questions remain around the geographic distribution of closures—none have yet been identified publicly—raising risks of community backlash, regulatory scrutiny, and potential brand weakening in local markets. Additionally, while savings are earmarked for customer experience, it’s unclear how much reinvestment will offset lost sales from closures. The modest benefit projected indicates Kroger expects costs to outweigh short-term revenue loss, but longer term performance will depend on execution.
From an investment / banking perspective, Kroger seems to be entering a period of leaner operations, shedding underperforming assets, and preparing for renewed growth—but its ability to create value from these moves depends on maintaining customer loyalty and integration efficiency amid competitive pressures from Walmart, Amazon, and others.
Supporting Notes
- Kroger will close approximately 60 underperforming stores over 18 months, representing about 2.2–5% of its store base.
- The merger with Albertsons, valued at $24.6 billion, was proposed in October 2022 but blocked by federal and state courts in late 2024 over competition concerns.
- The company is taking a $100 million impairment charge tied to the planned closures; the benefit is expected to be modest and is not anticipated to affect full-year guidance.
- Savings from closures will be reinvested in customer experience; employees at affected stores will be offered transfers rather than laid off.
- Kroger plans to open at least 30 new stores in the current year and accelerate expansion into high-growth geographies.
- Kroger paused its usual store performance evaluations during the merger process, which delayed identification of underperforming stores.