Kroger to shutter three automated facilities
Kroger to shutter three automated facilities
Following a comprehensive review, Kroger will close fulfillment facilities in Pleasant Prairie, WI; Frederick, MD; and Groveland, FL, in January, while monitoring the remaining facilities' performance. The closures are part of the company's updated eCommerce plan, which it said should improve profitability by approximately $400 million in 2026.
In geographies where Kroger sees higher density of demand, the company will continue to take advantage of automated customer fulfillment to increase customer engagement, capacity and improve productivity and profitability. As part of its comprehensive hybrid fulfillment network, Kroger will also pilot capital-light, store-based automation in high-volume geographies to improve fulfillment capabilities and elevate the in-store customer experience. The adjustments to the network combined with increased store-based fulfillment will contribute to ROIC improvement.
The company expects to incur impairment and related charges in the third fiscal quarter of 2025 of approximately $2.6 billion as a result of these closures and the automated fulfillment network not meeting financial expectations. The company expects these closures to have a neutral effect on its identical sales without fuel.
"eCommerce remains a core part of serving customers who want better value, wide selection and flexible ways to shop," said Ron Sargent, Kroger's chairman and CEO. "We are building on a strong foundation with five consecutive quarters of double-digit eCommerce sales growth and increased profitability improvements. We are taking decisive action to make shopping easier, offer faster delivery times, provide more options to our customers and we expect to deliver profitable sales growth as a result."
Kroger has expanded its Instacart relationship and broadened its relationship with DoorDash. In addition, Kroger announced the upcoming launch of a new customer experience on Uber Eats Marketplace.
"Every customer is different, and they expect more options to access fresh, affordable food, without compromising on the value or convenience," said Yael Cosset, executive vice president and chief digital officer for Kroger. "Our differentiated approach, combining the proximity of our stores with high-capacity automation, the wide assortment of the fresh food they love, allows us to fulfill more trips for the families we serve. Being able to deliver food and groceries to tens of millions of families who shop with us every year, in as little as 30 minutes is a winning model for Kroger and our customers."
