Kroger said Wednesday that it was considering a sale of its convenience stores. Its shares jumped 5% in early trading after the news.
“We want to look at all options to ensure this part of the business is meeting its full potential,” said Mike Schlotman, Kroger’s CFO, in a premarket announcement. “Considering the current premium multiples for convenience stores, we feel it is our obligation as a management team to undertake this review.”
Kroger’s shares have dropped 12% since mid-June when Amazon stunned the grocery industry with its acquisition of Whole Foods. The company reported an 8% drop in second-quarter profits after aggressive cost cuts aimed at overcoming competition from Walmart and other retailers.
Kroger said Wednesday it was unveiling a plan to revamp its stores, including bigger investments in ecommerce and more cost cuts.
The 784 convenience stores under consideration for a sale earned $US1.4 billion in revenues last year. Kroger’s supermarket fuel centres and its Turkey Hill Dairy brand are not under review. Kroger also operates pharmacies, jewellery stores and health clinics.