Kroger surges after announcing it may sell its convenience-store business

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.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.