Kroger Takes Growth Spending Up to Over $4 Billion

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Wed. May 25th, 2016
- by Jessica Donnel     

CINCINNATI, OH - As you can tell from the array of recent headlines, Kroger is all about growth these days. How much growth? It looks like more than $4 billion worth, for everything from new stores, expanded locations, and renovations, to revamped tech and logistics. 

Kroger officials said it's all part of a long-range plan to keep increasing the investment in their stores, according to a report from Cincinnati.com. Kroger revealed in its most recent financial report that it upped its capital expenditure budget by 24 to 33 percent, aiming to hit between $4.1 billion and $4.4 billion. The projections do not even include possible acquisitions, which Kroger has been known to frequently venture into.

In his annual letter to shareholders last week, Kroger CEO Rodney McMullen explained that a critical part of his strategy for success is adding or expanding stores within the company's current 35-state footprint

Rodney McMullen, Chairman and CEO, Kroger Co.

"These are markets where we already operate, yet offer a significant opportunity to grow the business," McMullen wrote. ”We continue to expand our presence in fill-in markets across the country."

In the past year, Kroger has announced the following huge growth investments: 

Kroger also recently announced it is growing its work base by 14,000 new workers

McMullen continued in his shareholder letter by explaining that the retail industry puts too much emphasis on “splashy tech innovations” and corporate takeovers, when they should be focusing on investment in existing stores.

"Too many companies over-focus on innovation in the hopes of discovering the next 'big thing,'" McMullen wrote, according to Cincinnati.com. "Important to our success with mergers is that we don't need them to meet our long-term earnings per diluted share growth target... Balance – the integration of these strategic elements across our business – is how we'll continue to win with customers." 

So what will this fill-in strategy entail? Late last year, McMullen hinted to Wall Street analysts that the company had identified eight markets where it would concentrate its growth. Those eight markets have yet to be revealed, but AndNowUKnow will keep our eyes out for the latest.

Kroger

 
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