<p>Speaking at two investor conferences, Michael Schlotman, CFO at Kroger, shared his thoughts on the pending merger between Albertsons and Safeway and the retailer’s expansion into a new market. </p><hr class="legacyRuler"><hr class="invisible minimal-padding"><p><B>Is Kroger Concerned About the Albertsons-Safeway Merger?</b><hr class="legacyRuler"><hr class="legacyRuler"><hr class="invisible minimal-padding"> <img class="small-cropped-image" src="https://cdn.andnowuknow.com/legacySmallCroppedImages/mike-schlotman-kroger-304.jpg" alt="Cropped Images 031214" />According to Cincinnati Business Courier, Schlotman claims that Kroger isn’t worried about the Albertsons-Safeway impact on competition. “It’s not something that’s going to happen overnight,” he said at the Bank of America Merrill Lynch Consumer & Retail Conference. “It’s probably, best case, a year off. There are a lot of things that happen in that intervening year that’ll help everybody understand exactly what the landscape’s going to wind up being like.”<hr class="legacyRuler"><hr class="legacyRuler"><hr class="invisible minimal-padding">Schlotman added, “They’ll generate a lot of synergies, but they’re going to be pretty levered. They’re going to have a fair amount of interest expense to cover. So I think it’ll remain to be seen how much net synergy dollars they have left to invest in competitive activities versus giving a return to the equity investors that we’re going to have as well as the debt carry load – the interest on the debt load they have.”</p><hr class="legacyRuler"><hr class="invisible minimal-padding"><p><B>Kroger’s Expansion into a New Market</b><hr class="legacyRuler"><hr class="legacyRuler"><hr class="invisible minimal-padding"> At the UBS Global Consumer Conference, Schlotman said that Kroger is “going down the path of picking one new market to enter organically” and that they’ve been involved in the process since October. “It will be awhile before where we’re going is public, both from a competitive standpoint and cost of land always seems to go up if they know we’re looking for land,” he said.<hr class="legacyRuler"><hr class="legacyRuler"><hr class="invisible minimal-padding"> This entry into a new market is part of a bigger plan to spend $2.8 billion to $3 billion on store expansion this year, according to Cincinnati Business Courier.<hr class="legacyRuler"><hr class="legacyRuler"><hr class="invisible minimal-padding"> He noted that while the company plans to continue expansion in fill-in markets, Kroger could still acquire some Safeway stores that could be divested to avoid violating antitrust laws.<hr class="legacyRuler"><hr class="legacyRuler"><hr class="invisible minimal-padding"> “We’ve long said that if a competitor is going to have stores available in markets where we are and they fit nicely with our footprint, those kinds of deals have been great for us, but we’ll wait to see what that chapter says when it gets written.”<hr class="legacyRuler"><hr class="legacyRuler"><hr class="invisible minimal-padding"> On the Harris Teeter acquisition, Schlotman said that Kroger has already moved Harris Teeter’s operating trade area into the Baltimore, Delaware, and Washington, D.C. areas, but a decision still needs to be made regarding whether to take that expansion further south or north. In addition, Schlotman hinted that Harris Teeter Marketplace stores may pop up - a reflection of Kroger’s larger-format stores. </p><hr class="legacyRuler"><hr class="invisible minimal-padding"><p> Stay tuned to AndNowUKnow as we continue our coverage on Kroger’s expansion into a new market.</p><hr class="legacyRuler"><hr class="invisible minimal-padding"><p><a class="btn btn-sm btn-primary col-lg-12" style="white-space: normal;" href=" http://ir.kroger.com/phoenix.zhtml?c=106409&p=irol-irhome" target="_new"> Kroger </a></p><hr class="legacyRuler"><hr class="invisible minimal-padding">
