Kroger announces more closures and cuts ahead of the holidays

Core Insights - The shift towards online grocery shopping is significantly impacting Kroger's business, leading to store closures and job cuts [1][5][10] Online Grocery Sales Growth - U.S. online grocery sales surged by 104% during the pandemic and are expected to grow at an annual rate of 12.3% through 2029, with over 148 million Americans projected to shop for groceries online by 2025 [2] Fulfillment Center Closures - Harris Teeter, owned by Kroger, will close two fulfillment centers in Virginia and Maryland, affecting a total of 171 employees, with closures expected by February 1, 2026 [3][4] - Kroger plans to close five additional fulfillment facilities across various states in January 2026 as part of a strategy to streamline operations and enhance delivery efficiency [5] Restructuring and Financial Impact - The closures are part of a broader restructuring plan aimed at increasing e-commerce profitability, with Kroger anticipating a $400 million increase in e-commerce operating profit by 2026 [9] - The company expects to incur approximately $2.6 billion in impairment charges in the third fiscal quarter of 2025 due to these closures and underperformance of its automated fulfillment network [10] Customer Impact - The closure of fulfillment centers in Florida will eliminate Kroger's grocery delivery program in the state, while customers in other affected markets will lose local access to delivery services [11][12] - Harris Teeter customers in Virginia and Maryland will still have access to delivery services through third-party partners [14] Future Plans and Partnerships - Kroger is expanding its partnerships with delivery services like Instacart, DoorDash, and Uber Eats to enhance delivery coverage and improve its retail media business [17] - The company is also piloting store-based fulfillment in busy regions to improve fulfillment capabilities and the in-store experience [18] Sales Performance - In the second quarter of fiscal 2025, Kroger reported a total sales increase of 0.08%, with same-store sales rising by 3.4%, driven in part by a 16% increase in e-commerce sales [19]