Core Insights - Kroger has consistently reported year-over-year digital sales increases that outpace same-store sales growth since early 2022, yet its e-commerce business remains unprofitable [3] - The company plans to close three automated fulfillment centers in January 2024 as part of a strategy to enhance profitability [4][8] Group 1: E-commerce Strategy - Kroger aims to improve e-commerce profitability by approximately $400 million by 2026 through various strategic changes, including the closure of fulfillment centers and increased in-store fulfillment [8] - The company will shift focus from dedicated e-commerce facilities to in-store fulfillment, planning to pilot store-based automation in high-volume markets [7] Group 2: Fulfillment Center Closures - The fulfillment centers being closed are located in Pleasant Prairie, Wisconsin; Frederick, Maryland; and Groveland, Florida, with the Groveland center having opened in June 2021, Pleasant Prairie in June 2022, and Frederick in June 2023 [4][6] - Kroger will continue to monitor the performance of its remaining automated fulfillment centers and leverage them in high-demand markets to enhance customer engagement and productivity [5] Group 3: Financial Implications - The company will incur impairment and related charges of $2.6 billion in fiscal Q3 2023 due to the changes in its fulfillment strategy [8] - Kroger's partnership with Ocado, which began in 2018, has seen a pause in the rollout of new facilities in 2023, although plans for two new centers in Charlotte and Phoenix are set for fiscal 2026 [6]