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Pick 'n Save parent Kroger has been closing stores since Roundy's acquisition, and may not be done

Pick 'n Save parent Kroger has been closing stores since Roundy's acquisition, and may not be done
Posted at 8:50 AM, Jul 05, 2017
and last updated 2017-07-06 12:35:17-04
MILWAUKEE -- Just a year and a half after Kroger bought Milwaukee-based Roundy’s Inc., it has closed eight of the stores it acquired.
 
Cincinnati-based Kroger (NYSE: KR), the nation’s largest operator of traditional supermarkets, closed six Pick ‘n Save stores in Wisconsin this year because they were weak performers, according to TODAY'S TMJ4 partner the Milwaukee Business Journal. Three of those stores are in the Milwaukee area. The others are in Kenosha and Sheboygan, not far from Milwaukee, and Shawano, in northern Wisconsin.  
 
The closures leave Kroger with 111 stores in Wisconsin. It also acquired 34 Mariano’s stores in the Chicago area when it bought Roundy’s for $800 million in December 2015.
 
Kroger has done plenty of work realigning its management teams in Wisconsin and converting stores to its system in terms of pricing, products, customer rewards and tech systems.
 
“We’re clearly shining up a slightly tarnished star,” Kroger CFO Mike Schlotman said last November at Kroger’s investor day. “Getting back to a 50 (percent) market share from 30 or 35 is a lot of work.”
 
Schlotman had said on a conference call when the deal was announced: “We have no plans to close stores.”
 
David Livingston, principal at Waukesha, Wis.-based supermarket research firm DJL Research, told me last November he expected Kroger to sell dozens of stores. Livingston said Schlotman’s statement wasn’t false, but that Kroger would eventually close some stores. Many Pick ‘n Save stores had sales per square foot that were too low to remain feasible, he said then.
 
Livingston told me Monday that the stores Kroger has closed were “extremely underperforming.” Some had sales per square foot that were 25 percent to 30 percent below average.
 
“Many were redundant,” Livingston said. “If there were two stores in close proximity, they’re focusing on the better store. Many of those (closed) stores had such low volume they were essentially closed anyway. There were a lot of dogs in that chain.”
 
Heightened competition in the Milwaukee area from Meijer and Fresh Thyme along with independent chains had made for a competitive market and worsened the labor shortage there in the grocery business, Livingston said. Kroger’s closures help with that situation.
 
He doesn’t think Kroger is done in Wisconsin. He expects it to close another 20 or so stores in Wisconsin, including about 10 in the Milwaukee area.
 
Livingston applauded Kroger’s quick moves to close stores.
 
“Kroger’s not messing around,” Livingston said. “They’re being more proactive than I thought. I think they want to get this turned around faster.”
 
Kroger’s Howard pointed out that all employees at those stores were offered jobs at other Pick ‘n Save stores. She said Kroger won’t comment on future store-closing plans.
 
“We continue to focus on our growth plans,” Howard said.