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On its fourth quarter and full-year 2023 earnings call today, Kroger CEO Rodney McMullen provided an update on the grocer’s proposed merger with Albertsons and detailed the company’s “optimism for 2024.”
Following last week’s news that the Federal Trade Commission is suing to block the deal, calling it anticompetitive (Washington and Colorado also filed their own lawsuits pushing back on the deal last month), McMullen said Kroger is “committed to defending the merger.”
“While we were disappointed about the FTC’s recent attempt to challenge our merger, we were not surprised, given the current political environment,” he said, referencing its track record with previous mergers, which include Harris Teeter in 2014 and Roundy’s in 2015. “The character of a company is clear in its actions, regardless of what others claim. Kroger keeps its commitments. And we’re happy to share this with whomever is willing to talk with us.”
The FTC hasn't set a hearing date yet, but Kroger expects it this summer, he said.
Kroger plans to complete 30 store openings, relocations, and expansions this year, interim CFO Todd Foley said. New stores will be an important part of the grocer’s future sales growth, McMullen noted. While the closure of the deal with Albertsons would boost its store count to more than 5,000, McMullen said Kroger will “continue to run our business just like we would run our business without the merger.”
Kroger’s total sales in 2023 were $150 billion, up 1.1% year over year. Its identical sales fell 0.8% in the fourth quarter but were up 0.9% for fiscal 2023. The company forecast identical sales without fuel will rise 0.25% to 1.75% in 2024.
Looking ahead, McMullen said he is “optimistic about 2024 and beyond.” Kroger expects to add 800 new brands to its Our Brands portfolio in 2024, “reimagining” it “with a refreshed look.” Despite some challenges in consumer spending, he said Kroger anticipates positive unit volume this year. He noted it’s gained share with “mainstream and upscale” customers who tend to buy larger pack sizes, but said market share with lower income customers is “slightly better, but we still have a lot of work to do,” adding that the company is “not satisfied with where we are” with that cohort.