In a significant move, Kroger, the largest traditional supermarket chain in the U.S., has announced plans to close 60 underperforming stores over the next 18 months. This strategic restructure comes as part of the retailer’s broader effort to streamline operations, improve profitability, and redirect resources toward more promising locations and digital growth.

Why the Closures?

According to Kroger’s Q1 2025 earnings report, the closures are expected to generate a $100 million impairment charge, while delivering a “modest financial benefit” through cost savings. Executives stated that freeing up these resources will help enhance customer experience at remaining stores, particularly by investing in fresh food offerings, private-label brands, and faster e-commerce fulfillment.

Employee Transition and Store Network Optimization

Kroger emphasized it will offer transfers to affected employees at nearby locations, underscoring its commitment to workforce retention. While specific store locations have not been disclosed, the planned closures—about 5% of its Kroger-branded supermarkets—mark a notable reshuffle aimed at optimizing underperforming assets.

Offsetting with New Store Openings

To balance this contraction, Kroger plans to open around 30 new stores in 2025, with additional expansions in 2026. Interim CEO Ron Sargent described the strategy as a dual approach—closing low-performing sites while investing in growth markets to rebuild market share lost during the failed Albertsons merger. The aim is to strengthen both physical footprint and e-commerce reach.

Financial Performance Amid Change

Despite the charges related to the store closures, Kroger posted solid results in Q1 2025:

• Net income of $866 million, compared to $947 million in the prior year.
• Identical-store sales rose 3.2% year-over-year excluding fuel.
• Raised full-year identical-store sales forecast to 2.25–3.25% (up from 2–3%).

These results sent Kroger’s stock climbing—up ~14% in 2025 and nearly 40% over the past year—reflecting investor approval.

Customer Experience & Digital Growth

Kroger plans to redirect savings into areas that resonate with shoppers, such as fresh food counters, expanded private-label offerings, and enhanced e-commerce services—including same-day delivery and Kroger Express—for a 15% surge in online orders. These initiatives aim to retain cost-conscious consumers amid restaurant inflation.

What This Means for the Grocery Landscape

The closures come after a turbulent phase for Kroger, including a failed $24.6 billion merger with Albertsons tied up in antitrust issues, and leadership changes with the resignation of former CEO Rodney McMullen. This pivot highlights Kroger’s renewed focus on efficiency and strategic repositioning to compete with rivals like Walmart and discount chains.

Conclusion

Kroger’s decision to shutter ~60 stores over 18 months, while simultaneously expanding in growth regions, exemplifies a calculated effort to optimize operations and sharpen its competitive edge. With strong financials, rising customer demand, and a sharpened focus on experience and digital services, Kroger is charting a course for leaner, more profitable growth in a shifting retail environment.