KR Stock Drops After CEO Plans Big Price Cuts To Tackle Competition

• Kroger Co.'s new CEO, Greg Foran, is planning big price cuts to win back market share 
• Kroger plans to open 70 to 80 new stores next year. 
• Plans to trim expenses by importing merchandise directly.

Kroger (KR) stock price dropped 2% on Thursday amid plans to introduce its most aggressive price cuts in years, orchestrated by its new CEO, to reclaim market share from retail rivals like Walmart Inc. (WMT) and Costco Wholesale Corp. (COST). 

Greg Foran, who took over as Kroger’s CEO in February this year, announced the aggressive pricing strategy in a media interview with Bloomberg, signaling a major shift for the nation’s largest traditional supermarket operator.

Under the new plan, the grocery giant will test and implement substantial price reductions across thousands of product categories. The initiative is a direct attempt to win back budget-conscious shoppers who have increasingly migrated to low-cost competitors amidst prolonged inflation.

"We have to be competitive on price, and we are going to ensure that we are," Foran told Bloomberg News on Thursday.

Prior to joining Kroger, Foran served as the head of Walmart U.S., where he successfully drove 20 consecutive quarters of comparable sales growth through an everyday low-price model.

To fund the widespread discounts without completely eroding profit margins, Kroger plans to lean heavily on back-end operational efficiencies. The company expects to generate substantial capital savings through supply chain optimizations and the expanded rollout of artificial intelligence technology to streamline inventory management and logistics.

Kroger’s Acquisition Problems and Expansion Plans

The corporate pivot follows a major regulatory setback late last year, when a U.S. federal court blocked Kroger’s proposed $25 billion acquisition of rival Albertsons Companies Inc. after a legal challenge by the Federal Trade Commission. With the megamerger effectively scuttled, Kroger is shifting its focus entirely toward organic growth and internal store investments.

Beyond lowering costs, Kroger is also looking to expand its physical footprint to support top-line growth. The grocer revealed plans to build up to 80 new stores, focusing heavily on regions where it currently lacks presence.

“Our objective is to execute what we think is a very clear, sensible plan. We want to be America’s best grocer,” Foran said. 

KR Retail View 

Retail sentiment on Stocktwits was ‘bullish’ with ‘normal’ message volumes. 

The stock has lost 0.3% over the past 12 months.

For updates and corrections, email newsroom[at]stocktwits[dot]com.