While this news is just one more bit of focus for Kroger, the company announced last October that it would explore strategic alternatives for its convenience store business. The companies indicated that the deal is expected to close during the first quarter of Kroger’s fiscal year.
Kroger plans to use the proceeds from this sale to repay debt to lower its net total debt to adjusted EBITDA ratio and also to repurchase common shares.
What EG will get here is 762 convenience stores spread over 18 states. Its store brand names include Kwik Shop, Turkey Hill, Quik Stop and Tom Thumb. According to Kroger, the convenience stores accounted for roughly $4 billion in revenues, sold roughly 1.2 billion gallons of gasoline and employ roughly 11,000 people. Kroger’s supermarket fuel centers and its Turkey Hill Dairy are not included in the sale.
[nativounit]
For a reference to the big picture here, Kroger’s total revenues were $115 billion in 2016, and the company claims roughly 450,000 company associates and 2,790 supermarkets and multi-department stores across its entire system.
Mike Schlotman, Kroger’s executive vice president and chief financial officer, said of the convenience store sale:
Our convenience store business has been a part of our company for many years. We want to thank our management team and associates for their enduring commitment to our customers, and for the contributions they have made to build our supermarket fuel business. As part of our regular review of assets, it has become clear that our strong convenience store business unit will better meet its full potential outside of our business.
The deal is not that substantial to Kroger’s operations, but Wall Street is basically discounting the news. Kroger shares were last seen down 0.5% at $29.20 on Monday, in a 52-week range of $19.69 to $34.75. Kroger’s consensus analyst target price was $28.73.
[wallst_email_signup]
Top Gaining Stocks
Top Losing Stocks