Kroger to consider internal and external candidates for CEO role after sudden resignation
Kroger will consider both internal and outside candidates to replace CEO Rodney McMullen who resigned abruptly last week, interim CEO Ron Sargent told Wall Street analysts in a conference call.
"We are going to be looking at both ... but I think most importantly we're focused on identifying the right leader to drive Kroger's growth," Sargent said, adding: "I am proud to serve in this role as long as needed."
Sargent's remarks came as Kroger reported 2024 sales results that were lower than Wall Street forecasts on Thursday, but the grocer predicted sales would pick up in 2025.
Kroger reported a profit of $2.7 billion last year
Meanwhile, the Cincinnati-based supermarket giant beat analysts’ profit estimates for both the latest quarter and the fiscal year that ended Feb. 1. Kroger reported a robust $2.7 billion profit on $147.1 billion of sales in 2024. The grocer also said it notched $634 million in earnings on $34.3 billion in sales in the fourth quarter.
The financials are the first disclosures since Kroger announced that McMullen, who led the retailer since 2014, had resigned after an ethics investigation.
Interim CEO got his start in a Kentucky store
On Thursday, Sargent sought to project confidence and continuity, praising the company's "enduring values" that he remembered back to his college days when he first worked summers at a suburban Cincinnati Kroger in Fort Mitchell, Kentucky in 1974.
“Kroger is operating from a position of strength … We enter 2025 with positive momentum,” Sargent said in prepared remarks for the call.
Kroger sees strong 2025 ahead
Kroger's 2024 total sales were lower than the $150 billion in 2023 sales in part due to a 53rd week in the previous fiscal year, the company said. During its fourth quarter, the grocer recorded a healthy 2.4% increase in identical store sales excluding fuel, a key metric that measures sales growth excluding volatile gas prices and the impact of new stores.
Looking ahead, Kroger predicted identical sales excluding fuel would grow 2% to 3% in 2025 versus the 1.5% growth it saw last year. The grocer also predicted its 2025 earnings per share would range from $4.60 to $4.80, suggesting a profit before one-time items topping $3 billion.
Last year, Kroger reported an annual profit of $2.2 billion on total sales of $150 billion during its 2023 fiscal year.
Kroger CEO resigned last week
The results come three days after Kroger announced the abrupt resignation of McMullen after a 10-day internal investigation led the board to determine his “personal conduct” was "inconsistent with Kroger’s policy on business ethics."
The company did not disclose what exactly McMullen did to cost his job, only that was “not related to the company's financial performance, operations or reporting, and it did not involve any Kroger associates.”
Sargent, a board member and former Staples CEO, took Kroger’s helm as interim CEO as the nation’s largest supermarket chain began a national search for a permanent chief executive.
Hours after McMullen’s exit, Vivek Sankaran, the CEO of former Kroger takeover target Albertsons, announced his plans to retire on May 1.
Kroger faces numerous challenges
The leadership switch comes as Kroger and the supermarket industry faces multiple challenges, including: the aftermath of its aborted Albertsons bid and the subsequent lawsuit by Albertsons accusing Kroger of botching regulatory approval of the deal; continued inflation that weigh on consumers and dampened sales in 2024; and 25% tariffs on imports from Mexico and Canada imposed by President Trump that could hit grocery produce and meat sections with higher prices within weeks.
Kroger operates more than 2,700 stores in 35 states and the District of Columbia. The retailer operates stores under the Kroger banner name as well as Fred Meyer, Ralphs, Harris Teeter, Pick ‘n Save, Dillons, King Soopers, Mariano’s, Fry’s, QFC and others.
The company employs almost 414,000 workers, including about 20,000 in its hometown region, including its local stores, downtown Cincinnati headquarters and 8451 consumer analytics subsidiary, online fulfillment center and its two manufacturing plants in Cincinnati's Lower Price Hill neighborhood.