Even as they trade barbs over which of them is to blame for the demise of their merger plan, Kroger and Albertsons have started looking past the failed transaction.
Both companies separately released statements about their futures as stand-alone companies on Wednesday, disclosing plans to repurchase billions of dollars in shares while outlining their vision for growth.
Kroger — which had promised to invest $1 billion to lower prices if it was able to complete the deal — said in a press release that it remains “committed” to bringing down costs for shoppers and investing in workers even though the merger fell through.
“We are at our best when we serve others – our customers, associates, and communities – and we take seriously our responsibility to provide great value by consistently lowering prices and offering more choices,” Kroger Chairman and CEO Rodney McMullen said in a statement. “When we do this, more customers shop with us and buy more groceries, which allows us to reinvest in even lower prices, a better shopping experience and higher wages. We know this model works because we’ve been doing it successfully for many years, and this is exactly what we will continue to do.”
Kroger also plans to boost its alternative profit businesses and increase cash flows while leveraging its balance sheet to move ahead with projects including new locations and store renovations, McMullen said.
Additionally, Kroger said it would resume share repurchases after halting them in the wake of the merger agreement in 2022 and intended to repurchase up to $7.5 billion of its common stock. The program replaces a $1-billion share-repurchase program it approved in September 2022 and then paused following the merger agreement in 2022.
“Now that Kroger has terminated the merger agreement, the company is ready to deploy its capacity,” the company said.
Meanwhile, Albertsons also said in a press release that it is in a strong position to move ahead, adding that it expects to bring its same-store sales growth to 2% or more “over time.”
“We start this next chapter in strong financial condition with a track record of positive business performance,” Albertsons CEO Vivek Sankaran said in a statement.
Albertsons added that it intends to pay stockholders a quarterly dividend of 15 cents per share, a 25% increase from the 12 cent dividend it has distributed every quarter since late 2021 — in addition to a special dividend of $6.85 per share it distributed in January 2023. The company had previously paid a quarterly dividend of 10 cents per share.
The grocer said it plans to direct as much as $2 billion to its repurchase program, adding that it would fund the repurchases with cash from its operations.
Albertsons’ largest shareholder, Cerberus Capital Management, said in the grocer’s press release that it does not intend to sell any of its shares in the company.
“As a long-term investor in and partner to Albertsons across multiple investments and throughout the evolution of its competitive environment, Cerberus is proud of the Company’s performance and it will continue to be a strong supporter of Albertsons, its talented leadership team, and its dedicated associates,” Cerberus said in a statement.
