Chief Executive Greg Foran told staff that about 3,000 of roughly 8,200 corporate roles will go. The memo arrives a week before Albertsons takes its $8 billion claim against Kroger to trial.
Eight months into the job, Kroger's new chief executive is taking aim at the company's headquarters.
Greg Foran, the former head of Walmart's U.S. business, told employees in a memo on Monday that Kroger will cut about 3,000 corporate roles over the next three years. The company has roughly 8,200 corporate employees, so the reduction equals about 37% of that workforce. Kroger confirmed the plan.
"Our business is becoming leaner, more focused and more competitive," Mr. Foran wrote.
The Rationale
The memo frames the cuts around overhead. "Our company has more layers, more handoffs and more overhead than we need, so we are addressing this issue," Mr. Foran wrote. He also pointed to technology: "We need to adopt capabilities, reduce duplicative work and look closely at where work is best fit to be done."
He said the savings will be redirected toward lower prices, store employees and the customer experience. Kroger did not disclose an expected savings figure or a restructuring charge.
The Competitive Backdrop
Mr. Foran took over in February. Since then, Kroger has focused on cutting prices to compete with Walmart, Costco, Amazon and discount grocers. In July it agreed to buy the Pittsburgh supermarket chain Giant Eagle for $1.65 billion, including about $400 million of assumed liabilities.
Kroger shares closed Monday at $62.56, up about 1.5%. The memo became public after the market closed, so the stock has not yet traded on the news in a regular session.
The Albertsons Trial
The restructuring comes days before a courtroom test. Albertsons is seeking at least $8 billion from Kroger over their failed merger, and the trial is expected to begin in Delaware on Oct. 19, according to a news report. Albertsons shares closed Monday at $12.54, up about 2.9%, ahead of its own quarterly results on Tuesday.
Market Implications
One reading is that Mr. Foran is applying a Walmart playbook: strip out management layers, use technology to do the work, and spend the savings on prices to win shoppers. Without a savings figure, investors cannot yet judge how much margin the plan protects.
A second reading is that the timing reflects pressure. Kroger is competing on price, absorbing an acquisition and facing a multibillion-dollar claim from Albertsons, and cost cuts at headquarters may be needed simply to hold margins steady.
What To Watch
Kroger's first trading session after the memo will show how investors value the plan. Any savings target or charge, disclosed with quarterly results, will make it measurable. The Albertsons trial starting Oct. 19 will determine the size of the legal overhang.