Kroger says it bought Roundy’s because of strong market share


The Kroger Co., in its fourth quarter earnings call this morning, revealed some of its reasoning behind the acquisition of Milwaukee-based Pick ’n Save operator Roundy’s Inc.

Cincinnati, Ohio-based Kroger, which closed on its acquisition of Milwaukee-based Roundy’s in December, said the integration of the companies is well underway. Kroger said by merging with Roundy’s it was able to enter the Chicago and Wisconsin markets, where Roundy’s already had strong market share with Pick ’n Save, Mariano’s and Copps stores.

“We’re really looking for companies that bring something to us that we don’t have today,” said Rodney McMullen, chairman and chief executive officer of Kroger. “Mariano’s has done a phenomenal job on connecting with customers and their market share is in the low teens and they entered that market in 2010. So we felt like we could learn a lot, plus we started out in a position of strength because of the success they’ve had. When you look at Wisconsin, Pick ’n Save and Copps have great market share across the state.”

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He also said Kroger admires Roundy’s “outstanding” real estate sites and those were a major factor in the decision to acquire Roundy’s.

Kroger today reported fourth quarter net income of $559 million, or 57 cents per diluted share, up from $518 million, or 52 cents per share, in the fourth quarter of 2014.

The grocery chain’s operating profit was $928 million in the fourth quarter, up from $912 million in the same period a year ago.

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Kroger’s revenue, including Roundy’s, totaled $26.2 billion in the fourth quarter, up 3.8 percent from $25.2 billion in the fourth quarter of 2014.

Including six weeks of Roundy’s results, the chain’s identical supermarket sales growth excluding fuel was 3.7 percent in the fourth quarter.

“2015 was an outstanding year for Kroger,” said McMullen. “We delivered on our performance targets, grew market share, created 9,000 new jobs, supported our communities, and continued to expand our use of technology to drive growth. And we’re not done. In 2016, we will continue making a difference for our customers and associates, growing our business, and delivering value for shareholders.”

Kroger has 431,000 employees at 2,778 retail stores under several banner names in 35 states and the District of Columbia.

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