Kwik Shop, Kroger convenience store
Kroger operates 784 convenience stores in 18 states, including KwikShop stores.

CINCINNATI — The Kroger Co. is exploring strategic alternatives, including a potential sale, for its convenience store business, the retailer said Oct. 11. With $4 billion in total sales last year, the business includes 784 convenience stores in 18 states under banner names Turkey Hill Minit Markets, Loaf ‘N Jug, KwikShop, Tom Thumb and QuickStop, and has generated 62 consecutive quarters of identical store sales growth.

J. Michael Schlotman, Kroger
J. Michael Schlotman, executive vice-president and c.f.o. of Kroger

“Our convenience stores are strong, successful and growing with the potential to grow even more,” said J. Michael Schlotman, executive vice-president and chief financial officer. “We want to look at all options to ensure this part of the business is meeting its full potential. Considering the current premium multiples for convenience stores, we feel it is our obligation as a management team to undertake this review.”

Kroger executives revealed the plan during its annual investor conference as part of a larger Restock Kroger initiative to deliver value for customers and shareholders.

Rodney McMullen, Kroger
W. Rodney McMullen, chairman and c.e.o. of Kroger

“We know that when we serve America through food inspiration and uplift, we create value for our shareholders, customers and associates,” said W. Rodney McMullen, Kroger’s chairman and chief executive officer. “We understand that today’s marketplace is shifting rapidly. Kroger’s success has always depended on our ability to proactively address changes by focusing relentlessly on our customers. We have the scale, the data, physical assets and human connection to win. Combining our food expertise and data analytics uniquely positions Kroger to create new and highly-relevant customer experiences, delivered both digitally and in stores. Restock Kroger builds on our strengths and strategically repositions Kroger to accelerate our customer-centered efforts in order to create shareholder value.”

Kroger said it will invest in pricing, technology innovation and infrastructure upgrades in its stores to improve the shopper experience. The company also plans to support growth of its three biggest store brands, Kroger, Private Selection and Simple Truth.

Loaf N Jug, Kroger convenience store
Kroger's convenience store business raked in $4 billion in total sales last year.

The Restock Kroger plan is expected to deliver $400 million in incremental operating margin and more than $4 billion in free cash flow by 2020.

“Our goal is to continue generating shareholder value even as we make strategic investments to grow our business,” Mr. Schlotman said.