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Kroger (KR) & Albertsons to Sell Stores & Other Assets to C&S
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The Kroger Co. (KR - Free Report) and Albertsons Companies Inc. (ACI - Free Report) recently entered into a deal with C&S Wholesale Grocers, LLC, to divest more than 400 stores and other assets in relation to the $24.6 billion proposed merger agreement. This divestiture deal marks an important step toward completing the planned merger.
Kroger’s shares increased by 3.1% yesterday, eventually closing the trading session at $46.94.
Inside the Headlines
In October 2022, Kroger and Albertsons formed an agreement to merge their businesses. The merger deal, which is likely to close in early 2024, will help the combined entity to firm its position in the competitive grocery space. The combined entity would benefit from a loyal customer base, digital investments, increased purchasing power and a broader product portfolio. The transaction is likely to boost Kroger’s strategy of Leading with Fresh, Accelerating with Digital, thus enabling the new organization to support its go-to-market strategy comprising Fresh, Our Brands, Personalization and Seamless.
The divestiture deal is in sync with the commitments made by Kroger and Albertsons in the merger agreement. The divestiture will help extend a competitor to new geographies through the sale of stores to a well-recognized buyer in the wholesale and grocery space. It will also ensure that there will be no store closures as a consequence of the Kroger-Albertsons merger and all frontline associates will remain under the service.
The divestiture will involve 413 stores, 8 distribution centers, 2 offices and 5 private label brands across seventeen U.S. states and the Columbia district. The deal will also involve Kroger divesting the Debi Lilly Design, ReadyMeals, Primo Taglio, Open Nature and Waterfront Bistro private label brands. It will also include the selling of QFC, Mariano's and Carrs brand names.
As noted, the deal will include the divestiture of 104 and 66 stores in Washington and California, respectively. In Colorado, 52 Albertsons stores and in Oregon, 49 Albertsons and Kroger stores will be divested. Other stores included in the divestiture agreement are located in several states, including Arizona, Nevada, Texas, Illinois and others.
With regard to the divestiture, Kroger will receive about $1.9 billion in cash from C&S, subject to the receipt of necessary regulatory clearance, other customary closing conditions and the completion of the Kroger-Albertsons merger.
Kroger may also require C&S to acquire up to another 237 stores in certain geographies to secure FTC and other governmental clearance related to the proposed merger. If these stores are acquired, Kroger will receive an additional cash consideration from C&S.
What’s More?
Separately, Kroger also announced its second-quarter fiscal 2023 results, wherein the top line missed the Zacks Consensus Estimate but the bottom line beat the same. In the quarter, Kroger posted adjusted earnings of 96 cents per share, which surpassed the Zacks Consensus Estimate of 92 cents and increased from 90 cents reported in the prior-year quarter. Including a $1.4 billion charge related to a nationwide opioid settlement framework, the company reported a loss of 25 cents per share.
Total sales of $33,853 million fell short of the Zacks Consensus Estimate of $34,251 million. The metric declined from the $34,638 million reported in the year-ago period. Excluding fuel, sales rose 1.1% from the year-ago period.
Image Source: Zacks Investment Research
The Zacks Rank #3 (Hold) company’s shares have gained by 1.2% compared with the 5.6% growth recorded by the industry in the past three months.
Key Picks
Here we have highlighted two better-ranked stocks, namely Ross Stores (ROST - Free Report) and Walmart (WMT - Free Report) .
Its expected EPS growth rate for three to five years is 11.6%. The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and earnings suggests growth of 7% and 19.4%, respectively, from the year-ago reported numbers. ROST has a trailing four-quarter earnings surprise of 11.4%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 6.6%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings suggests growth of 5% and 2.1%, respectively, from the year-ago reported numbers. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.
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Kroger (KR) & Albertsons to Sell Stores & Other Assets to C&S
The Kroger Co. (KR - Free Report) and Albertsons Companies Inc. (ACI - Free Report) recently entered into a deal with C&S Wholesale Grocers, LLC, to divest more than 400 stores and other assets in relation to the $24.6 billion proposed merger agreement. This divestiture deal marks an important step toward completing the planned merger.
Kroger’s shares increased by 3.1% yesterday, eventually closing the trading session at $46.94.
Inside the Headlines
In October 2022, Kroger and Albertsons formed an agreement to merge their businesses. The merger deal, which is likely to close in early 2024, will help the combined entity to firm its position in the competitive grocery space. The combined entity would benefit from a loyal customer base, digital investments, increased purchasing power and a broader product portfolio. The transaction is likely to boost Kroger’s strategy of Leading with Fresh, Accelerating with Digital, thus enabling the new organization to support its go-to-market strategy comprising Fresh, Our Brands, Personalization and Seamless.
The divestiture deal is in sync with the commitments made by Kroger and Albertsons in the merger agreement. The divestiture will help extend a competitor to new geographies through the sale of stores to a well-recognized buyer in the wholesale and grocery space. It will also ensure that there will be no store closures as a consequence of the Kroger-Albertsons merger and all frontline associates will remain under the service.
The divestiture will involve 413 stores, 8 distribution centers, 2 offices and 5 private label brands across seventeen U.S. states and the Columbia district. The deal will also involve Kroger divesting the Debi Lilly Design, ReadyMeals, Primo Taglio, Open Nature and Waterfront Bistro private label brands. It will also include the selling of QFC, Mariano's and Carrs brand names.
As noted, the deal will include the divestiture of 104 and 66 stores in Washington and California, respectively. In Colorado, 52 Albertsons stores and in Oregon, 49 Albertsons and Kroger stores will be divested. Other stores included in the divestiture agreement are located in several states, including Arizona, Nevada, Texas, Illinois and others.
With regard to the divestiture, Kroger will receive about $1.9 billion in cash from C&S, subject to the receipt of necessary regulatory clearance, other customary closing conditions and the completion of the Kroger-Albertsons merger.
Kroger may also require C&S to acquire up to another 237 stores in certain geographies to secure FTC and other governmental clearance related to the proposed merger. If these stores are acquired, Kroger will receive an additional cash consideration from C&S.
What’s More?
Separately, Kroger also announced its second-quarter fiscal 2023 results, wherein the top line missed the Zacks Consensus Estimate but the bottom line beat the same. In the quarter, Kroger posted adjusted earnings of 96 cents per share, which surpassed the Zacks Consensus Estimate of 92 cents and increased from 90 cents reported in the prior-year quarter. Including a $1.4 billion charge related to a nationwide opioid settlement framework, the company reported a loss of 25 cents per share.
Total sales of $33,853 million fell short of the Zacks Consensus Estimate of $34,251 million. The metric declined from the $34,638 million reported in the year-ago period. Excluding fuel, sales rose 1.1% from the year-ago period.
Image Source: Zacks Investment Research
The Zacks Rank #3 (Hold) company’s shares have gained by 1.2% compared with the 5.6% growth recorded by the industry in the past three months.
Key Picks
Here we have highlighted two better-ranked stocks, namely Ross Stores (ROST - Free Report) and Walmart (WMT - Free Report) .
Ross Stores, which operates off-price retail apparel and home fashion stores, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Its expected EPS growth rate for three to five years is 11.6%. The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and earnings suggests growth of 7% and 19.4%, respectively, from the year-ago reported numbers. ROST has a trailing four-quarter earnings surprise of 11.4%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 6.6%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings suggests growth of 5% and 2.1%, respectively, from the year-ago reported numbers. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.