Kroger to Invest in Store Base

The Kroger Co. (Cincinnati) released a long-term strategy for enhanced growth at its investor conference in New York this week. Among the highlights, the grocery chain says it will invest in a targeted expansion strategy to increase square footage and store penetration in existing markets and enter new markets.

To support its growth strategy, Kroger expects to increase capital spending by an incremental $200 million annually and increase return on invested capital. The company says it sees significant opportunities across the broad food retailing market, including discount stores, drug stores, restaurants and others.

“Our proven strategy and market position provide a tremendous platform to accelerate growth and increase value creation for Kroger shareholders,” says David Dillon, Kroger's chairman and ceo. “We are confident that Kroger's unmatched knowledge of the customer and disciplined approach to deploying capital will drive growth at attractive levels of return. We will continue to use our strong free cash flow to deliver shareholder value through actions such as our recent 30 percent dividend increase and the continuation of our substantial share repurchase program.”

Kroger says it will also pursue other growth initiatives, including new customer channels, such as enhanced digital and mobile platforms, and new store formats. The company is testing new formats to provide greater access and shopping flexibility to customers.

Kroger operates 2425 supermarkets and multi-department stores in 31 states under two dozen local banner names, including Kroger, City Market, Dillons, Jay C, Food 4 Less, Fred Meyer, Fry's, King Soopers, QFC, Ralphs and Smith's. The company also operates 788 convenience stores, 342 fine jewelry stores, 1124 supermarket fuel centers and 37 food processing plants in the U.S.