CINCINNATI -Kroger announced Friday that they will ask for voluntary buyouts to about
2000 non-store employees, according to a media release.
The parent company of Dillon’s said that in a concession to difficulties of the current operating environment, Kroger was offering voluntary retirement buyouts. Kroger CEO Rodney McMullin said that the the announcement is in support of the company’s Customer 1st” strategy to reduce costs in areas not affecting the customer experience, such as in stores.
Because the program is voluntary, savings and cost will be based on the number of associates who accept the offer between now and early March, when the consideration periods expire, Kroger said. Expenses related to the offer will be reflected in Kroger’s first quarter 2017 results.
The effect of this buyout plan was not included in the company’s initial comments on its fiscal 2017 outlook. Bill Kirk, an analyst at RBC Capital, in a research note said the move would not likely have a material impact on Kroger, which employs some 431,000 workers in the U.S., but was indicative of the difficult operating environment. Kirk noted that if the number of employees that take the offer is lower than expected layoffs could be the next step.
The announcement comes on the heels of weakening sales at the Cincinnati based retailer, which early this month posted nonfuel comparable store sales of 0.1% in its fiscal third quarter, its lowest quarterly sales gain in 13 years.