Kroger CEO Rodney McMullen said Thursday the company's heavy investment in digital shopping initiatives have poised it for future growth and helped it meet unprecedented customer demand during the coronavirus pandemic this spring.
"We are more convinced than ever that we made the right decision to transform our business model when we did," McMullen said, speaking to the grocer's shareholders during its annual meeting (which was telecast-only this year due to the pandemic).
The company also announced its 14th straight annual increase in its dividend payment at the meeting.
Kroger's stock price has been hammered in recent years after Amazon suddenly became a direct competitor with its 2017 takeover of Whole Foods and the Cincinnati-based grocer's big push into digital shopping that sucked up cash and squeezed profit margins.
Since then Kroger has enabled more than 2,000 Pickup locations and 2,400 delivery locations that can service 97% of its customers.
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Last week, Kroger reported its digital sales nearly doubled during the first quarter of 2020 as shoppers clicked online to buy groceries amid nationwide business shutdowns and stay-at-home orders in the first months of the pandemic outbreak.
Industry experts believe the pandemic has sped up America's embrace of digital grocery shopping.
The trick for Kroger and other grocers will be sustaining most of the digital surge.
McMullen said it takes roughly three to four years for new digital customers to do enough business with Kroger to become truly profitable, but he noted the company is determined to draw them in. He added that digital customers also typically visit stores in person.
McMullen told Kroger shareholders the company's digital and delivery capabilities will further expand as the first of its robotic delivery hubs – including one being constructed in Monroe – become operational next year.
In other company business, Kroger announced Thursday it was boosting its quarterly dividend by 12.5% from 16 to 18 cents per share. The next quarterly payment will be made Sept. 1 to shareholders of record as of Aug. 14.
Besides Kroger stores, the grocer operates several regional supermarket chains in 35 states, including Fred Meyer, Harris Teeter, Ralphs, Mariano's, Fry's, Smith's, King Soopers, QFC and others. The company has nearly 2,800 stores and employs 540,000 workers.
For the latest on Kroger, P&>, Fifth Third Bank and Cincinnati business, follow @alexcoolidge on Twitter.
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Kroger CEO: Company's heavy tech investments vindicated. 'We made the right decision.' - The Cincinnati Enquirer
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