Kroger to divest ownership stake in Lucky’s Market
This story was updated at 1:06 p.m. with comments from Lucky’s Market.
NIWOT — Grocery giant Kroger Co. (NYSE: KR) will sell its ownership stake in Niwot-based Lucky’s Market, 3½ years after making a “meaningful investment” in the natural-grocery chain.
Kroger announced the divestment in its third-quarter financial report to the U.S. Securities and Exchange Commission.
“As part of a portfolio review, we made the decision to evaluate strategic alternatives in relation to our investment in Lucky’s Market,” Gary Millerchip, Kroger’s senior vice president and chief financial officer, said during an earnings conference call. “As a result of this review, the company has decided to divest its interest in Lucky’s Market and recognized an impairment charge of $238 million in the third quarter.”
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Millerchip said “the impairment charge is a non-cash charge and reflects the write down of our initial investments in Lucky’s Market as well as additional funding provided to operate and grow the business.”
The non-cash impairment charge includes $107 million attributable to the minority interest in Lucky’s.
“The amount of investment that it would take for Lucky’s to be a meaningful contributor to Kroger overall and the efforts that it would take, we just didn’t think it created a good return for the investments that we needed to be made relative to that,” W. Rodney McMullen, Kroger chairman and CEO, said during the call. “So it was really driven by narrowing our focus and the additional requirements to make it something that would be meaningful to Kroger.”
Kroger’s investment, made in 2016, enabled Lucky’s to expand from 17 locations to 39. Local expansions included a new store in downtown Fort Collins, with other locations added around the country.
Kroger reported third-quarter sales of $28 billion, up from $27.8 billion for the same period a year ago. Net income in the third quarter missed analysts’ expectations at $263 million, down from $317 million a year ago.
In a statement to BizWest, Lucky’s spokeswoman Krista Torvik said the current ownership group is currently weighing next steps.
“In the meantime, we are as committed as ever to bringing more healthful foods to more people in the communities we serve,” she said. “We remain committed to that mission on behalf of our Team Members, customers and supplier partners, and look forward to continuing to serve all of our stakeholders into the future.”
This story was updated at 1:06 p.m. with comments from Lucky’s Market.
NIWOT — Grocery giant Kroger Co. (NYSE: KR) will sell its ownership stake in Niwot-based Lucky’s Market, 3½ years after making a “meaningful investment” in the natural-grocery chain.
Kroger announced the divestment in its third-quarter financial report to the U.S. Securities and Exchange Commission.
“As part of a portfolio review, we made the decision to evaluate strategic alternatives in relation to our investment in Lucky’s Market,” Gary Millerchip, Kroger’s senior vice president and chief financial officer, said during an earnings conference call. “As a result…
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