Why Kroger Stock Dropped Today
Key Points
Kroger CEO Greg Foran plans to implement "big price cuts" on thousands of items in his stores.
The company wants to compete on price against rivals such as Walmart and Costco.
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The Kroger Co. (NYSE: KR) stock took a tumble Thursday, falling 2.6% through 11:35 a.m. ET after Bloomberg reported that new CEO Greg Foran plans to implement "big price cuts" to better compete with rivals both public -- Walmart (NYSE: WMT), Costco Wholesale (Nasdaq: COST), and Amazon.com (Nasdaq: AMZN) -- and private -- Trader Joe's and Aldi.
In a shocking revelation, Foran pointed out that shoppers appear to prefer stores with lower prices rather than more expensive ones!
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Details, please
Meeting the consumer where she's at, therefore, Bloomberg reports that Kroger will cut prices "across product categories," with "thousands" of products dropping in price. The CEO is also hoping to encourage his store employees to work faster and be friendlier, reports the news agency.
Rounding out the array of changes, he says Kroger will accelerate new store openings, doubling the 2026 rate to add 70 to 80 new stores in 2027.
What does this mean for Kroger stock?
Although the changes sound mundane, there's nothing in any of the above that should frighten Kroger investors today... except for the fact that lower prices imply less revenue and less profit as well. Ideally, Kroger will "make it up on volume," as the saying goes -- however, there's a reason why that saying is more of a joke than a rule of law in retail.
Foran did outline vague plans to cut costs by "importing merchandise directly and using technology more effectively" to offset the price cuts he plans. Both those ideas imply investments that will themselves cost money, however -- in rerouting distribution channels, for example, and in paying for artificial intelligence services to optimize operations.
Don't expect Kroger investors to give Foran much credit for this plan till they get more specifics -- and see it in action.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Walmart. The Motley Fool recommends Kroger. The Motley Fool has a disclosure policy.
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