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US supermarket chain Kroger said that chief executive and chair Rodney McMullen had stepped down after a board investigation found his personal conduct was “inconsistent” with its policy on business ethics.
In a statement on Monday, the company said McMullen’s conduct was not related to the chain’s financial performance or operations, but did not give any details.
Kroger is the largest US supermarket chain, with $150bn in revenue. But the Cincinnati-based company has in recent years confronted intensifying competition in food retail from big-box retailers such as Walmart and Costco as well as discount chains including Aldi. Last year Kroger captured 9.1 per cent of US grocery sales, compared with 20.9 per cent at Walmart, according to Numerator, a market research firm.
To survive competitive pressures, Kroger sought to merge with rival supermarket operator Albertsons. The deal was blocked on antitrust grounds last year.
Kroger said its board had been made aware on February 21 of “certain personal conduct” by McMullen and had “immediately retained outside independent counsel to conduct an investigation”.
It said the conduct was not related to Kroger’s “financial performance, operations or reporting, and it did not involve any Kroger associates”.
Ronald Sargent, Kroger’s lead independent director, will replace McMullen as chair and interim chief executive immediately, the company added. It said it had hired a headhunter to find a permanent replacement as chief executive.
Sargent said: “As interim CEO, I am committed to working alongside our proven and experienced management team and dedicated associates to ensure Kroger continues providing exceptional value for our customers.”
McMullen’s departure marks a significant shake-up this year for Kroger’s top leadership. The company last month announced that interim chief financial officer Todd Foley will step down in April, to be replaced by PepsiCo Europe CFO David Kennerley.
Albertsons sued Kroger in December after their proposed $25bn merger was blocked by two separate US judges. The deal would have been the biggest supermarket merger in US history, creating a behemoth with 5,000 stores across 48 US states. Albertsons alleged that Kruger had not made enough effort to secure regulatory approval.
Kroger said on Monday that it expected full-year sales “at the high end of its guidance range” and that adjusted earnings per share would be slightly above guidance. It will report fourth-quarter and full-year results on March 6.
Shares of Kroger were down 1.4 per cent shortly after Wall Street’s opening bell on Monday.
McMullen, 64, has served as Kroger’s CEO since 2014 and added the chair title a year later. A ‘lifer’ of 47 years, he began working at the company as a shelf stacker while in college. Kroger paid him $15.7mn in the company’s 2023 fiscal year, according to Kroger’s latest proxy statement.
Kroger said on Monday that McMullen would forfeit all unvested stock awards outstanding under a long-term incentive plan and will not be eligible for a bonus from the latest fiscal year.
