Kroger Explores Strategic Alternatives For Convenience Stores

Kroger Co KR shares spiked Wednesday as management announced the exploration of strategic alternatives for the company’s 784 convenience stores.

"Our convenience stores are strong, successful and growing with the potential to grow even more," chief financial officer Mike Schlotman said in a press release during the company’s investor conference. "We want to look at all options to ensure this part of the business is meeting its full potential. Considering the current premium multiples for convenience stores, we feel it is our obligation as a management team to undertake this review."

The stores generated $4 billion in 2016 sales and posted 62 consecutive quarters of same store sales growth.

Based on rumors, Kroger may already be fielding interest for a sale. Since Oct. 3, traders have circulated chatter that Dutch retailer Koninklijke Ahold Delhaize was working on a $32-per-share bid for the entire company. In August, Kroger declined to comment on rumors that it had been approached by Costco Wholesale Corporation COST.

Consideration of a sale is meant to advance the firm’s “Restock Kroger” plan, an effort to revitalize the franchise amid sector challenges. The grocer has suffered a tough year competition-wise, having fallen about 30 percent on Amazon.com, Inc. AMZN’s acquisition of Whole Foods Market and were shaken on additional updates.

Despite its troubles, Kroger reported in-line quarterly results in September and guided for $2 to $2.05 earnings per share in 2017.

Management reaffirmed its outlook at Wednesday’s event and guided for flat or marginally higher 2018 EPS.

The investor conference will continue until 2 p.m.

At the time of publication, Kroger was trending up nearly 5 percent at a rate of $21.52.

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