2024-05-24 02:28:43 ET
Summary
- Kroger's stock broke upward after strong Q1 earnings, but has faced difficulties gaining FTC approval for its merger with Albertsons.
- The company plans to sell 579 stores to C&S Wholesalers for $2.9B in cash to appease the FTC, but it is unclear if this will be sufficient.
- With KR looking to sell stores that might gain a market advantage and promising not to close supply chain centers, it is unclear if the company's profit margins will rise.
- Food and gasoline commodities may be breaking to the upside, creating costs that Kroger may be unable to entirely pass on to its customers.
- I believe the Company may decline over the coming year as cost pressures rebound, and it faces potential downside from its merger efforts.
After years of stagnation, Kroger ( KR ) broke upward to retouch its 2022 highs following its strong Q1 earnings report. Since then, the stock has not moved much, with some declines following its difficulties with gaining FTC approval to merge with Albertsons ( ACI ). To appease the FTC, the company is looking to sell 579 stores to C&S Wholesalers for $2.9B in cash, expanding the terms of its previous deal. It is unclear if this will be sufficient as the FTC has been unable to gain documents regarding the specifics of its plan....
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Kroger: Downside Risk Mounts As Merger Poses Lose-Lose Scenario