Kroger Layoffs 2019: Hundreds Lose Jobs In Middle Management Over Restructuring Plans

Hundreds of employees, including many middle managers, are being let go at The Kroger Co., the world's largest supermarket chain.

The Ohio-based firm that employs 443,000 full-time and part-time employees worldwide said the lay-offs are "part of ongoing talent management, many store operating divisions are evaluating middle management roles and team structures with an eye toward keeping resources close to the customer.”

A spokesperson said the company's independent store divisions are all “taking steps to ensure they have the right talent in the right store leadership positions.”

Kroger didn't specify exactly how many employees it plans to fire. The unexpected firings, which might be the first in a series, follow news company executives are publicly expressing concerns about Kroger’s ability to hit profit targets amid a controversial turnaround effort dubbed “Restock Kroger."

Under this multi-million dollar initiative, Kroger is investing heavily in its online business and delivery service to better compete against Amazon, Walmart, Albertsons Companies Inc., Lidl Stiftung & Co. KG, and German discount chains, Aldi.

Kroger has also acquired Chicago-based meal kit and food company Home Chef as part of the initiative. It now owns a stake in British online supermarket Ocado Group plc (which calls itself the "the world's largest dedicated online grocery retailer") and has entered into a partnership with Nuro, a California-based robotics firm that develops autonomous delivery vehicles.

In September, CEO Rodney McMullen told analysts the company isn't reconfirming its three-year projection of $400 million in incremental operating profit tied to Restock Kroger.

McMullen's profit warning sent Kroger shares plummeting even as Kroger reported quarterly profit that easily exceeded Wall Street’s expectations. The company's stock on Wednesday fell 2.11% to $25.05, and dropped further in after hours to $25.00. Shares of Kroger are down about 9% year-to-date, according to CNBC.

The expansion into online has also boosted Kroger's labor costs, however. The company's unionized employees represented by the the United Food and Commercial Workers are also demanding a share of the profits.

“Our financial results continue to be pressured by inefficient healthcare and pension costs, which some of our competitors do not face,” said CFO Gary Millerchip in September during the company’s second quarter call.

A number of presidential hopefuls from the Democratic Party, including Sen. Bernie Sanders (I-VT) support this call.