Kroger bites into meal kit market with Home Chef merger
Kroger to make Home Chef meal kits available in stores and online
CINCINNATI and CHICAGO — Kroger is looking redefine the grocery customer experience and revolutionize mealtime through a merger agreement with meal kit company Home Chef.
The initial transaction price is $200 million and future earn-out payments of up to $500 million over five years are contingent on achieving certain milestones, including significant growth of in-store and online meal kit sales. The deal is expected to close in the second quarter, following the satisfaction of customary closing conditions, including regulatory approval.
The pending merger comes on the heels of Home Chef’s 150 percent growth in 2017, $250 million in revenue, and two profitable quarters.
“Customers want convenience, simplicity and a personalized food experience. Bringing Home Chef’s innovative and exciting products and services to Kroger’s customers will help make meal planning even easier and mealtime more delicious,” said Yael Cosset, Kroger’s chief digital officer. “This merger will introduce Kroger’s 60 million shoppers to Home Chef, enhance our ship-to-home and subscription capabilities, and contribute to Restock Kroger.”
Chicago-based Home Chef employs approximately 1,000 employees and operates three distribution centers in Chicago, Atlanta and San Bernardino, Calif. Home Chef’s distribution centers reach 98 percent of all continental U.S. households within a two-day delivery window.
After the deal closes, Home Chef will operate as a subsidiary of Kroger. It will maintain its e-commerce business on homechef.com and will assume responsibility for Kroger’s meal solutions portfolio. The company will continue to operate its offices and facilities.
Following closing, Kroger will make Home Chef meal kits available to Kroger shoppers, both in stores and online.
Kroger expects the transaction to have no effect on 2018 earnings, and to be slightly accretive in 2019.
Giant Food returns as title sponsor of major summer festival
WASHINGTON — For the third consecutive year, grocer Giant Food will be the title sponsor of the annual Giant National Capital Barbecue Battle to be held in June in Washington D.C.
The summer festival benefits the USO of Metropolitan Washington-Baltimore and Capital Area Food Bank and is one of the largest food and music festivals in the country, welcoming more than 100,000 fans annually. This year’s event is scheduled for June 23 and 24.
Located at the National Mall on Pennsylvania Avenue, attendees will enjoy live music, barbecue food, cooking demonstrations and competitions, celebrity appearances, and a variety of unique exhibits and special attractions.
“We are thrilled to be returning as the title sponsor for this year’s Annual Giant National Capital Barbecue Battle,” said Gordon Reid, president of Giant Food. “Our local communities and barbecue fans from all over look forward to this annual celebration to kick-off summer and we anticipate another successful weekend that will help raise money for USO-Metro and supply plenty of food to the Capital Area Food Bank.”
All Giant Food stores are offering a buy one, get one free admission coupon.
Target’s revenue, digital sales rise in Q1 results
A strong quarterly traffic gain was not enough for Target, whose profit missed Street expectations amid a late spring and higher costs.
The discounter’s net income rose 5.9% to $718 million, or $1.34 a share. On an adjusted basis, it earned $1.32 a share, below expectations of $1.39 a share.
Revenue rose 4.75% to $16.782 billion, topping analysts’ forecasts of $16.5 billion. Digital sales increased 28%, on top of 21% growth in the year-ago period.
Same-store sales rose 3%. Traffic increased 3.7%, its strongest quarterly performance in more than 10 years.
“We’re very pleased that our business continued to generate strong traffic and sales growth in the first quarter, as we made significant progress in support of our long-term strategic initiatives,” said Brian Cornell, chairman and CEO of Target.
Target experienced strong sales growth in its home, essentials and food & beverage categories. But a late spring took a toll on temperature-sensitive categories, but sales have “accelerated rapidly in recent weeks as the weather improved across the country,” Cornell said.
In the first quarter, Target completed 56 remodels and opened seven new stores. It also debuted three new brands, expanded its Restock initiative nationwide, launched its new Drive-Up service in more than 250 locations, and rolled out same-day delivery from more than 700 stores, enabled by its recent acquisition of Shipt.
Neil Saunders, managing director of GlobalData Retail, commented that stores contributed 1.9 percentage points of growth to Target’s same-store sales growth, making them the lead driver of the retailer’s success.
“In our view, this completely justifies Target’s decision to focus on and invest in stores – a step that was criticized by some at the time it was announced,” he said,
“There is no doubt that investing in stores was an expensive decision, but we believe….it was the right move to make.” For more, click here.
Target reaffirmed its earlier stated expectations for 2018, which anticipate comparable sales growing at a low-single-digit rate and adjusted earnings per share between $5.15 to $5.45.