A faction of the US trades union United Food and Commercial Workers (UFCW) has called for the ousting of Kroger CEO Rodney McMullen in the wake of a controversial $7.5bn stock buyback announcement.
The move follows an unsuccessful attempt to consolidate its position in the grocery market by merging with Albertsons.
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The Stop the Merger coalition, spearheaded by several UFCW local unions, contends that the substantial buyback initiative is ill-timed, arguing that the company should prioritise investments in workforce enhancement, store maintenance and renovations.
The potential $25bn merger between Kroger and Albertsons was halted in early December 2024 when a federal judge issued an injunction against the deal, citing concerns over reduced competition in the grocery market.
Following this, Albertsons initiated legal proceedings against Kroger due to recent legal setbacks as the impetus for the dissolution of the agreement.
Kroger’s fresh stock repurchase strategy includes plans to fast-track an approximate $5bn acquisition of common stock.
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By GlobalDataThe $7.5bn allocation comes on top of almost $1bn already spent on the unsuccessful merger attempt.
McMullen said: “Our strong balance sheet and free cash flows position us to deliver on our commitment to grow the business and return capital to shareholders, maintaining capacity to invest in lower prices and higher associate wages,”
The union coalition argues that this shareholder-centric move significantly overshadows Kroger’s previous commitments to lower consumer prices and enhance employee wages, which were emphasised during the merger negotiations.
The strategy appears to be a calculated effort to bolster the company’s stock value in the short term. This tactic may be interpreted as an endeavour to secure McMullen’s position as CEO.
The president of UFCW 3000 for Washington State, Faye Guenther, stated: “As the president of a union local that represents 11,700 Kroger workers, I don’t take lightly the decision to call for the replacement of the company’s CEO, but Rodney McMullen has mismanaged this company so badly there is no other way forward.
“It was under his leadership that the company decided to attack its union members by cutting staffing by double-digit percentages, it was under his leadership that the decision was made to invest in the automated Ocado warehouse boondoggle, and it was under his leadership that both companies wasted the last two years and nearly $1bn pursuing a doomed merger. It’s past time for him to go.”
A Kroger representative countered her claims, stating that the comments from UFCW local leaders currently engaged in collective bargaining agreement negotiations misrepresent the company’s actions and intentions.
The spokesperson noted that with the merger now off the table, Kroger is free to resume its share repurchase programme that had been on hold since the initial merger announcement in 2022.
