“Lucky’s approach is very much aligned with our efforts to provide affordable, fresh, organic and natural foods as part of our customer-first strategy. We expect to learn a lot from each other,” Kroger CEO Rodney McMullen said at the time.
With Kroger’s backing, Lucky’s expanded in Florida. But that expansion, and increased competition from chains like Sprouts, Fresh Thyme and Earth Fare, proved to be untenable.
“The portfolio of company stores was unable to achieve sustainable four-wall profitability,” Lucky’s said in its bankruptcy filing.
In its latest fiscal year ending in early January, the company had an approximately $100 million net loss and a 10.6% drop in sales at stores open for at least year.
In December, Kroger announced it would divest from the chain.
“The amount of investment that it would take for Lucky’s to be a meaningful contributor to Kroger overall and the efforts that it would take, we just didn’t think it created a good return for the investments that were needed to be made,” CEO McMullen told analysts.
Lucky’s has around 3,100 employees, most of whom are hourly workers.
Scott Mushkin, chief executive of R5 Capital, said that Whole Foods’ moves to drive down produce prices was pressuring rival organic chains. Lucky’s has also increased its food service offering, which involves a costlier labor model.
— CNN Business’ Alicia Wallace contributed to this article.
Source : CNN