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Investing.com -- Kroger Co . (NYSE: NYSE:KR) stock fell 1% following the announcement that the company’s Chairman and Chief Executive Officer Rodney McMullen has resigned due to a violation of the company’s ethics policy. The resignation comes after a Board investigation into McMullen’s personal conduct that did not relate to Kroger’s business operations or financial reporting.
The Board has named Ronald "Ron" Sargent as the interim CEO and Chairman, with Mark Sutton taking on the role of lead independent director. The Board’s inquiry, initiated on February 21 upon learning of McMullen’s conduct, was conducted by outside independent counsel and overseen by a special committee. The investigation concluded that the conduct in question did not involve other Kroger associates or affect the company’s performance or operations.
Despite the leadership upheaval, Kroger anticipates its full-year Identical Sales without fuel to be at the high end of its guidance range, with full-year Adjusted Earnings Per Share expected to be slightly above the high end of its guidance range. The company will release its fourth quarter and full-year 2024 results and provide full-year 2025 guidance during its earnings call on March 6, 2025.
Ron Sargent, a Kroger board member since 2006 and lead director since 2017, expressed his commitment to maintaining the company’s strategic direction and value to customers. Sargent, a retail veteran with a long history at Kroger and past leadership as Chairman and CEO of Staples, Inc., plans to be an active interim CEO. His appointment has reassured some stakeholders, as Mark Sutton highlighted Sargent’s integral role in Kroger’s strategic development.
The departure of a CEO under such circumstances often raises concerns among investors regarding governance and stability. However, the swift appointment of an experienced interim CEO and the positive financial outlook provided by Kroger may help to mitigate these concerns in the short term. The search for a new CEO is underway, with a nationally recognized firm engaged to find McMullen’s successor.
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