Kroger to Close Automated Fulfillment Centers, Takes $2.6B Charge

Grocery giant Kroger said it will shut several of its automated fulfillment centers and record a $2.6 billion charge as it retools its e-commerce strategy. The write-down reflects a reassessment of past investments in automation and related assets that the company now considers excess to its current needs.

Kroger framed the move as part of a broader effort to sharpen capital allocation and improve long-term profitability. Executives said the decision follows a review of fulfillment economics, customer demand patterns and operational flexibility. The charge is expected to hit Kroger’s upcoming financial results and will likely be reported as an impairment and restructuring expense under GAAP.

Analysts note that many retailers built out expensive automated systems during a period of surging online grocery demand. As habits normalize and costs rise, companies are re-evaluating those bets. For Kroger, the closures may reduce near-term operating costs but also signal a pullback from full-scale automation where returns were uncertain.

The company said it will work to mitigate impacts on store operations and supply chains, and that it plans to redeploy some workers where possible. Kroger did not disclose exact timing for each closure or the total number of employees affected, but indicated that one-time costs tied to the closures are included in the $2.6 billion figure.

Investors and analysts will watch how Kroger balances capital spending between digital initiatives and core store investments going forward. The charge could weigh on short-term earnings per share, but management contends the move should free up resources for higher-return projects and improve cash flow over time.

Market reaction may hinge on disclosure detail — including what assets were impaired, the expected timing of cash outlays, and the company’s revised roadmap for fulfilling online orders. As the retail sector recalibrates its automation strategies, Kroger’s action underscores the challenges of converting technological ambition into consistent, profitable execution.