It’s been a tough week for Kroger and Albertsons

Would-be business partners Kroger and Albertsons have both had a challenging week.

Facing lackluster results, Albertsons on Tuesday pulled its full-year guidance, with plans to conduct a business review and a full turnaround plan to be shared on its Q4 earnings call, CEO Susan Morris said on its Q2 earnings call. The grocer’s identical sales dropped 0.8% in the quarter, though e-commerce sales rose 11%.

Speaking on the earnings call, Meg Whitman, Albertsons’s new executive chair and former eBay and HP CEO, said, “Susan and I agree that everything should be on the table as we figure out how Albertsons should be structured to better compete in the years ahead.”

“Dramatic improvement is needed now,” Whitman added. Among imperative tasks Whitman listed were cutting costs and reducing prices, boosting customers’ in-store experience, and increasing traffic.

Morris noted some of Albertsons’s issues stem from “layers of complexity,” noting a need to simplify the business and narrow its focus. Interim Albertsons CFO Cody Perdue said some of the grocer’s challenges stem from financially challenged consumers facing continued inflation. Consumer prices rose 0.6% in September, the Bureau of Labor Statistics reported this week, with gas prices up 9.1% month over month.

Analysts told the Wall Street Journal that turnaround efforts could include selling off certain banners or regions, the grocer’s first potential M&A efforts since its attempt to merge with Kroger failed in 2024. And its court battle with Kroger is ongoing: According to a filing made public this week, Albertsons is seeking about $8 billion in damages from Kroger amid claims the grocer breached their merger agreement, which Kroger denied in its own pre-brief filing. The companies’ trial is set to start on October 19.

Kroger, meanwhile, is facing its own setbacks. The company announced it’ll lay off 3,000 corporate employees over the next three years as it leans further into technology. In an employee memo this week, CEO Greg Foran said the grocer needs to “adopt capabilities, reduce duplicative work, and look closely at where work is best fit to be done.” The grocer is set to hold an investor update next week.

Last month at Groceryshop, chief digital officer Yael Cosset highlighted Kroger’s strategy around AI. Speaking with Retail Brew, Cosset said he’s focused on “turning Kroger into a digital enterprise,” integrating AI into operations and customer-centric efforts like its AI shopping assistant.