By Denny Jacob and Patrick Thomas

Kroger Chief Executive Rodney McMullen resigned from the company following a board investigation into his personal conduct, ending a more than four-decade career at the grocery chain.

Kroger, the biggest U.S. supermarket chain by sales, said Monday that while the conduct was unrelated to the company's business, it was inconsistent with its ethics policy. Lead director Ronald Sargent will serve as chairman and interim CEO while the company searches for a permanent replacement for McMullen.

"I plan to be a steady, but active hand in the execution of our strategy, " said Sargent, who has been on Kroger's board since 2006 and lead director since 2017. He previously held corporate roles at Kroger and served as CEO of office supplies retailer Staples.

McMullen's ouster follows Kroger's failed $20 billion takeover of smaller rival Albertsons, which aimed to unite the two largest pure-play supermarket operators in the biggest grocery deal ever. The deal was blocked by a federal judge in Oregon in December.

The Cincinnati-based company said Monday its board was made aware of certain personal conduct by McMullen, who also served as chairman, on Feb. 21 and immediately retained outside independent counsel to conduct an investigation, which was overseen by a special board committee.

McMullen's conduct wasn't related to Kroger's financial performance, operations or reporting, and didn't involve any Kroger associates, said the company. Efforts to reach McMullen weren't immediately successful.

Kroger shares declined 2% in premarket trading.

McMullen's ouster comes days before Kroger is scheduled to announce its fourth-quarter results. The company said it expects two key measures -- identical sales without fuel and adjusted per-share earnings -- to be at the high end of its prior outlook.

McMullen grew up in Kroger's backyard as a farm-raised Kentuckian who joined the company as a part-time stock clerk in 1978. He earned a master's degree in accounting and spent years climbing Kroger's ranks. He had served as CEO since 2014 and was named chairman in 2015.

McMullen carefully studied the grocery industry, and has been known to peruse the aisles of his stores and those of rivals as he expanded Kroger, seeking to build leverage with suppliers and cut costs.

Early in his tenure as Kroger's CEO, McMullen spent about $200 million to acquire chains such as Roundy's and Pick N' Save in Wisconsin and Mariano's in Chicago, expanding Kroger's Midwest footprint. He described Amazon.com's takeover of Whole Foods as a watershed moment for the industry and one that helped inspire Kroger's attempted takeover of Albertsons.

In 2022, he launched an effort to acquire Albertsons, a deal he said would secure the chains' future to better compete with retail giants including Walmart and Amazon. The Biden administration argued the deal would remove Kroger's largest competitor and lead to higher prices for grocery shoppers.

The Federal Trade Commission sued to block the deal, taking the companies to trial and winning a ruling from an Oregon federal judge to halt the merger. The companies dropped the deal shortly after. Albertsons has since sued Kroger, saying the grocer didn't do enough to win regulatory approval for their deal.

Kroger has said that it's focused on its future without Albertsons by keeping costs low as it works to gain market share. Analysts have said the supermarket chain could try to acquire smaller, more regional grocers over the next year.

The company's upcoming earnings results will be watched for any signs of slowing growth or changes in consumer spending patterns amid higher prices for eggs and other groceries.

McMullen's resignation is the latest change to Kroger's C-suite in the past few months. The company in February hired veteran PepsiCo executive David Kennerley as its next chief financial officer. Stuart Aitken, Kroger's chief merchandising and marketing officer and one of its top executives departed the company last November.

Write to Denny Jacob at denny.jacob@wsj.com and Patrick Thomas at patrick.thomas@wsj.com

(END) Dow Jones Newswires

March 03, 2025 09:26 ET (14:26 GMT)

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