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Kroger CEO David Dillon told an investor conference Tuesday that the retailer would be aggressive in its future growth strategy, willing to invest in increased square footage and store penetration in existing markets, as well as entering new markets.
The company said it would increase capital spending by an incremental $200 million annually to support the strategy, and it approved a $500 million share buyback program.
"Our proven strategy and market position provide a tremendous platform to accelerate growth and increase value creation for Kroger shareholders," Dillon told the audience, according to a news release from Kroger. "We are confident that Kroger's unmatched knowledge of the customer and disciplined approach to deploying capital will drive growth at attractive levels of return. We will continue to use our strong free cash flow to deliver shareholder value through actions such as our recent 30 percent dividend increase and the continuation of our substantial share repurchase program."
Kroger raised its long-term earnings outlook from 6-8 percent growth to 8-11 percent growth, on top of its current 2.5 percent dividend.
The company will selectively expand its current store base, the release said, but will also find other ways to drive growth, including enhancing its digital and mobile platforms, and testing new store formats (to provide greater access and shopping flexibility to customers.”
Kroger recently opened a Marketplace store in Ohio where it was testing out apparel sales in addition to grocery.
"Selling food and clothing proved to be successful in Portland, Oregon," Kroger spokeswoman Jackie Siekmann told the Mansfield News Journal. “We are testing the concept to see if it will fare well here in the Midwest.”