Good morning. Fortune 500 companies are increasingly hiring external talent for CFO roles.
One of the latest such moves is Kroger Co. hiring PepsiCo's David Kennerley as its new finance chief. Supermarket giant Kroger announced on Wednesday that Kennerley will officially begin as CFO on April 3. But he will join Kroger on March 10 as senior vice president, while interim CFO Todd Foley continues through the end of Kroger's fiscal year 2024 reporting cycle. Former CFO Gary Millerchip left the company about a year ago to join Costco as finance chief.
In a statement, Kennerley cited the opportunities he had at PepsiCo over the last 24 years as "instrumental in paving the way for my new role as the CFO of Kroger."
Kennerley joined PepsiCo in 2001 and has served as senior vice president and CFO for PepsiCo Europe since March 2020. Over the years, Kennerley held roles such as senior finance director of its Global Beverages Group, and leadership roles in the North American business.
Staying competitive
Kroger Co., No. 25 in the Fortune 500, operates thousands of U.S. supermarkets, under brands including Kroger, Ralphs, and Fred Meyer. In addition to more than 2,700 grocery stores, the company has thousands of fuel centers and pharmacies and, as of 2024, employs more than 412,000 associates across the U.S.
As incoming CFO, Kennerley will need to focus on areas that could weigh on the profits in the future, like intense competition, according to Noah Rohr, an equity research analyst at Morningstar. “We've seen competition within the supermarket sector heat up over the last couple of years,” he told me.
“Some of Kroger’s lower-priced peers, like Walmart, and Costco are doing really well,” Rohr explained. Traditional supermarkets like Kroger or Albertsons continue to compete with mass merchandise and warehouse club channels, he said.
In 2022, Kroger announced it would pay $24.6 billion for Albertsons in a proposed merger. It was set to be the largest grocery store merger in U.S. history. But in December, courts blocked the deal siding with the U.S. Federal Trade Commission’s argument the merger would lead to higher prices for shoppers. Albertsons then sued Kroger alleging a breach of contract that caused the deal's demise.
Kroger sources many of its foods from the U.S., compared to some of its big retail competitors, Rohr said. In Q3 2024, Kroger beat same-store sales expectations due to a surge in customer demand for its lower-priced and freshly sourced groceries at stores and online.
Proposed tariffs against countries like Mexico may not have a direct impact on Kroger, Rohr said. However, there could be a “knockdown effect” when consumers in general “feel the effects of tariffs in other areas, like electronics or auto parts, and therefore they become more value-conscious at the grocery level,” he said.
Rodney McMullen, Kroger's chairman and CEO, noted Kennerley's qualities as he has “deep experience leading a broad-cross section of U.S. and international finance teams,” he said in a statement. In other words, a strategic CFO hire.
You can read about more of the latest Fortune 500 Power Moves here.
