Nobody envisioned an attempted post-merger scenario like this. On March 3, veteran Kroger CEO Rodney McMullen was forced to resign as the top executive of the country’s largest pure-play supermarket retailer after it was disclosed he had breached the company’s personal conduct standards.
Later that same day, Albertsons announced that its CEO Vivek Sankaran would voluntarily step down from his post on May 1. Company EVP and COO Susan Morris has been named to replace Sankaran who had helmed the Albertsons ship since 2019.
While Sankaran’s departure was expected, McMullen’s certainly was not. He had been Kroger’s top executive since 2015. Kroger was the only company he had ever worked for, starting in the stores in 1978.
While the Cincinnati-based retailer would not specify what led to his quick exit, here’s what Kroger released early on March 3: “Rodney McMullen has resigned from the company following a board investigation of his personal conduct that, while unrelated to the business, was inconsistent with Kroger’s policy on business ethics. The board has appointed lead director Ronald Sargent to serve as chairman of the board of directors and interim CEO, effective immediately. The board also announced that Mark Sutton will serve as Kroger’s lead independent director.”
On February 21, the board was made aware of certain personal conduct by McMullen and immediately retained outside independent counsel to conduct an investigation, which was overseen by a special board committee. McMullen’s conduct is not related to the company’s financial performance, operations or reporting, and it did not involve any Kroger associates. The board of directors has formed a search committee and engaged a nationally recognized firm to conduct a search for Kroger’s next CEO. Sargent has agreed to serve in his role until the appointment of the next CEO.
“As interim CEO, I am committed to working alongside our proven and experienced management team and dedicated associates to ensure Kroger continues providing exceptional value for our customers,” said Sargent. “Kroger has been a special place throughout my retail career after spending summers in college working in stores, as well as my first ten years after business school at corporate headquarters, before more recently serving as lead independent director. My decades here have given me a full appreciation of what makes Kroger unique, and I am excited to work even more closely with this talented team. I plan to be a steady, but active hand in the execution of our strategy.”
Sargent has been a Kroger director since 2006 and has served as the lead director of Kroger since 2017. He spent the first 10 years of his professional career at Kroger, working in several roles across stores, sales, marketing, manufacturing and strategy. Sargent is a veteran retail operator and leader with 35 years of experience, including as the chairman and CEO of Staples, Inc. from 2002 to 2016 after joining the company in 1989. He currently serves on the board of Wells Fargo & Company, where he is chair of the human resources committee, and the board of Five Below, Inc. In connection with his new role, Mr. Sargent will step down from his service on the audit committee, the corporate governance committee and the public responsibilities committee.
“Over the years, Ron has played an integral role in the development and approval of Kroger’s strategy, which has led us to the position of strength where we are today,” said Mark Sutton, Kroger’s newly appointed lead independent director.
“Kroger will continue to deliver for our customers, invest in our associates, strengthen our communities, and reward our shareholders under Ron’s leadership.”
At Albertsons, Sankaran’s departure was no surprise – most trade observers believed he’d step down whether the merger was approved or denied, as it was on December 10.
The timing of his departure was in question and now we have learned Morris will take control of the large retailer in less than 60 days.
During the transition period, Morris will work closely with Sankaran to continue execution of the company’s “Customers for Life” strategy. On the effective date, Morris will join the Albertsons Cos. board of directors, replacing Sankaran.
Veteran retail executive Jim Donald, who served as the chain’s CEO from 2017-2019 and is now chair of the Albertsons Cos. board of directors, said, “Over the past several years, the board has engaged in a thoughtful and comprehensive succession planning process to identify Albertsons Cos.’ next CEO, including evaluating internal and external candidates. The board is confident that Susan is the ideal person to lead the company into its next chapter of growth. With a nearly 40-year career at the company that began at an Albertsons store in the Denver market, Susan brings unmatched expertise and deep knowledge of the business. She is highly respected across the organization and industry, with a strong track record of operational success and passion for serving our customers and communities.”
“At a time of profound change for the grocery industry, I am honored to be appointed as the next CEO of Albertsons Cos.,” said Morris. “I have worked closely with Vivek and the leadership team on our plans to accelerate growth and am confident that we are on the right path with our ‘Customers for Life’ strategy. I look forward to participating in the fiscal Q4 earnings call where we will discuss our strategy and provide our fiscal 2025 outlook. Albertsons Cos. has an incredibly bright future and the best team in the business – I am energized about the many opportunities that lie ahead.”
Donald added, “On behalf of the board, we are grateful for Vivek’s exceptional leadership over the past six years, successfully managing Albertsons Cos.’ response to the COVID-19 pandemic and navigating the company through challenging industry dynamics. During the past two years, he led continued investment in the business and drove our ‘Customers for Life’ strategy, positioning Albertsons Cos. on strong financial footing for its next chapter of growth. We are grateful for his continued commitment to the company during this transition period and his mentorship of and collaboration with Susan.”
“It has been a privilege to lead Albertsons Cos. through a critical period of evolution and I couldn’t be more confident in the company’s future with Susan at the helm,” said Sankaran. “Susan embodies the best of Albertsons Cos.’ culture, with a strong track record of leading and building high performance teams. I have no doubt in her ability to usher in a new phase of growth and improve our value proposition with customers and the communities where we operate.”
Morris has served as the company’s executive VP and chief operations officer since January 2018. In this role, she leads the company’s retail operations, overseeing more than 2,200 stores across 34 states.
She has nearly 40 years of experience in the retail grocery industry and has held a variety of leadership roles across Albertsons. Her experience includes serving as executive VP-regional operations; division president in two markets; and various other roles across merchandising and operations. She began her retail career at an Albertsons store in the Denver market.
She also serves on the board of directors of IDACORP Inc and the Food Marketing Institute. Morris is a graduate of Colorado State University.