Kroger Company (NYSE:KR), a major player in the American retail sector, officially announced the divestiture of its online wellness division, Vitacost.com, transferring ownership to digital health retailer iHerb. The deal officially closed on January 8 following an extensive evaluation period focused on reviewing non-core assets within Kroger’s diverse portfolio.
This strategic divestiture forms part of Kroger’s larger initiative to refine its business operations, underscoring a shift toward concentrating on grocery retailing, its foundational segment. By shedding Vitacost, the company intends to enhance its operational focus, streamline resource allocation, and improve customer interactions predominantly within its principal food retail business.
Ron Sargent, Kroger’s chairman and chief executive officer, emphasized that the move is an integral aspect of the company’s effort to reassess the role and contribution of peripheral business lines. “As previously communicated, we are thoroughly examining all non-core assets to determine their relevancy relative to our organizational goals. Our priorities include simplifying Kroger’s structure, elevating the customer experience, and reinforcing our core grocery business,” Sargent commented.
The company’s financial strategy post-divestment revolves around channeling investments toward innovations within its food retail operations, such as supply chain advancements and upgrading in-store customer engagement capabilities. No financial terms of the sale were disclosed, and Kroger reaffirmed that the transaction will not affect its fiscal year 2025 outlook.
On the receiving end, iHerb hailed the acquisition as a significant augmentation of its footprint in the health and nutrition e-commerce sector. Emun Zabihi, iHerb’s chief executive officer, described the acquisition of Vitacost as an astute strategic investment, noting that Vitacost’s long-standing reputation for quality, value, and consumer trust aligns well with iHerb’s mission and global operations.
Zabihi underscored that integrating Vitacost’s well-established brand and dedicated customer base enhances iHerb’s capacity to strengthen its leadership position within the online wellness marketplace.
During the transition period, both Kroger and iHerb have prioritized the continuity of service and customer experience. Collaborative efforts have been implemented to ensure that no disruptions impact either employees or consumers as ownership and management of Vitacost change hands.
Despite the strategic importance of this divesture, neither Kroger nor iHerb provided specific financial details or figures associated with the transaction. Market response following the announcement has been measured, with Kroger’s shares falling slightly by 0.35% to $59.58 at the time of the report.
This divestment signals a broader trend in Kroger’s efforts to sharpen its operational focus and resource allocation, aiming to bolster its competitive position in the highly competitive food retail sector. Meanwhile, iHerb’s acquisition demonstrates its commitment to expanding digital health and nutrition offerings, leveraging established brands to capture broader market segments.