Deflation Explains Why Kroger might be interested in Rite Aid

The danger here is that Kroger’s operating margins are very thin. The company reported a free cash flow of just $24 million; on revenues of $112.41 billion on July 31, 2016. That made for a profit margin of just 1.44%. To make matters worse Kroger has very little float it; had just $319 million in the bank on July 31, 2016, even though it reported generating $5.11 billion in cash from operations.

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Could Aldi Kill the Dollar Stores?

Aldi is a potent force that is already changing the American grocery business. It may not threaten the big guys, but Aldi will certainly change how and where Americans shop for milk and potato chips.

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Kroger Probably Will Not Bid on A&P

More likely, buyers for the A&P locations include Walmart Stores Inc. (NYSE: WMT), which is expanding the number of smaller locations it operates, and Target (NYSE: TGT), which is considering entering the small-box arena. Also likely to jump in is the fast-growing, privately-held Aldi Inc., which is aggressively expanding its discount grocery business in the United States. Aldi owns another fast-growing grocer: Trader Joe’s.

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