- Kroger announced its Chief Financial Officer J. Michael Schlotman will step down April 3 after holding the position for 18 years and working at the company for 30 years, according to a company release. After Schlotman retires, he will be succeeded by Gary Millerchip, chief executive of Kroger Personal Finance.
- After April, Schlotman will remain as executive vice president of the company and sit on the senior leadership team until December 28, 2019. "Gary and Mike have a deliberate and thorough CFO transition plan with a singular focus — a seamless transition," Kroger CEO Rodney McMullen said in a statement Monday.
- During his time as CFO of Kroger, Schlotman was one of the chief architects behind Restock Kroger, a program that uses analytics to sell products on shelves and anticipate shoppers' needs. Millerchip joined Kroger eight years ago and oversees the financial and retail services unit of Kroger.
This year was a significant one for Kroger. The grocer rolled out many major investments including its transformative partnership with Ocado and acquisition of meal kit company Home Chef. The grocer also partnered with Walgreens to sell groceries in the drug store, as well as the sale of its convenience store business for $2.5 billion earlier this year. But an executive change in the midst of success and increasing pressure from competitors raises eyebrows.
However, Schlotman's retirement after 18 years as CFO of Kroger doesn't come as a surprise. He had a long run considering the average tenure for a Fortune 500 CFO is about five to six years, according to the Spencer Stuart Fortune 500 CFO Index of 2017.
Although fairly new to the company compared to Schlotman, Millerchip isn't a stranger to Kroger’s financial business. As CEO of Kroger Personal Finance, he has worked with the grocer's senior leadership team for five years and played a large role in the company's recent growth, according to the company's release. He has been responsible for Kroger's retail grocery division and corporate strategy initiatives, playing an essential role in the recent partnerships and strategies that have contributed to the grocer's growth, the company stated.
Kroger is also ensuring a smooth transition for the two executives by keeping Schlotman on as an executive vice president until Dec. 28 of next year. With over a year to learn the ropes, Millerchip should have a grasp on the Restock program as well as other CFO duties by the time of Schlotman’s departure.
Kroger has pushed a lot of funds and manpower into its Restock Program, particularly with its recent promotion of key executives to support the initiative. In a press statement, the retailer said Millerchip's financial background and success with creating long-term shareholder value for Kroger made him the obvious choice.
There’s a lot at stake with Kroger’s financial business as the company reported third-quarter earnings in line with Wall Street estimates due to pressures from competition. Switching roles at this point in time is risky, but the grocer played it safe by choosing an insider within the financial department. In fact, choosing Millerchip makes sense as he can continue Kroger's momentum in investments while optimizing stores and growing e-commerce.