DILLON IS NAMED PRESIDENT OF KROGER

ELLIOT ZWIEBACH

CINCINNATI -- Kroger Co. here last week said Richard L. Bere will retire next month as president and chief operating officer and will be succeeded by David B. Dillon, who runs Kroger's Dillon Cos. unit.

In another move, the company said W. Rodney McMullen will become group vice president and chief financial officer, succeeding William J. Sinkula, who will retire. Sinkula's titles are executive vice president and chief financial officer. McMullen is currently vice president of financial services and control. Dillon, 44, has been executive vice president of Kroger and chief executive officer of Dillon Cos., Hutchinson, Kan. Succeeding him as CEO of Dillon will be Warren F. Bryant,

49, senior vice president. Kroger said both Bere, 63, and Sinkula, 64, decided to retire because they were approaching mandatory retirement age. All of the changes will become effective June 18.

Kroger made the announcements last week on the eve of its annual meeting here, a gathering in which the company discussed positive operating results and future square footage growth plans.

Dillon Cos. encompasses Fry's Food Stores, Phoenix; King Soopers, Denver; City Markets, Grand Junction, Colo., and Dillon Food Stores in Kansas, Missouri and Arkansas. Bere, a 38-year Kroger employee, has been president and chief operating officer since 1990. Sinkula joined Kroger in 1980.

According to Joseph A. Pichler, chairman and chief executive officer, "The retirements of Dick Bere and Bill Sinkula mark the departure of two of the most effective executives in our industry." Commenting on Dillon's promotion, Pichler said, "Dave comes to the job of president and chief operating officer very well prepared. "He grew up in the supermarket business and has held a number of key positions at Dillon Cos. and with Kroger. He has been a major contributor in the development of Kroger's operating and financial strategies and has earned the respect and confidence of the entire organization." On the subject of corporate expansion, Pichler told the annual meeting he expects retail square footage to increase by about 5.5% this year -- "a figure that could grow further through selective acquisition," he added. Square footage grew by 4.7% in 1994 with the opening, expansion or acquisition of 82 stores and the remodeling of 66 units, Pichler noted. He said the company anticipates opening or expanding 90 stores and remodeling 65 this year. Most new units will be combination stores, which currently represent more than 70% of Kroger's food store sales, he said. Pichler said he expects that figure to grow to about 75% by the end of 1997. "Management is confident that our strategy will continue to generate substantial rewards for Kroger investors," he said. "We expect another year of improved performance from our existing store base and new store projects in 1995, while additional investments in technology and logistics will continue to improve efficiency and reduce costs." Pichler's talk to shareholders included the following points:

Kroger plans to convert cheese and seafood service departments to self-service following the success of a similar move in bakery. Since converting most in-store bakeries to self-service, bakery department costs as a percentage of sales declined 10% while profits increased 15%.

Kroger is the largest private-label food retailer in the United States, with Kroger-brand products accounting for about 21% of total scanned grocery sales last year. He said growth in private-label health and beauty care sales was especially impressive in 1994, increasing its share to 11.8% from 10.7% in 1993.

The use of consolidation warehouses is enabling Kroger to realize cost savings through more coordinated purchasing across marketing areas. For example, volume purchases of health and beauty care items last year enabled Kroger to save more than $8 million, while consolidation reduced HBC inventories by $25 million.

Nine of Kroger's 16 food-store divisions posted record cash-flow performances in 1994. Kroger's Delta marketing area in Memphis -- "the heart of Wal-Mart supercenter country," Pichler pointed out -- also had a record year, while Nashville and Louisville "set records on top of records." In addition, Michigan generated the second highest cash flow in its history and Toledo and Dayton both showed "sharply improved results," while Kroger's convenience store group had its most profitable year ever.

Kroger reduced total debt by $350 million to $3.8 billion in 1994.

Operating efficiencies produced a $234 million reduction in working capital -- "an impressive performance in light of the funds required to build, stock and open all the new stores during the year."