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Kroger Gets a 15-Year Tax Exemption for 2 Key Data Centers

By Rhian Hunt – Updated Jul 27, 2020 at 8:17PM

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The supermarket chain says the exemption will strengthen its rapidly growing digital operations.

Kroger (KR 2.17%) said in a press release today that two of its digital data centers and a "supporting technology facility" located in Ohio received a 15-year, 75% exemption from taxes on all equipment bought for use there. The exemption will greatly reduce sales tax paid on data center operations. It was approved by the Ohio Tax Credit Authority to help ensure Kroger keeps its Ohio facilities open, safeguarding more than 600 local jobs.

The two Ohio data centers are located in Blue Ash and Hamilton. Blue Ash's Economic Development Director, Neil Hensley, said the local government is "grateful for Kroger's continuing confidence in our city" and that it looks "forward to strengthening our partnership with the company." Kroger was required to pay at least $1.5 million in salaries and invest $100 million over three years to qualify for the data center tax exemption.

Two workers at a data center.

Image source: Getty Images

Kroger added $4.2 billion to its fiscal first-quarter revenue year over year, with comparable-store sales rising 19% and digital sales skyrocketing 92% during the period. According to today's press release, REDI Cincinnati Chief Executive Officer Kimm Lauterbach noted that online "grocery is expected to grow by 40% in 2020 alone, and Kroger is primed to benefit from that growth by investing in its digital future."

The data centers handle online orders, gather data, and enable personalization for customers. Kroger says the tax exemptions will boost its ability to continue modernizing its equipment and ease "software and development work" to further improve the efficiency of its digital infrastructure.

Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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