Albertsons’ Q1 profit down, but revenue rises driven by pharmacy, digital
Albertsons Cos. reported a mixed first quarter, with lower-than-expected profit but revenue that came in slightly ahead of estimates.
The grocer did not hold an earnings call or issue financial guidance in light of its planned $24.6 billion merger with Kroger. A hearing date of Aug. 26 has been scheduled for Aug. 29 regarding the FTC’s request for a preliminary injunction against the merger.
In a statement, however, CEO Vivek Sankaran said that, with regard to the balance of fiscal 2024, the company expects to see “continuing headwinds” related to investments in employee wages and benefits, an increasing mix of its pharmacy and digital businesses which carry lower margins and the cycling of prior year food inflation.
“We expect these headwinds to be partially offset by ongoing productivity initiatives,” he said.
Albertsons’ net income fell to $240.7 million, or $0.41 a share for the quarter ended June 15, down from $417.2 million, or $0. 72 a share, in the year-ago quarter. Adjusted net income was $391.6 million, or $0.66 per share, compared with $545.7 million, or $0.93 per share last year. Adjusted earnings per share were $0.66, just below analysts’ estimates of $0.67.
Revenue inched up to $24.3 billion, up from $24.1 billion and above estimates $24.2 billion. Lower fuel sales partially offset its net sales increase, the company said.
First-quarter same-store sales rose 1.4%, also more than expected, driven by strong growth in pharmacy sales. Digital sales rose 23%. Memberships in Albertsons' recently streamlined loyalty program increased 15% to 41.4 million.
“Amidst an evolving economic and industry backdrop, we continued to deliver outsized growth in our digital and pharmacy businesses,” said Sankaran.
[READ MORE: Online grocery sales rise in June fueled by delivery and ship-to-home]
Capital expenditures for the quarter totaled $543.0 million, which primarily included the completion of 17 remodels, the opening of one new store and continued investment in digital and technology platforms.
The company held $291.1 million in cash and equivalents as of June 15. Operating cash flow totaled $960.9 million.
As of June 15, Albertsons operated 2,269 retail food and drug stores with 1,725 pharmacies, 403 associated fuel centers, 22 dedicated distribution centers and 19 manufacturing facilities. The Company operates stores across 34 states and the District of Columbia under more than 20 banners including Albertsons, Safeway, Vons, Jewel-Osco, Shaw's, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets and Balducci's Food Lovers Market.
