Albertsons slashes outlook amid cautious consumers, soft grocery trends
Albertsons Cos. reported strong growth in its first-quarter digital and pharmacy sales, but ongoing softness in its core grocery business took a toll on its results.
The grocer cut its outlook. It now expects identical sales in the range of (1.5)% to (0.5)%, compared to its previous estimate of 0.0% to 1.0%. Adjusted net income per share is expected to be in the range of $1.75 to $1.85 per share, down from its previous estimate of $2.22 to $2.32 per share.
In other moves, Albertsons said it will consolidate 11 divisions into four regions under a new regional operating model, with a focus on strengthening its connections with customers, supporting stores and driving results within communities.
"We call it the ACI Edge," said CEO Susan Morris. "It combines the scale and capabilities of a national retailer with the accountability and local focus that have long distinguished our banners. By consolidating 11 divisions into four regions and centralizing center store merchandising, we can make faster decisions, improve in-stocks and move accountability closer to our stores, where fresh, service and local execution matter most to customers.”
Albertsons also revealed that CFO Sharon McCollam will retire later this year.
First Quarter
Albertsons reported net income of $84.7 million, or $0.17 per share, for the quarter ended June 20, compared with $236.4 million, or $0.41 per share, in the year-ago period. Adjusted net income was $210.3 million, or $0.42 per share, compared to $318.9 million, or $0.55 per share, during the first quarter of fiscal 2025.
Net sales inched up 0.2% to $24.94 billion from $24.88 billion. Identical sales declined 0.8%.
Pharmacy and digital remained areas of strength, with pharmacy sales continuing to grow despite ongoing Inflation Reduction Act headwinds and digital sales increasing 13% during the quarter, the company said.
In the earnings statement, Morris said that while Albertsons' digital and pharmacy businesses continued to deliver strong growth during the quarter, core grocery faced increasing pressure from softer industry unit trends and a more cautious consumer.
"While these results did not meet our expectations, they underscored the need to move faster," she said. "As we look ahead, we are moving decisively. Given continued softness in industry unit trends and a more cautious consumer, we are accelerating investments and operational changes designed to strengthen our customer value proposition and improve our competitive position.”
As of June 20, Albertsons Cos. operated 2,240 retail stores with 1,708 in-store pharmacies, 408 associated fuel centers, 22 dedicated distribution centers and 19 manufacturing facilities.
