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Albertsons’ earnings increase; inflation and continued work-from-home continue to benefit grocery giant

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Boise-based Albertsons Companies saw an increase in sales and beat Wall Street estimates in its most recent quarter.

The retail giant, which operates nearly 2,300 stores across the country, saw its identical sales increase by 6.8% from the same timeframe a year ago. Identical sales compare stores that were open both last year and this year but don’t include any newly opened stores. It helps provide an “apples to apples” comparison of sales.

Albertsons said net sales and revenue hit $23.3 billion in the quarter, up from $21.3 billion last year.

“In the first quarter, our teams continued to deliver strong operating and financial performance across all key metrics, and we continued to gain market share,” Albertsons CEO Vivek Sankaran, said.

Thoms Reuters polled analysts who thought Albertsons would report earnings of $0.92 per share, but the company actually ended up reporting adjusted earnings of $1 per share. That means the company beat estimates by about eight percent.

Company CFO Sharon McCollam said the company has “momentum” and is seeing share gains. McCollam said the company was raising its outlook for the current second quarter due to the strength. Albertsons’ leaders think they will see a three to four percent increase in those identical store sales for the full 2022 fiscal year.

Customer patterns continue to change

Sankaran said Albertsons’ stores saw an increase in customers and that many customers continue to eat at home, driving sales. He cited higher restaurant prices mixed with an increase in Americans working from home has helped boost grocery store spending. Sankaran said sales of lunch items have increased, as well as ingredients for dinners and more.

He said that the pressure of inflation has consumers “trading down,” particularly on staple items like rice, beans, cooking oils, and the like, but “the good news is they are trading down into a lot of our own brands.” This includes store brands like Signature Select. Albertsons said the store brands made up 25.8% of sales.

“We are seeing this phenomenon where customers are value-conscious, but are willing to spend on things they care about,” Sankaran said, listing examples of some customers buying premium beer while others buy cheaper beer, or a customer buying a bag of avocadoes instead of a single avocado. “If someone wants the higher end, we’ve got it. If someone wants an opening price point, we’ve got it in our stores. That combination is working well for us.”

Sankaran said the company is working to gain market share not just from other grocers, but from restaurants, and being able to offer a variety of price points helps that goal.

Strategic review

Albertsons also said its strategic review, launched in February, continues. It said it completed a real estate appraisal, which found the property it owns is valued at $13.7 billion, up about $2.5 billion from 2019. As BoiseDev reported in June, the company hinted the real estate appraisal could be a key factor in the review. But, Albertsons said the review is ongoing and there can “be no assurance that the strategic alternatives review will result in any transaction or other strategic change or outcome.” McCollam said they “understood the strategic value” of the real estate and didn’t indicate if it might try to split the property off from the rest of the business.

Albertsons runs stores under its own name, as well as Safeway, Vons, Jewel, Acme, United Supermarkets, and more than a dozen other brands.

Don Day - BoiseDev Editor & Founder
Don Day - BoiseDev Editor & Founder
Don is the founder and publisher of BoiseDev. He is a National Edward R. Murrow Award winner and a Stanford University John S. Knight Fellow. Contact him at [email protected].

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