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Albertsons sees big pop in earnings driven by inflation, beating expectations

Acquiring Albertsons
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Boise-based Albertsons Companies saw its revenue and earnings in the latest quarter zoom, beating analysts’ expectations. The company said inflation helped drive more money onto the balance sheet.

The grocery giant, which has a deal in place to be acquired by Kroger Co. next year if government regulators sign off, saw sales increase 7.9% at stores open at least a year. That works out to earnings per share of $0.87, which is $0.20 better than analysts expected.

“Our team continues to deliver strong performance as we execute against our Customers for Life strategy and bring people together around the joys of food and inspire well-being,” company CEO Vivek Sankaran said. “Our investments in digital transformation, differentiation in Own Brands and fresh offerings, and the modernization of our operational capabilities contributed to these results. I want to thank all of our teams for their commitment to serving our customers and living our values every day.”

Albertsons said adjusted net income worked out to $505 million for the three months that ended on December 3rd. Sales hit $18.2 billion for the quarter, up significantly from the $16.7 billion booked in the third quarter of last year.

The big sales increase caused Albertsons’ stock to pop, immediately jumping 2.9% on the news, before retreating slightly as the day went on. Kroger, which hopes to land that deal for Albertsons, saw its stock slide slightly.

Albertsons said “retail price inflation” was the primary driver for sales increases, as well as higher fuel sales. The company said it saw its margin decrease slightly from the year before, driven by “increases in product, shrink and supply chain” costs.

Albertsons also said it saw its digital sales increase 33% from the same time a year ago, but the company doesn’t break out how much it makes from home delivery, drive up and go and other digital initiatives, so it’s not possible to tell how significant this is to the overall revenue picture.

Kroger’s hoped-for acquisition of Albertsons has hit a number of stumbling blocks, including a pointed congressional hearing, initial probing by the Federal Trade Commission, and opposition from unions. The company also hopes to pay out a large dividend to shareholders, but that has been on hold pending litigation in Washington State.

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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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