Albertsons Companies Surpasses EPS Estimates in Q4 Earnings Report
Albertsons Companies (ACI) reported strong earnings for FQ4, exceeding analyst expectations for earnings per share (EPS). Revenue remained flat year-over-year at $18.34 billion, while identical sales increased by 1.0%, slightly below the consensus estimate of +1.2%. The company’s growth in pharmacy sales offset declines in fuel and wholesale revenue.
Albertsons also experienced continued growth in its digital business, with sales increasing by 24% during the quarter. Gross margin improved to 28.0% of sales compared to 27.8% in the previous year. However, excluding the impact of fuel and LIFO, the gross margin rate decreased by 58 basis points. Albertsons attributed this decline to factors such as strong growth in pharmacy operations, increased shrink, and higher picking and delivery costs associated with digital sales growth.
Despite the gross margin pressures, ACI’s productivity initiatives allowed it to continue providing incremental targeted price investments to customers. Adjusted EBITDA reached $915.8 million, compared to $1.05 billion in the previous year. No specific guidance was provided with the earnings release.
Albertsons and Kroger Update Merger Plans
In related news, Kroger (KR) and Albertsons announced amendments to their agreement with C&S Wholesale Grocers for the sale of assets in connection with their proposed merger. The modified divestiture package is said to address concerns raised by federal and state antitrust regulators. The revised plan includes an expanded store set and additional non-store assets to enhance C&S’s competitiveness after the merger.
The updated divestiture package increases the total store count to be sold to C&S by 166, bringing the total to 579 stores. C&S will continue operating these stores as they currently operate.
Kroger CEO Rodney McMullen emphasized that the updated divestiture plan ensures that no stores will close as a result of the merger, and all frontline associates will retain their employment, collective bargaining agreements, and industry-leading benefits. Shares of Albertsons Companies (ACI) rose 0.69% in premarket trading to $20.35.
