In an October 18th release, Albertson’s Companies (ACI) posted financial results for the second quarter of fiscal 2022 ending September 10th 2021. As the second largest pure-supermarket company, Albertson’s can be regarded as a bellwether for the retail food industry subject to increased costs of ingredients, labor, packaging and transport in a competitive consumer environment impacted by inflation.
Albertsons operates 21 banners including Albertson’s, Safeway, Von’s, Acme, Jewel-Osco and Shaw’s. Albertson’s Companies posted a 7.4 percent increase in same-store sales with a 36 percent increase in digital sales over the second quarter of 2022 compared to 2021.
For the period, net income was $342.7 million on total revenue of $17,919 million. Comparable figures for the second quarter of fiscal 2021 ending September 11th 2020 were net income of $295.2 million on total revenue of $16,506 million. Diluted EPS rose from $0.52 for the second quarter of fiscal 2021 to $0.59 for the most recent quarter. Gross margin declined from 28.6 percent to 27.9 percent denoting escalation in cost of goods sold due to inflation. In contrast operating income increased from 2.9 percent for the second quarter of 2021 to 3.0 percent. During the most recent quarter Albertsons recorded a $14 million gain on property disposition and $18.6 million assigned to the ‘other income’ category for the second quarters of both 2021 and 2022.
In commenting on results CEO Vivek Sankaran stated, "Our team continued to deliver strong performance during the second quarter," said Vivek Sankaran, CEO. "Throughout the quarter, we continued to invest in our digital transformation, our differentiation in Fresh, and the modernization of our capabilities. As we look ahead to the balance of the year, we believe we are well-positioned to further accelerate in each of these areas, as we continue to roll out our Customers for Life strategy. With ongoing productivity to support our investments and to cushion inflationary and consumer headwinds, we will continue to prioritize our investments in deepening our relationships with our customers and communities. Our teams' commitment to serving our customers is driving our performance while furthering our purpose to bring people together around the joys of food and to inspire well-being."
On Friday October 14th Kroger announced a bid for Albertson’s offering $34 per share and assuming $4.7 billion in debt in a $25 billion transaction. The acquisition would at the least require divestment of 400 stores among the total of close to 5,000 in areas with an overlap. Several senators have urged the FTC to scrutinize the proposed transaction. The Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumers’ Rights will hold a hearing on the intended acquisition.
Albertson’s Companies posted assets of $28,754 million, against long-term debt and lease obligations of $12,558 million. The Company had an intraday market capitalization of $14,260 million on October 19th. ACI trades with a forward P/E of 9.4 and has ranged over a 52-week period from $24.34 to $37.99 with a 50-day moving average of $27.26.