In a January 10^th release, Albertson’s Companies (ACI) as the Nation’s second largest pure-play 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 2,270 stores with 1,720 pharmacies and 402 fuel centers under 21 banners. These include Albertson’s, Safeway, Von’s, Acme, Jewel-Osco and Shaw’s. Albertson’s Companies posted a 7.9 percent increase in same-store sales with a 33 percent increase in digital sales over the third quarter of 2022 compared to 2021. Sales increased by 5.5 percent over the third quarter of FY 2022, net income was $375.5 million on total revenue of $18,155 million.  Comparable figures for the third quarter of FY 2021 ending December 4^th 2021 were net income of $424.5 million on total revenue of $16,728 million. Diluted EPS fell from $0.74 for the third quarter of fiscal 2021 to $0.20 for the most recent quarter. Gross margin declined fractionally from 28.8 percent to 28.2 percent denoting escalation in cost of goods sold due to inflation. Operating income decreased from 3.6 percent for the third quarter of 2021 to 3.2 percent. During the third quarter of FY 2021 Albertsons recorded a $13 million gain on property disposition and $38.6 million assigned to the ‘other income’ category.

In commenting on results CEO Vivek Sankaran stated, “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," He added, "Our investments in digital transformation, differentiation in Own Brands and Fresh offerings, and the modernization of our operational capabilities contributed to these results."

 Sankaran concluded, "As we look ahead to the balance of the year and into fiscal 2023, we believe that all of these initiatives position us well to continue to drive top-line growth and deepen our customer and community engagement both online and in-store. At the same time, our ongoing productivity engine is expected to continue to support our investments and partially offset anticipated inflationary cost increases, declines in COVID-19 vaccination and at-home test kit revenue, and macro-consumer headwinds."

On Friday October 14^th 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 $30,215 million, against long-term debt and lease obligations of $14,609 million. The Company had an intraday market capitalization of $11,130 million on January 10^th 2023. ACI trades with a forward P/E of 7.0 and has ranged over a 52-week period from $20.05 to $37.99 with a 50-day moving average of $20.80. Albertson’s has a twelve-month trailing operating margin of 3.4 percent, a profit margin of 2.3 percent, a return on assets of 5.7 percent and 39.9 percent on equity. For the purposes of comparison Kroger had a market capitalization of $32,740 million and a twelve-month trailing operating margin of 3.1 percent, a profit margin of 1.6 percent, a return on assets of 5.7 percent and 24.4 percent on equity.