In a January 9^th 2024 release, Albertson’s Companies (ACI) posted financial results for the third quarter of fiscal 2023 ending December 3^rd 2023. As the second largest pure-grocery company, Albertson’s can be regarded as a bellwether for the retail food industry, subject to increased costs of foods, labor, and transport in a competitive consumer environment impacted by inflation.

Albertsons operates 2,270 stores under 21 banners including Albertson’s, Safeway, Von’s, Acme, Jewel-Osco and Shaw’s. Albertson’s Companies posted a 2.9 percent increase in same-store sales with a 21 percent increase in digital sales over the third quarter of FY 2023 compared to 2022.

For the period, net income was $361.4 million on total revenue of $18,557 million.  Comparable figures for the third quarter of fiscal 2022 ending December 3^rd 2022 were net income of $375.5 million on total revenue of $18,155 million. Diluted EPS for Class A shares for the most recent quarter was $0.62 up from $0.60 for the third quarter of FY 2022. Gross margin declined fractionally from 28.2 percent to 28.0 percent denoting minor escalation in cost of goods sold despite falling inflation. Operating income decreased from 3.2 percent for the third quarter of FY 2022 to 3.1 percent. During the most recent quarter Albertsons recorded a $23.9 million loss on property disposition and $6.7 million assigned to the ‘other income’ category.

In commenting on results CEO Vivek Sankaran stated, We delivered another solid quarter amidst a challenging economic backdrop," He added, “As we look ahead, our ambition is to create Customers for Life, in part through our focus on operational excellence in our stores, driving growth in our digital and pharmacy operations, and deepening our relationships with our customers."

Mr. Sankaran continued, "While we are benefiting from our productivity initiatives, we expect to continue to see the impacts of investments in associate wages and benefits, cycling significant prior year food inflation, customers receiving less government assistance, the resumption of student loan payments and other types of payment deferrals, inflationary cost increases and the outsized growth of our pharmacy and digital businesses as we continue to lean into increased customer engagement in our Customers for Life strategy."

On Friday October 14^th 2022 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 stores among in areas with an overlap.  Several senators, states Attorneys General and unions representing Albertson’s workers oppose the transaction and have urged the FTC to rule against the merger in an anticipated February decision. The parties to the merger have offered to spin off 440 stores to C&S Wholesalers and to invest in worker benefits and to recognize unions.

On January 15^th the parties issued a joint statement “We remain in active and ongoing dialogue with the Federal Trade Commission and individual state Attorneys General regarding our proposed merger and divestiture plan. We believe our merger with Albertsons and the comprehensive divestiture to C&S will result in the best outcomes for customers, associates and our communities”.

The statement concluded “In light of our continuing dialogue with the regulators, we are updating our anticipated closure timeline. We currently anticipate that the closing will occur in the first half of Kroger's fiscal 2024. While this is longer than we originally thought, we knew it was a possibility and our merger agreement and divestiture plan accounted for such potential timing.  We remain committed to closing the transaction and providing the meaningful and measurable benefits that we promised when we originally announced the transaction."

Albertson’s Companies posted assets of $26,497 million, against long-term debt and lease obligations of $15,320 million. The Company had an intraday market capitalization of $13,080 million on January 16^th. ACI trades with a forward P/E of 8.4 and has ranged over a 52-week period from $19.14 to $23.88 with a 50-day moving average of $22.10. Approximately 74 percent of the equity is held by institutions. The Company attained a 12-month trailing operating margin of 3.5 percent and a profit margin of 1.7 percent. Return on assets was 5.1 percent and 69.1 percent on equity