In a July 23rd 2024 release, Albertson’s Companies (ACI) posted financial results for the 1st quarter of FY 2024 ending June 15th 2024. Earnings and revenue were consistent with consensus estimates. 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 as reflected in low net margins among competitors.
Albertson’s Companies posted a 1.4 percent increase in same-store sales during the most recent quarter with a 23 percent increase in digital sales over the corresponding Q1 of FY 2023. Loyalty membership increased 15 percent to 41.4 million.
For Q1 FY 2024 net income was $240.7 million on total revenue of $24,265 million. Comparable figures for Q1 FY 2023 ending February 25th 2023 were net income of $417.2 million on total revenue of $24,050 million. Diluted EPS for Class A shares for the most recent quarter was $0.41 down from $0.72 for Q1 FY 2023. Gross margin increased fractionally from 27.7 percent to 28.0 percent denoting a minor reduction in cost of goods sold reflecting deflation. Operating income decreased from 2.6 percent in Q1 FY 2023 to 1.8 percent. During Q1 FY 2024 Albertsons recorded a $9.3 million loss on property disposition, impairments and “other expenses”. This contrasts with a $27 million in property or other impairments offset by $16 million “other income” in Q1 FY 2023.
In commenting on results CEO Vivek Sankaran stated, "In the first quarter of fiscal 2024, we continued to invest in our Customers for Life strategy and the digital and omnichannel capabilities necessary to support it." He added "Our Customers for Life strategy is placing the customer at the center of everything we do, and we continued to drive strong year-over-year growth in loyalty members as we launched our new simplified 'for U' loyalty program. Amidst an evolving economic and industry backdrop, we continued to deliver outsized growth in our digital and pharmacy businesses."
Sankaran concluded, "As we look ahead to the balance of fiscal 2024, we expect to see continuing headwinds related to investments in associate wages and benefits, an increasing mix of our pharmacy and digital businesses which carry lower margins, and the cycling of prior year food inflation”
On October 14th 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 have required divestment of stores among in areas with an overlap. Several U.S. senators, states Attorneys General and unions representing Albertson’s workers oppose the transaction. The parties to the merger offered to spin off 413 stores and eight DCs to C&S Wholesalers, since increased by an additional 166 stores. The combined company would invest in worker benefits, devote $1 billion of working capital to reduce prices and would recognize unions.
On January 15th in advance of a Federal Trade Commission decision, the parties issued a joint statement “We remain in active and ongoing dialogue with the FTC 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 FTC sued to block the merger in mid-February 2024 supported by eight states and Washington DC. with an administrative hearing to commence on August 26th 2024. A case filed by the Attorney General of Colorado will be heard commencing September 30th 2024.
Albertson’s Corporation posted assets of $26,077 million including $3,616 million in goodwill and intangibles, against long-term debt and lease obligations of $15,343 million. The Company had an intraday market capitalization of $11,690 million on July 25th 2024. ACI trades with a forward P/E of 8.3 and has ranged over a 52-week period from $19.33 to $23.88 with a 50-day moving average of $20.10. Approximately 74 percent of equity is held by institutions with 14 percent by insiders. The Company attained a 12-month trailing operating margin of 2.3 percent and a profit margin of 1.4 percent. Return on assets was 5.4 percent and 45.6 percent on equity
Albertsons operates 2,269 stores under 20 banners including Albertson’s, Safeway, Von’s, Acme, Jewel-Osco and Shaw’s.