Despite what trade observers believe is a priority for Albertsons to lower everyday retail prices and upgrade many of its older locations, earlier this month the retailer posted solid third quarter results. Especially noteworthy was the Boise, ID-based chain’s continued growth in digital sales – up 21 percent – and its efficiency gains made through the use of artificial intelligence.
Other metrics were also good including an identical store sales increase of 2.4 percent and the increase of loyalty members by 12 percent. Only Albertsons’ profit dipped – from $400.6 million in the corresponding period in 2024 to $293.3 million for the period ended November 29.
“In the third quarter, we delivered solid results and continued to advance our strategic priorities,” said Susan Morris the nearly 40-year Albertsons veteran who was named CEO last May. “Our investments in technology and AI are fundamentally reshaping how we operate and serve our customers; driving smarter decisions, greater efficiency, and more personalized experiences. Growth in our digital and pharmacy channels, combined with disciplined execution and targeted investments, is strengthening our value proposition and positioning us for success.”
Morris added, “As we look ahead, I am confident that our modernized technology foundation, relentless focus on productivity, and commitment to innovation will enable us to deliver sustainable long-term value for our customers, associates, and shareholders.
During the company’s call with financial analysts, Morris said that shoppers are clearly “stretched” and are putting fewer items in their baskets while also prioritizing essentials. She added that Albertsons is focusing on more personal promotions and loyalty enhancements to ensure return trips.
Besides digital, Albertsons attributed much of its ID sales increase to strong growth in pharmacy. Offsetting those gains were lost revenue from closed stores and a decrease in fuel prices. In addition, the big retailer noted the temporary government shutdown and related delayed SNAP funding during the third quarter of fiscal 2025 negatively impacted identical sales by approximately 10 to 20 basis points.
Viewing the first 40 weeks of fiscal 2025, Albertsons said its capital expenditures were $1.4 billion, which primarily included the completion of 74 remodels, the opening of five new stores, and continued investment in digital and technology platforms.Â
Moreover, in October Albertsons entered into an accelerated share repurchase agreement with JPMorgan Chase Bank, National Association to repurchase $750 million of shares of the company’s common stock. The retailer also announced that its board of directors has authorized an increase to the share repurchase program from $2.0 billion to $2.75 billion. Relatedly, Albertsons paid JPMorgan $750.0 million in cash and received an initial delivery of 35.4 million shares of common stock with a value equal to $600.0 million.
Albertsons also provided an updated fiscal 2025 outlook and expects its financial results to be as follows:
*Identical sales growth in the range of 2.2 percent to 2.5 percent (previously 2.2 percent to 2.75 percent);
*Adjusted EBITDA in the range of $3.825 billion to $3.875 billion, including approximately $65 million related to the Company’s 53rd week (previously $3.8 billion to $3.9 billion);
*Adjusted net income per Class A common share in the range of $2.08 to $2.16 per share (previously $2.06 to $2.19 per share);
*Effective income tax rate in the range of 23 percent to 24 percent (previously 23.5 percent to 24.5 percent);
*Capital expenditures in the range of $1.8 billion to $1.9 billion (unchanged).
At the end of third quarter, Albertsons operated 2,243 supermarkets with approximately 300 of those stores operating under the Safeway, Acme, Kings and Balducci’s banners in the Mid-Atlantic.
