Albertsons reports net sales, revenue increases in Q3

In announcing third-quarter results for fiscal year 2023, Albertsons Cos. said net sales and revenue increased slightly by 2.9% for the company — approximately $18.6 billion for the 12 weeks ending Dec. 2, 2023, compared with $18.2 billion for the same time in 2022.

The Boise, Idaho-based company attributed the growth to an increase in identical sales.

"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," Albertsons CEO Vivek Sankaran said in a news release.

The company reported an increase in digital sales by 21% during the third quarter of fiscal year 2023.

Albertsons also saw a gross margin decrease of 0.2% compared with the third quarter fiscal year of 2022. The gross margin rate decreased 64 basis points compared with the third quarter of fiscal year 2022, according to the release. The company said its productivity initiatives provided incremental targeted price investments to customers during the third quarter of fiscal year 2023.

The company reported net income for the third quarter of fiscal year 2023 decreased slightly from the third quarter of 2022 to $361.4 million, or 62 cents per share. The company said it had a net income of $375.5 million, or 20 cents per share, during the third quarter of fiscal 2022. The company said the net income per share during the third quarter of fiscal 2022 included a 45 cents per share reduction related to the special cash dividend of $6.85 per share to holders of convertible preferred stock on an as-converted basis.

Albertsons’ adjusted net income was $462.3 million, or 79 cents per share, during the third quarter of fiscal 2023, according to the release. During the third quarter of fiscal year 2022, the company’s adjusted net income was $505.1 million, or 87 cents per share.

The company said its adjusted earnings before interest, taxes, depreciation and amortization was $1,106.5 million, or 6% of net sales and other revenue, during this reporting period. During the same time last year, the company’s adjusted EBITDA was $1,158 million, or 6.4% of net sales and other revenue. The company said it expects continued outs growth and margin impact in digital operations and its pharmacy.

Capital expenditures for the first 40 weeks of fiscal 2023 were $1,535 million, which included 115 store remodels, the opening five stores and increased investment in its digital and technology platforms, according to the release.

Merger update

The company provided an update on its merger agreement with The Kroger Co.

In September 2023, Kroger and Albertsons agreed to sell 413 stores, eight distribution centers, two offices and five private-label brands across 17 states and the District of Columbia to C&S Wholesale growers

In mid-December, six U.S. senators and representatives, including Sens. Elizabeth Warren and Bernie Sanders, sent a letter to the Federal Trade Commission opposing the proposed merger, arguing it would “harm consumers, workers and the grocery industry as a whole,” according to a news release from Warren’s office.

The letter came before the FTC’s Dec. 15 deadline to act on the merger. The FTC extended its deadline to Jan. 17.