Grocery Giant Albertsons Q3 Sales Grow As Pharmacy Products Shine; Boosts Annual Earnings Outlook

Albertsons Companies Inc ACI shares are trading higher premarket on Wednesday after the company reported third-quarter earnings.

The company’s sales increased 1.2% year over year to $18.774 billion, missing the analyst consensus estimate of $18.820 billion.

The increase was driven by 2.0% increase in identical sales, with strong growth in pharmacy sales being the primary driver of the identical sales increase. Identical sales increased 2% and digital sales grew 23%.

Gross margin rate contracted 10 basis points to 27.9%. The operating margin was 2.8%, and operating income for the quarter declined 8% to $518.5 million.

Adjusted EBITDA of $1.065 billion decreased 3.7% Y/Y. Adjusted EPS of $0.71 beat the analyst consensus estimate of $0.66.

The company held $202.3 million in cash and equivalents as of November 30. Operating cash flow for 40 weeks totaled $1.92 billion.

On December 11, 2024, the Board of Directors increased the quarterly cash dividend by 25% from $0.12 per common share to $0.15 per common share.

Today, the company announced the next quarterly dividend payment of $0.15 per share to be paid on February 7, 2025, to stockholders of record as of the close of business on January 24, 2025.

Total debt, including finance leases, was $7.84 billion as of November 30, 2024. Net debt ratio was 1.88.

“Investments in our Customers for Life strategy drove increased digital engagement across our platforms, evidenced by strong growth in our digital sales, pharmacy operations, and membership in our loyalty program,” said CEO Vivek Sankaran.

In December, Albertsons announced the termination of its proposed merger with Kroger Co. The decision followed after a a U.S. judge blocked the proposed merger, citing that the deal would impact competition in the grocery space.

Outlook: Albertsons raised FY24 adjusted EPS outlook from $2.20 – $2.30 to $2.25 – 2.31 versus an estimate of $2.26.

ACI expects FY24 identical sales growth of 1.8% – 2.0% (previously 1.8% – 2.2%). 

The company continues to see FY24 capital expenditures of $1.8 billion to $1.9 billion.

Price Action: ACI shares are trading higher by 1.32% at $19.99 in premarket at the last check Wednesday.