What's Going On With Albertsons Stock Post Q4 Results & Updated Divestiture Plan?

Albertsons Companies Inc ACI reported fourth-quarter FY23 sales growth of 0.4% year-on-year to $18.34 billion, missing the analyst consensus estimate of $18.47 billion.

The increase was driven by a 1.0% increase in identical sales, partially offset by lower fuel sales and wholesale revenue. Digital sales increased 24%.

Gross margin rate expanded 20 basis points to 28%. The operating margin was 2.3%, and operating income for the quarter slid 1.7% to $426.2 million.

The company held $188.7 million in cash and equivalents as of February 24, 2024. Operating cash flow for fiscal 2023 totaled $2.66 billion.

Adjusted EBITDA of $915.8 million decreased 12.8% Y/Y. Adjusted EPS of $0.54 beat the analyst consensus estimate of $0.52.

“At the same time, we expect to face ongoing headwinds posed by investments in associate wages and benefits, cycling significant prior year food inflation, lower government assistance for our customers, declining COVID-related income, and the increasing mix of our pharmacy and digital businesses, which carry lower margins. We expect these headwinds to be much stronger in the first half of fiscal 2024,” said CEO Vivek Sankaran.

Albertsons and Kroger Co KR have amended their definitive agreement with C&S Wholesale Grocers, LLC (C&S) for the sale of assets regarding the merger announced on October 14, 2022.

The amended divestiture plan adds stores, facilities and banner names to enhance competition in overlap geographies. The updated package increases the total store count by 166 to include 579 stores that will be sold to, and continue operating as they do today by the new owner, C&S.

This follows concerns raised by federal and state antitrust regulators regarding the original agreement.

The companies expect the amended package to bolster their position in regulatory challenges to the proposed merger, including pending court proceedings.

Price Action: ACI shares are trading higher by 0.17% at $20.39 at last check Monday.