Albertsons Q2 Sales Rise, But CEO Expects Competitive And Margin Pressure In 2024

Albertsons Companies Inc ACI reported second-quarter sales growth of 1.43% year-over-year to $18.55 billion, beating the consensus of $18.48 billion.

The 2.5% rise in identical sales, led by pharmacy growth, and a 24% increase in digital sales boosted revenue, though lower fuel sales partially offset gains. Loyalty members for the quarter increased by 15% to 43 million.

The gross margin rate was flat year-over-year at 27.6%. The operating margin was 1.6%, down 91 bps, and operating income for the quarter declined 35.7% to $292 million.

Excluding fuel and LIFO expenses, the gross margin declined 44 bps compared to a year ago. Adjusted EBITDA of $901 million decreased 7.8% YoY, and the margin declined 50 bps to 4.85%.

Adjusted EPS of $0.51 (-19.1% YoY), beating the consensus estimate of $0.48.

As of September 7, 2024, the company held $284.2 million in cash and equivalents. Operating cash flow totaled $1.374 billion, compared to $1.347 billion a year ago.

Also Read: Listeria Scare Prompts Albertsons To Recall Certain Ready-To-Eat Meals In Multiple State

As of September 7, 2024, net debt totaled $7.908 billion, and the net debt ratio was 1.86, compared to 1.82 a year ago.

“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 an increasingly competitive backdrop. We expect these headwinds to be partially offset by ongoing and new productivity initiatives,” commented CEO Vivek Sankaran.

Related: Why Shrinking Price Differences Between Walmart, Kroger, And Albertsons Matter To Investors

Additionally, Kroger Company KR announced it has extended the expiration date for its Exchange Offers and Consent Solicitations regarding the acquisition of Albertsons Companies’ notes from October 16 to October 22, 2024.

Dividend: Albertsons announced a quarterly cash dividend of $0.12 per share, payable on November 8, 2024, to stockholders of record as of October 28, 2024.

Price Action: ACI shares are trading higher by 1.12% at $18.46 at the last check Tuesday.