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Albertsons Digital Sales Surge 276% in Q1

Albertsons Digital Sales Surge 276% in Q1
Curbside pickup, branded as Drive Up and Go at Albertsons, is on track to reach 1,600 stores.

Albertsons Companies' first quarterly report as a public company was something to behold, with a 26.5% identical store sales increase driven by pandemic fueled spending and displaced foodservice demand.

Albertsons said its sales and other revenues increased 21.4% to $22.8 billion for the 16 week period ended June 20. The increase was driven by the 26.5% gain in identical store sales offset by a slightly reduced number of stores in operation and lower fuel prices. The company also reported a stunning 276% increase in digital sales, a figure consistent with what other publicly held retailers have experience as shoppers shifted toward home delivery or store pickup.

During the quarter, Albertsons said it accelerated digital efforts so that delivery is now available at more than 90% of its 2,252 stores and curbside pickup, branded as Drive Up and Go at Albertsons, is on track to reach 1,600 stores.

Albertsons President and CEO Vivek Sankaran offered few operational details in the company’s earnings announcement, but spoke highly of employee commitment and efforts during a challenging period.

"I am inspired by the many ways my colleagues continue to step up to serve our customers and help our communities around the country during this time of need," said Sankaran. "Their hard work and dedication have also allowed us to successfully navigate this extraordinary environment and we have accelerated our digital and e-commerce strategy to adapt to market conditions. We generated strong financial performance in the first quarter, including robust cash flow and enhanced liquidity, which support our continued investment to benefit our associates, customers, communities and stockholders."

The strength of the company’s financial performance was reflected in a gross margin rate that expanded to 29.8% from 28%, aided in part by the fact that Albertsons wasn’t reliant on margin eroding promotions to drive sales. Meanwhile, profits were aided by a corresponding decline in selling and administrative expenses, which fell to 25.4% of sales during the first quarter of fiscal 2020 compared to 26.4% the prior year.

The strong sales more than offset increased expenses related to employee and customer protection measures and bonus pay, enabling the company to report adjusted profits of nearly $1.7 billion, compared to $877 million the prior year. Reported net income increased to $586.2 million from $49 million.

The first quarter results come on the heels of Albertsons' underwhelming initial public offering on June 18, which fell two days prior to the end of the first quarter. Despite a reduction in the offering price and number of shares sold, shares of Albertsons began trading at $16. The shares have drawn limited interest since the IPO and only recently poked about $16.

Albertsons operates 2,252 retail stores with 1,726 pharmacies, 402 associated fuel centers, 23 dedicated distribution centers and 20 manufacturing facilities. The company’s stores predominantly operate under the banners Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Jewel-Osco, Acme, Shaw’s, Star Market, United Supermarkets, Market Street and Haggen. Albertsons is No. 8 on The PG 100, Progressive Grocer’s 2020 list of the top food retailers in North America.

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